TAXATION AND LOCAL GOVERNMENT DEVELOPMENT IN NIGERIA

TAXATION AND LOCAL GOVERNMENT DEVELOPMENT IN NIGERIA 

(A CASE STUDY OF OKENE LOCAL GOVERNMENT  AREA OF KOGI STATE)

ABSTRACT

Local government is faced with varieties of difficulties to source adequate revenue from federal government, state government and the internally generated revenue, such problems are cogwheel to the smooth running of local government administration. They are; the dishonesty on the part of officers collecting the revenues, such as cases of printing receipts by the officers had been the major problem in releasing the expected revenues. The machinery put in place for collection of revenue is inadequate hence, most of the government money are not collected and this is in case of the internally generated funds that is while, there need to review the revenue generation in Local government in Nigeria. The objectives of the study are: to review the revenue collection in local government, to analyze the machinery of internally generated revenue, to determine the impact of revenue generated in Nigeria local government, to review the various sources of internally generated revenue. Data were collected from ten local governments in Okene for this study and the analysis is through descriptive and inferential statistical methods. The descriptive analysis involves the use of percentage, tabulation and counts while inferential statistical method employs chi-square. keeping of appropriate accounting records and books (c) Supply of social and economic services: Establishment of Projects: Staff motivation: workers should be encouraged so that they can put in their maximum services and when this is done, there will be increase or solid improvement in revenue generation.

 
CHAPTER ONE

1.0     Introduction

Revenue generation in Nigeria local governments is principally derived from TAX. Meanwhile tax is a compulsory levy imposed by government on individuals and companies for the various legitimate function of the state (Olaoye, 2008). Tax is a necessary ingredient for civilization. The history of man has shown that man has to pay tax in one form or the other that is either in cash or in kind, initially to his chieftain and later on a form of organized government (Ojo, 2003). No system or rules can be effective whether foreign or nature unless it enjoys some measures of financial independence.

Local governments in Nigeria has developed over a number of years. Historically, the development of direct taxation in local government in Nigeria can be traced to the period before the British pre-colonial period. Under this period, community taxes were levied on communities (Rabiu, 2004) recently the revenue that accrues to local government is derived from two broad sources, viz: the external sources and the internal sources.

1.1  Background of the Study

The overriding objectives and the impact of assessment and procedures on tax collection is to ensure that all tax payers within a defined tax jurisdiction are brought into the tax net and assessed correctly in order to plug all possible leakages for effective revenue generation. According to Ariwodola (2001) who defined tax as a compulsory levy imposed by government authority through its agents on its subjects or his properties to achieved some goals. Also, Arnold and McIntyre (2002) defined tax as a compulsory levy on income, consumptions and production of goods and services as provided by the relevant legislation. Tax is a charge imposed by government authority upon property, individuals, or transactions to raise money for public purposes. This definition may however be imperfect, because the study of the teaching of Christianity, Islamic and other prominent religions in the world shows that tax is a religious duty based on social and civil responsibilities (Agbetunde 2004). They all support and encouraged tax imposition either to redistribute wealth or to finance government project.

Nigeria is richly blessed with oil and gas among other mineral resources but the over dependence on oil revenue for the economic development of the country has left much to be deserved. According to Ariyo (1997) Nigerian over dependence on oil revenue to the total neglect of other revenue sources was encourage by the oil boom of the seventies. This is unsustainable due to the fluctuation in the oil market which have in most cases plunged the nation into deficit budgets. It was the view of Popoola (2009) that Nigeria tax administration and practice be structured towards economic goals achievement since government budgets over the year centres on the oil sector, while decrying the low productivity of the Nigeria tax system. Therefore, in order to mitigate the over dependence on the oil source, the tax system was introduced as the additional revenue generation. Tax is a charge imposed by government authority upon property, individuals or transactions to raise money for public purposes. The Nigeria tax administration is in line with the British model of tax administration since 1960 and has been.

1.2     Objectives of the Study

To review the revenue collection in local government, to analyze the machinery of internally generated revenue, to determine the impact of revenue generated in Nigeria local government and to review the various sources of internally generated revenue.

1.3     Significance of Study
Comparison of different State Government revenue generating ability will and the researcher to know how well the government is able to raise revenue on its own apart from its statutory allocation and how it can develop its revenue mobilization in terms of increasing its revenue from taxation.

1.4    Scope and Limitations of Study
          This study aims at covering the local government’s taxes in terms of        mobilization and collection, so also is the spectrum of the various types of                   taxes collected:
Information necessary to account for increased revenue has been difficult to      obtain, due to a number of tax changes that took place within the period of  study. Thus on examination of the ratio of internally generated revenue to     statutory revenue allocation as used by Nyongs (1998) will be carried out by      the researcher.

1.5    Terminologies in Study (Taxation)

          Taxing Power: The power within a tier of government in impose a tax by its    own law and prescribe conditions for the collection and due administration of the tax either by its own agency or that of another tier of government.

          Tax:  A burden which every citizen must been to sustain his or her          government.

          Tax Rate: This is the amount of tax which is levied per unit of base.

          Tax Policy: Policies that aims at amending the tax rate so as to suit         economic fiscal policy measures.

          Tax Incidence: This is where the burden of tax falls or who bears the      burden of tax.

          Tax Base: It is the object that and it could be the value of the income.

          Taxable Capacity: It is the connected with the amount of tax which could be jointly or fairly imposed on the individual.

          Tax Compliance: The obedience of a tax payer totally under the law. This obedience can be induced, voluntary or compelled.

1.6     Hypotheses that are Tested

We have the null hypotheses as follows:

H₁=There is no internal control measures put in place to ensure effective utilization of revenue generated

H₂=There are no lay down procedures for revenue collection

H₃=There is no town that is too small to approach for revenue generation