The Impact of Taxation On Revenue Genera

International Journal of Public Administration and Management Research (IJPAMR), Vol.
2, No 2,
March., 2014 Website: http://www.rcmss.com. ISSN: 2350-2231 (Online) ISSN: 2346-7215 (Print)
Afuberoh, Dennis. and Okoye Emmanuel, 2014, 2(2):22-47
The Impact of Taxation on Revenue Generation in Nigeria: A Study of Federal

Capital Territory and Selected States
Afuberoh, Dennis1 & Okoye Emmanuel, PhD2

1
Dept. of Accountancy, Faculty of Management Sciences, Kogi State University, Anyigba Nigeria.
Email:Iydiajohndennis@gmail.com GSM: +234 7035139673
2Professor of Accounting, Dept. of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State,
Nigeria
Manuscript ID: RCMSS/IJPAMR/14003
Abstract
The study was aimed at finding out the impact of taxation on revenue generation in Nigeria, with
reference to FCT and some selected states in the country. Attempt is also made in the study ( through
the means of secondary data) at highlighting the concept and nature of taxation, objectives of
taxation, features in Nigerian tax system, taxation as a tool for wealth creation and employment,
classification of taxes, Nigeria’s major taxes and other issues that relate to taxation. In achieving the
objective of the study, the researcher adopted also primary sources of data to present and analyze the
information for the study. The testing of the hypotheses of the study was done using regression
analysis computed with the aid of SPSS version 17.0. The research discovered among others that,
taxation has a significant contribution to revenue generation and taxation has a significant
contribution on Gross Domestic Product (GDP). The research recommends among others that Well
Equipped Data Base (WEDB) on all tax payers should be established by the Federal, State and Local
Governments with the aim of identifying all possible sources of income of tax payers for tax purpose,
the tax collection processes must be free from corruption. In addition, the Federal Government, States
and Local Governments should urgently fully modernize and automate all its tax system, improve tax
payers’ convenience in the assessment and payment process whilst at the same time entrenching
effective and modern human resources management practice in the tax authorities.
Key words: Taxation, Revenue Generation, Gross Domestic Product, Tax System and Tax
Administration.
Introduction
The serious decline in price of oil in recent years has led to a decrease in the funds
available for distribution to the Federal and State Governments. The need for state
and local governments to generate adequate revenue from internal sources has
therefore become a matter of extreme urgency and importance. This need
underscores the eagerness on the part of state and local governments and even the
federal government to look for new sources of revenue or to become aggressive and
innovative in the mode of collecting revenue from existing sources. Aguolu (2004),
states that though taxation may not be the most important source of revenue to the
government in terms of the magnitude of revenue derivable from taxation, however,
taxation is the most important source of revenue to the government, from the point
of view of certainty, and consistency of taxation. Aguolu (2004) further mentioned
that taxation is the most important source of revenue to the government. Owing to
the inherent power of the government to impose taxes, the government is assured at
all times of its tax revenue no matter the circumstances.
This study focuses on identifying the means taxation has been utilized to
promote fiscal redistribution of income, identify problems that militate against the
use of taxation as revenue generation in Federal Capital Territory (FCT) and in some
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Research Centre for Management and Social Studies

International Journal of Public Administration and Management Research (IJPAMR), Vol. 2, No 2,
The Impact of Taxation on Revenue Generation in Nigeria: A study of Federal Capital Territory and Selected States
selected states in Nigeria and to identify the use of taxation to promote economic
growth and development in FCT and in some selected states in Nigeria.
Lastly, the study is aimed at making recommendations that will assist to increase the
revenue generation through taxation in the FCT and in some selected states in
Nigeria.
Statement of the Problem

Over the years, revenue derived from taxes has been very low and no physical
development actually took place, hence the impact on the poor is not being felt.
Inadequate tax personnel, fraudulent activities of tax collectors and lack of
understanding of the importance to pay tax by tax payers are some of the problems
of this study. The issues mentioned above will therefore constitute the problem to be
addressed by this research work.
Based on this, the following three research questions are formulated to guide
the study:
(i) What extent has taxation contributed to revenue generation in Nigeria?
(ii) What extent has taxation contributed to the steady growth in Gross
Domestic Product in Nigeria?
(iii) In what ways can Nigeria revolutionalised her tax system in order to
boost revenue generation through this source?
Hypotheses of the Study

The following hypotheses were designed for the study:
H01: Taxation has not contributed significantly on revenue generation in Nigeria.
H02: Taxation has not contributed significantly to the steady growth in Gross
Domestic Product in Nigeria.
Scope of the Study

Tax revenue generated by the Federal Government of Nigeria and tax revenue
generated by some selected states were obtained in order to assess the impact of
taxation on revenue generation by the Federal Government of Nigeria and by some
selected states in Nigeria from 2002-2011. It is worthy to note that in this study one
state was selected from each of the six geo-political zones in the country North
Central Zone, South Southern Zone, South Western Zone, North Western Zone,
South Eastern Zone and Federal Capital Territory. Federal Capital Territory was
chosen to replace one state from North Eastern Zone because the required data
which was to be obtained from Taraba State could not be obtained due to the unco-
operative attitude of the Chairman, Board of Internal Revenue, Jalingo, Taraba State.
Gross Domestic Product of Nigeria covering the period 2002-2011 was
obtained to evaluate the extent that taxation has contributed to the steady growth in
Gross Domestic Product in Nigeria.
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Limitation of the Study

The major shortcoming encountered while undertaking this study was the unco-
operative attitude of the Chairman, Board of Internal Revenue, Jalingo Taraba State
to release the data of internally generated revenue in the state to the researcher. The
resultant effect of this attitude compelled the researcher to choose Abuja FCT to
replace Taraba State (North Eastern Zone).
Literature Review
Concept and Nature of Taxation
Taxation is seen as a burden which every citizen must bear to sustain his or her
government because the government has certain functions to perform for the benefits
of those it governs. A précised definition of taxation by Farayola (1987) is that
taxation is one of the sources of income for government, such income as used to
finance or run public utilities and perform other social responsibilities. Ochiogu
(1994) defines tax as a levy imposed by the government against the income, profit or
wealth of the individuals and corporate organizations.
According to Adams (2001) taxation is the most important source of revenue
for modern governments, typically accounting for ninety percent or more of their
income. Taxation is seen by Aguolu (2004), as a compulsory levy by the
government through its agencies on the income, consumption and capital of its
subjects. These levies are made on personal income, such as salaries, business
profits, interests, dividends, discounts and royalties. It is also levied against
company’s profits petroleum profits, capital gains and capital transfer. Whereas, Ojo
(2008) stresses that, taxation is a concept and the science of imposing tax on
citizens. According to him, tax is itself a compulsory levy which is required to be
paid by every citizen. It is generally considered as a civic duty. The imposition of
taxation is expected to yield income which should be utilized in the provision of
amenities, both social and security and creates conditions for the economic well
being of the society.
Okon (1997) states that income tax can be regarded as a tool of fiscal policy
used by government all over the world to influence positively or negatively
particular type of economic activities in order to achieve desired objectives. The
primary economic goals of developing countries are to increase the rate of economic
growth and hence per capita income, which leads to a higher standard of living.
Progressive tax rate can be employed to achieve equitable distribution of resources.
Government can also increase or decrease the rates of tax, increase or decrease the
rate of capital allowances (given in lieu of depreciation) to encourage or discourage
certain industries (e.g. in the area of agriculture, manufacturing or construction) or
may give tax holidays to pioneer companies. Income tax therefore can be used as an
agent of social change if employed as a creative force in economic planning and
development.
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Theoretical Framework
Taxation is a product of theorists. The contributions of some of the theorists are as
follows:-
The first theory that this study looks at is Prof. Arthur Laffer theory on
taxation, popularly known as the “Laffer Curve.” It is a theoretical representation of
the relationship between government revenue raised by taxation and all possible
rates of taxation.
This theory is demonstrated with a curve (i.e Laffer Curve which is constructed by
through experiment).
Government Revenue
Source:
Tax Rate
Laffer Curve (2004, www.heritage.org)
It considered the amount of tax revenue raised at the extreme tax rates of 0% and
100%. The theory concludes that a 100% tax rate raises no revenue in the same way
that a 0% tax rate raises no revenue. This is because at 100% rate, there is no longer
incentive for a rational tax payer to earn any income, thus, the revenue raised will be
100% of nothing. It therefore follows that there must exist at least one rate in
between where tax revenue would be a maximum. Laffer attributes the concept to
Ibn Khaldun and Keynes J.M.
One potential result of this theory is that increasing tax rate beyond a certain
point will become counter productive for raising further tax revenue because of
diminishing returns (Laffer, 2004). The second theory that helps to shape taxation is
Ibn Khaldrun theory on taxation. This theory was explained in term of two different
effects that is the arithmetic effect and the economic effect which the tax rates have
on revenues. The two effects have opposite results on revenue in case the rates are
increased or decreased.
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According to the arithmetic effect, if tax rates are lowered, tax revenues will
be lowered by the amount of the decrease in the rate. The reverse is true for an
increase in tax rates. The economic effect however recognized the positive impact
that lower tax rate have on work, output and employment and thereby the tax rate
base used in providing incentives to increase these activities whereas raising tax
rates here the opposite economic effect is used by penalizing participation in the
taxed activities. At a very high tax rate, negative economic effect dominates positive
arithmetic effect, thereby, the tax revenue declines (Islahi, 2006).
Functions of a Good Tax Administration

A tax administration is the whole organizational set-up for the management of the
tax system.The tax administrative set-up is a department of government and of
course works under regulations prescribed by tax legislation. Tax administration is
the process of assessing and collecting taxes from tax individuals and companies by
authorities in such a way that correct amount is collected efficiently and effectively
with minimum tax avoidance or tax evasion.
The broad objectives of a tax system is to guarantee the long-run fiscal
soundness of the policies and programmes of government while the purpose of tax
administration is to fully implement the tax system, that is, to ensure that tax payers
comply with the provisions of tax laws and that the funds derived from tax sources
are paid into the government purse. Certain aspects of the tax system are pre-
conditions for a successful tax administration. First the tax laws should be simple,
clear and understandable both to those who must apply them and those who are
subject to them. To quote Adam (1910), the tax which each individual is bound to
pay ought to be certain and not arbitrary. The form of payment, the manner of
payment, the quantity to be paid ought all to be clear and plain to the contributor and
every other person.
The scope of tax should also be clear. It should be certain that the tax can and
will be enforced, for a tax that is easily evaded causes resentment among the honest
taxpayers and often decline in taxpayers’ morality. Secondly, the taxes should be
fair, that is the burden should be spread as fair as possible, with regard to the tax
payer’s ability to pay and in light of his family circumstances, obligations and
wealth. The taxes should also be equitable as between one tax payer and another;
they should be of universal (general) application, and imposed without distinction of
persons between citizens in similar circumstances.
Thirdly, the taxes should be easy, economical and convenient to administer
that is the cost of collecting to the tax authority and the cost of compliance to the tax
payer should be as low as possible and should be consistent with effective
enforcement which means that the purpose and manner of payment of the taxes
should be related to the habits of the community. Hence the colonialists were careful
enough to introduce taxes as closely connected as possible to what their native laws
had been paying to their chiefs in those areas where such was the practice (Orewa,
1979).
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The role of the tax administrator in this matter is a crucial one. Balls (1965)
has pointed out that subject to the direction of the government and the will of the
legislature, the purpose of the tax administrator is, to devise taxes in conformity with
the principles that will raise revenues sufficient to meet the needs of government to
establish the basis of assessment and a procedure for collection that are as simple,
effective and economical as possible, and to develop auditing and other procedures.
The function of a tax administrator also includes ensuring full compliance and
effective enforcement of tax matters by tax payers.
It is important to note that however good principles of a tax system may be,
the success of tax administration depends essentially on the ability of the tax
administrators to utilize the principles. The problem of personnel then becomes
central to tax administration. Hence it has been argued according to Surrey (1965)
that the problems of tax administration in underdeveloped countries are basically
problems of personnel; there is usually poor pay, lack of training, inefficiency and
understaffing.
The Principles of Taxation

Adam (1910) maintained in his book “The Wealth of Nations” gave the most
important set of principles, which are also known as the “cannon of taxation” which
are still accepted generally by tax administrators all over the world. The principles
of taxation are outlined below:
(A) Equity/Equality of Sacrifices:

Adam Smith maintained in these principles that each tax payer should contribute to
the support of government also referred to as “state” as nearly as possible in
proportion to his ability to pay. For example 10 to 20 percent of all income above a
certain figure, since there are some citizens whose incomes were so low that they
were obviously to pay any taxes. Similarly, Musgrave and Peacock (1984)
conceived the principles of equity as equal proportion of taxation on every income
that is; in principle everyone should pay the same proportion of his income as tax.
This means proportional taxation or some percentage on all incomes and therefore
rejected progressive taxation i.e (higher tax rates on higher incomes). It also means
equal taxation of earned and investment incomes, existing private wealth and capital
are exempted, taxation is limited to income only.
In the same view, Prest and Barr (1985) said, equal amount per head should
be levied. It is obviously much easier to run a system under which everybody pays
say ten pounds per head than one which the amount due varies according to
economic circumstance.
(B) The Principle of Certainty:

This principle asserts that the taxpayer should know how much tax he has to pay,
and when it is to be paid. Such information should be adequately accurate and
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clearly stated by the tax regulations. Thus, neither the amount nor the time of
payment should be the subject of arbitrary decisions by the tax officials.
(C)The Principle of Convenience:

Taxes should be collected at a time convenient for the taxpayers. For example, the
Pay as You Earn income tax on salaries and wages deducted weekly or monthly as
the case may be as income is received, is a good example of the principle of
convenience. Convenience as a principle of taxation has to do with the enforcement
of tax and administration. Eckeston (1983) has said that a good tax should not
impose taxes that are impossible to enforce even when people comply to tax laws
voluntary, the government should verify the tax payments, if not the tax becomes an
invitation to break the law.
Adam (1910) has pointed out that every tax ought to be levied at the time or
in the manner in which it is likely to be convenient for the contributor to pay it.
Using this principle as an example, one can argue that the convenient time for
payment of tax for West African farmers is during the harvest time.
(D) The Principle of Economy:

The principle emphasizes that the cost of assessing and collecting a tax should be
small in relation to the revenue so collected i.e. economy should be the yardstick so
that the cost of collecting tax should not be excessive. For example, if the expenses
incurred in the course of collecting a tax exceed even 50 percent of the yield, then
such taxes do not conform to the principle of economy.
Objectives of Taxation
Although the tax structure in the various developing countries differs widely, the
objectives of taxation in these countries are virtually the same. Unfortunately
however, the objectives of the tax system and the relationship between these
objectives are hardly clearly stated (Cutt, 1969). This does not only makes tax
administration difficult but also give room for tax evasion with the attendant effects
on economic development. Cutt (1969) therefore, states that a brief discussion on the
objectives of taxation as outlined below would be a gainful exercise.
(A). Rising of Revenue:
The classical function of a tax system is the raising of the revenue required to meet
government expenditure. This income is required to meet the expenditure which are
either the provision of goods and services which members of the public cannot
provide such as defense, law and order to the provision of goods and services which
the federal and state governments feel are better provided by itself such as health
services and education.
(B) Wealth Redistribution:
In modern times, great emphasis has come to be placed on the objective of
redistribution of wealth. This has two quite distinct forms. The first is the doctrine
that taxation should be based on ability to pay and is summarized by the saying that
“the greatest burdens should be borne by the broadest backs.” The second form
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presupposes that the present distribution is unjust and concludes that this should
therefore be undone. This second principle sees confiscation as a legitimate
objective of taxation.
(C) Economic Price Stability:
It has been said that the most fundamental reason a government has for taxing its
citizens is to provide a reasonable degree of price stability within the nation
(Summerfield, et al, 1980). Most spending by the public and private sectors without
taxes generates high demand, which is inflationary. In such a situation, the basic
function of taxation is to reduce private expenditure in order to allow government to
spend without causing inflation. Thus, taxation is basically a deflationary measure.
On the other hand, when aggregate demand is lower than the deserved level,
government has two options which are to increase government spending with
increasing taxes or to reduce taxes while leaving government spending stable.
(D)Economic Growth and Development:
The overall control or management of the economy rests on the central government
and taxation plays an important role in this direction. In addition to maintaining
reasonable price stability, governments are determined to promote the near-full
employment of all the resources of the country (including human resources i.e.
labour) and ensure a satisfactory rate of economic growth. Economic growth and
development programmes are geared towards raising the standard of living of the
masses of a country through the improvement of their economic and social
conditions. Taxation in one way discourages, postpones or reduces consumption and
encourages saving for private investments.
This is only possible when the basic necessities of life including security,
law and order, education and communication are provided by government, hence,
the national development plans of developing countries are considered to be
important. This objective will be of great assistance to Nigeria where there is mass
unemployment of labour force and economic resources. According to Soyode and
Kajola (2006) the responsibilities or objectives of government using taxation are as
follows:-
(a) Revenue Generation:
The primary objective of a modern tax system is generation of revenue to help the
government to finance ever-increasing public sector expenditure.
(b) Provision of Merit Goods:
An important objective of tax system is the promotion of social, economic and good
governance through provision of merit goods. Examples of merit goods are health
and education. These must not be left entirely to private hands though, private
participation should be encouraged. Private enterprises will push the cost of
providing education and health services beyond the reach of common people if left
entirely in their hands.
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(c)Provision of Public Goods:

Revenue generated from tax can be used to provide commonly consumed goods and
services for which an individual cannot be levied the cost of the goods or a service
consumed is one of the functions of government. Examples of public goods include:-
(i) Internal security through maintenance of law and order by police and other
security agencies.
(ii) External security through defense against external aggression by Army,
Navy and Air Forces, and
(iii) Provision of street lights and roads.
(c) Discouraging consumption of demerit goods:
Tax can be used to discourage consumption of demerit or harmful goods like alcohol
and cigarette.
This is done to reduce external costs to the society. These external costs include
health risks and pollution.
(d) Redistribution of Income and Wealth:-

Tax system is a means of ensuring the redistribution of income and wealth in order
to reduce poverty and promote social welfare. For example, taxation can be used as
economic regulator for promotion of economic stability and sustainable growth
through fiscal policy. Government also has responsibility for fighting inflation,
unemployment and creating a sound infrastructure for business. A
tax system is one of the means of achieving this.
(e) Harmonization of Economic Objective:- Harmonization of diverse trade or
economic objectives of different countries is one of the modern objectives of tax
systems. For example, tax system can be used to achieve the philosophy of the
single market in ECOWAS or Africa so as to provide for the free movement of
goods/services capital and people between members states.
Features of the Nigerian Tax System

Somorin (2011) stated the features of the Nigerian tax system as follows:-
(i) Simplicity, certainty and clarity: Tax payers should understand and trust
the tax system and this can only be achieved if Nigerian tax policy keeps all
taxes simple, creates certainty through considerable restrictions certainty
through considerable restrictions on the need for discretionary judgments and
produces clarity by educating the public on the application of relevant tax
laws. It is therefore imperative that the Nigerian tax system should be simple
(easy to understand by all), certain (its laws and administration must be
consistent) and clear (stakeholders must understand the basis of its
imposition).
(ii) Low Cost of Administration:-
A key feature of a good tax system is that the cost of administration must be
relatively low when compared to the benefits derived from its imposition.
There must therefore be a proper cost- benefit analysis before the imposition
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of any taxes and the entire machinery of Tax Administration in Nigeria

should be efficient and cost effective.
(iii) Fairness:-
Nigeria’s tax system should be fair and as such observe the objective of
horizontal and vertical equity.
Horizontal equity ensures equal treatment of equal individuals. The Nigerian
tax system should therefore seek to avoid discrimination against
economically similar entities.
Vertical equity on the other hand addresses the issue of fairness among
different income of fairness among different income categories. In this
regard, the Nigerian tax system shall recognize the ability to pay principle, in
that individuals should be taxed according to their ability to bear the tax
burden.
(iv) Flexibility:-
Taxes in Nigeria should be flexible enough to respond to charging
circumstances. Prevailing circumstances should also be considered before the
introduction of new taxes or the review of existing ones.
(v) Economic Efficiency:-
The Nigerian tax system shall at all times strive to minimize the negative
impact of taxes on economic efficiency by ensuring that the marginal tax
rates do not distort marginal propensity to save and invest.
Utilization of Taxation as an Instrument of Fiscal Policy

Keynes (1936) believed that governments could counteract the problem of instability
in the economy caused by cycles of high unemployment, severe fluctuations in
prices (inflation or deflation) and uneven economic growth through the use of
taxation as an instrument of fiscal policy to promote full employment, price level
stability, and a steady rate of economic growth. In the Keynesian scheme, tax
systems is a primary tool of fiscal policy used, rather than trying to design a neutral
tax system, governments deliberately use taxes to move the economy in the desired
direction.
Taxation as a tool for Wealth Creation and Employment

Somorin (2011) stated that taxation is recognized as a very important tool for
National Development and growth in most societies. One of the major indices by
which development and growth can be measured in any society is the amount of
wealth, which is created by economic activities undertaken in that society.
Furthermore, she stressed that one of the means of creation of wealth for citizens is
through meaningful employment, so that citizens are able to earn income to cater for
their needs and also contribute taxes to the Government as part of their contribution
to National Development.
Somorin (2011) stated that taxation can play a vital and pivotal role in the
creation of wealth and employment in the Nigerian economy in the following ways:-
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(i) Stimulating growth in the economy, by increased trade and economic

activities: In this regard, tax revenues should be used to provide basis
infrastructure such as power, roads, transportation and other infrastructure
which would facilitate trade and other economic activities.
(ii) Stimulating domestic and foreign investment: It is necessary to mention
that where the tax system creates a competitive edge for investments in the
economy, local investments would be retained in the country while also
attracting foreign investments. Increased investment would generate
employment and provide wealth in the hands of individuals.
(iii) Revenue generated from taxes can also be applied directly to identify
sectors of the Nigerian economy to stimulate such sectors: Somorin
(2011) emphasized that for this statement to apply, the sectors must be those
which have potential for creating employment, developing the economy and
creating wealth for the greater benefit of citizens and government of this
country.
(iv) Revenue earned from taxes can be used to develop effective regulatory
systems, strengthen financial and economic structures and address
market imperfections and other distortions in the economic sector:
Taxes realized from specific sectors of the economy can be channeled back
to those sectors to encourage their continued growth and development.
(iv) Redistribution of income, whereby tax revenue realized from high income
earners is used to provide public infrastructure and utilities to the lowest
income earners.
The Role of Taxation on Economic and Social Development Sustainability

Adeyemi (2012) stated that in achieving sustainable development in the social and
economic sectors of a country, the government must consider the trade-off involved
in attracting foreign direct investment (FDI) in terms of giving incentives and the
impact of these on the country’s sustainable development.
Tax is a fiscal instrument used to encourage or discourage specific production or
consumption behaviours that affect the economic, environmental or social
sustainability. Taxation has the following impacts on the sustainability of economic
development:
(i) Tax system provides a fiscal platform that encourages foreign direct
investment (FDI) and also fosters bilateral, regional and international trade
relations among countries:
The tax policies of a nation determine whether foreign direct investment
would be attracted or not. If investors are brought into a country, it means
that the investors will bring their stable and free capital, their technology,
efficiency and contribution to nation’s capital accumulation and job/wealth
creation.
(ii) Taxation fosters a fair relationship between development and developing
countries so as to ensure that developing countries get a fair allocation of tax
base and tax room in emerging trade relations: Consequently, the developed
32

countries would not take undue advantage of the development needs in

developing countries as a reason not to work out the international tax regime
and mechanism against the third world countries.
(iii) Taxation helps developing countries in formulating effective policies and
collection system that foster the funding of sustainability:
Effective and well-functioning tax system and administration are and
essential foundation blocks for financing sustainable development.
Therefore, if there is no adequate tax structure or tax collection system in place, it
limits the ability of implementing any policy meant to enhance sustainable
development goals and this may make developing countries to keep relying on foreign
support which are usually attached with strings.
Government Revenue Generation

Olotu (2012) mentioned that today, taxation is already sowing seed of transformation
in many states of the federation of Nigeria. She pointed that only lost month, Tell
Magazine carried a cover story titled, “the new cash cow”. In that write up the
magazine reveals how “more and more states across the country are now turning to
taxation to shore up their revenue to finance critical infrastructural projects”. (Tell
Magazine, April 30, 2012). She pointed examples of Governor Okorocha (Imo State),
Governor Oshiomole (Edo State), Governor Fashola (Lagos State) and Governor
Amaechi (Rivers State) were among the list of states where tax revenues are being
harnessed to transform their various jurisdiction. Further more, Olotu (2012)
mentioned that these states have seen their tax revenues tripled and quadrupled in
recent times and this has enabled the implantation of numerous life and community
transforming projects and programmes leading to an increasingly more satisfied
populace.
Olotu (2012) cited monthly revenue increase from N275 million per month
to over N1.6 billion per month, as is the case in Edo State. She attributed the cause
mainly due to increase in tax revenue.
Abiola and Asiweh (2012) also highlighted the contribution of Lagos State to
government revenue generation in Nigeria.
They stated that Lagos State is among a few states in Nigeria that have left a
land mark in terms of independence and use internally generated revenue.
Syndelle (2009) observed that in 2007, Lagos state achieved a gross domestic product
of N3.68 trillion an equivalent of $29.028 billion making it the biggest contributor to
the federal government.
Nigeria’s Major Taxes

In order to avoid multiple collections of taxes from the same taxpayer, at least in
theory, taxes of each tier of government in Nigeria have been clearly defined by the
Joint Tax Board (JTB) as follows:
(a) Federal Taxes: Federal Taxes includes:
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(i) Companies Income Tax.

(ii) Custom and Excise Duties.
(iii) Value Added Tax.
(iv) Education Tax
(v) Personal Income Tax in respect of:-
(1) Armed Forces, Police, etc.
(2) Non resident individuals and companies.
(3) Staff of Nigeria Foreign Service.
(4) Individuals resident in the Federal capital Territory.
(b) State Taxes:
(i) Personal Income Tax.
(ii) Road Taxes
(iii) Pools betting and lotteries.
(iv) Business premises registration
(v) Development Levy.
(vi) Naming of street registration in state capitals
(vii) Right of occupancy on land owned by state
(viii) Market taxes on state financed taxes.
(c) Local Government Taxes:
(i) Shops and Kiosks rates.
(ii) Tenement rates.
(iii) On and off liquor license fee.
(iv) Slaughter slab fees
(v) Marriage, Birth and death Registration Fees (Rural Areas).
(vi) Right of Occupancy on land in rural areas.
(vii) Market Taxes and Levies.
(viii) Motor Park Levies
(ix) Domestic Annual License Fees.
(x) Bicycle, Truck, Canoe, Wheelbarrow, and Cart Fees.
(xi) Cattle tax payable by cattle farmers only.
(xii) Merriment and Road Closure Levy.
(xiii) Radio and Television License Fees (other than radio and television
transmitter)
(xiv) Vehicle Radio License (Local Government Registration of the vehicle).
(xv) Wrong Parking Charges
(xvi) Public Convenience and Refuse Disposal, Customary burial ground permit
fees.
(xvii) Religious Place Establishments Permit Fees
(xviii) Signboard and Advertisement Permit Fees.
Problems of Tax Administration in Nigeria

According to Soyode and Kajola (2006), the problems of tax administration in
Nigeria are as follows:
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(1) Tax Evasion: Tax evasion is a deliberate and willful practice of not
disclosing full taxable income so as to pay less tax. In other words, it is a
contravention of tax laws whereby a taxable person neglects to pay the tax
due or reduces tax liability by making fraudulent or untrue claims on the
income tax form.
Tax is evaded through different methods some of which include the
following:
Refusing to register with the relevant tax authority.
Failure to furnish a return, statement or information or keep records required.
Making an incorrect return by omitting or understating an income liable to
tax refusing or neglecting to pay tax.
Overstating of expenses so as to reduce taxable profit or income, which will
also lead to payment of less tax than otherwise have been paid.
A taxpayer hides away totally without making any tax return at all.
Entering into artificial transactions.
(2) Tax Avoidance: Tax avoidance has been defined as the arrangement of tax
payers’ affairs using the tax shelters in the tax law, and avoiding tax traps in
the tax laws, so as to pay less tax than he or she would otherwise pay. That
is, a person pays less tax than he ought to pay by taking advantage of
loopholes in a tax levy.
Tax can be avoided in various ways:
Incorporating the tax payer’s sole proprietor or partnership into a limited
liability company.
The ability to claim allowances and reliefs that are available in tax laws in
other to reduce the amount of income or profit to be charged to tax.
Minimizing the incidence of high taxation by the acquisition of a business
concern which has sustained heavy loss so as to set off the loss against future
profits.
Minimizing tax liability by investing in capital asset (for instance through the
new form of corporate financing by equipment leasing), and thus sheltering
some of the tax payers income from taxation through capital allowance
claims.
Sheltering part of the company’s taxable income from income tax by
capitalizing profit through the issue of bonus shares to the existing members
at the (deductible) expenses to the company.
Creation of a trust settlement for the benefit of children or other relation in
order to manipulate the martinet tax rate such that a high income bracket tax
payer reduces his tax liability.
Converting what would ordinarily accrue to the tax payer (employee) as
income into capital gain (i.e Compensation for loss of office) the advantage
of the employer and employee.
Manipulation of charitable organizations whose affairs are controlled and
dominated by its founders thus taking advantage of income tax exemption.
35

Buying and article manufactured in Nigeria thereby avoiding import duty on

imported articles.
Avoiding the consumption of the articles with indirect taxes incorporated in
their prices e.g. tobacco.
Other Problems Militating against Effective Tax Administration in Nigeria

(1) Problems of Assessment
There are two major aspects to these:
(1) Identification the person to be assessed:
His address and his place of resident so that notices can be served to him.
Due to the poor rate of voluntary compliance, and the very low degree of
honesty, most taxable persons hide from tax authorities, and if possible would
give fake addresses to conceal their identity. Persons who are aware of the
whereabouts of other taxpayers evading tax would not volunteer any information
to the Tax Authorities.
Our postal system and services are so inadequate and inefficient that even letters
with proper addresses are not delivered let alone those with no proper addresses.
Many businessmen and women do their business without any registration or any
fixed addresses. It is therefore difficult to track down such persons for tax
purposes.
There is also the fact that a lot businesses involving money, are still carried out
in this country without reducing anything in writing, what is in writing may not
accurately reflect what has transpired, either for fraudulent reasons or for tax
purposes.
(2) Identifying Income for Tax Purpose

The ascertainment of world income tax purpose most of the time proved
difficult. World income embraces all sources of income, including
employment income, income from business, profession or vocation interest,
rents, dividends etc. earned in or brought into Nigeria.
Taxpayers often flout notices to file return of income forms and either they
fail to render any returns at all or even when they do, they render virtually
useless returns, in the pretext that they are illiterate or do not know what to
do.
People engage in artificial transactions to conceal or dodge the burden of tax
and conceal income yielding transactions e.g. people build houses in other
people’s name, may be in the name of people who are otherwise non-existent
or are so insignificant in the society that they are not likely to be called at
any time to pay tax, let alone to be asked to account for house(s) they are
supposed to own.
(3) Personnel Problem and Low Image of Tax Officials
Lack of experienced personnel to man the various relevant tax authorities
hinders the effective tax administration in Nigeria. In some states, the Board
of Internal Revenue is poorly staffed both in terms of quality and quantity of
36

staff. The image of a tax man is that of a corrupt person. They are seen in the
eyes of the public as not only corrupt but also lacking in personal integrity.
(4) Inadequate Penalties for Tax Defaulters
Low penalties, sometimes ridiculous for tax defaulters do not serve as
deterrent for others. They are also not strict enough to encourage compliance.
(5) Attitudinal Problem
Most people do not know that it is part of their civic duties or responsibilities
to pay tax and except a few enlightened individuals, corporate organizations
and salaried employees whose income are subjected to tax, some adult
Nigerians do not eagerly and regularly pay tax.
(6) Cumbersome Process of Payment
The procedure for paying certain taxes are too cumbersome and do not
encourage prompt payment of tax by payers. In some instances they go Scot
free by bribing tax officials.
Methodology
The research design for the study is survey research. Both primary and secondary
sources of data collection were used. Questionnaire was used to obtain information
as a primary source while textbooks, journals and internet constituted secondary
sources of data collection. The questionnaire was designed showing closed-ended
questions- strongly agreed, agreed, strongly disagreed and disagreed responses. The
questionnaire was administered to the employees of Federal Inland Revenue Service
(FIRS) Abuja FCT, State Board of Internal Revenue, Kogi State, State Board of
Internal Revenue, Delta State, State Board of Internal Revenue, Ebonyi State, State
Board of Internal Revenue Abuja FCT, State, State Board of Internal Revenue,
Niger State and sample of tax payers from the selected six geo-political zones in the
country. The total population for this study comprises ten thousand, one hundred and
twenty six (10,126) employees as analyzed in table 1 below:
Table 1: Distribution of the Population

S/NO POPULATION OF THE STUDY TOTAL NUMBER OF STAFF
1 Federal Inland Revenue Service, Abuja FCT 6,120
2 S.B.I.R Kogi State 389
3 S.B.I.R Delta State 1,043
4 S.B.I.R Ondo State 850
5 S.B.I.R Ebonyi State 304
6 B.I.R Abuja FCT 850
7 S.B.I.R Niger State 450
8 Total sample of tax payers from the selected six 120
geo-political zones
TOTAL 10,126
Source: Field Survey, 2012.
37

Sample size and Sampling Techniques

A sample size of 400 respondents determined through the aid of Yamane and Yaro
(1967) formula was used in the study
Table 2: Distribution of Sample among selected Units in the Population
S/No Population of the Study Number of Staff Questionnaires
administered
1. Federal Inland Revenue Service Abuja
FCT 6,120 240
2 S.B.I.R Kogi State 389 16
3 S.B.I.R Delta State 1,043 42
4 S.B.I.R Ondo State 850 34
5 S.B.I.R Ebonyi State B.I.R Abuja FCT 304 12
6 S.B.I.R Niger State 850 34
7 Sub-Total 450 18
Total sample of the tax payers from the 10,006 396
8 selected six geo-political zones
120 4
Total 10,126 400
Source: Field Survey, 2012.
Based on the large population, the researcher adopted non-probability sampling
technique using judgmental or purposive sampling method.
Technique of Data Analysis

The technique of data analysis used in the study was regression analysis. The
computation was done using SPSS 17.0.
Data Presentation, Analysis and Findings

Table 3: Data on internally generated revenue by the six geo-political zones and
taxes collected by Federal Inland Revenue Service, Abuja F.C.T
Internally Generated Revenue by the six Taxes collected by FIRS Abuja-FCT
Year geo-political zones
2002 10,537,957,474.30 433,900,000,000
2003 10,538,584,051,28 703,100,000,000
2004 11,710,080,086.39 1,194,813,959,540.91
2005 12,747,879,997.24 1,741,477,131,459.72
2006 12,593,946,335.18 1,863,192,970,401.11
2007 14,528,892,955.99 1,841,107,016,067.39
2008 18,683,167,755.38 2,972,107,003,382.44
2009 21,656,584,918.49 2,196,474,879,708.54
2010 24,848,520,006.00 2,839,384,502,583.87
2011 27,868,818,842.60 3,449,394,505,683.97
Total 165,714,432,422.85 19,234,951,968,827.95
!"
38

Tale 3 above, shows that the data relating to internally generated revenue by the six geo-
political zones from 2002 – 2011 and data on taxes collected by Federal Inland Revenue
Service, Abuja FCT from 2002 – 2011.
TABLE 4: Data on taxes collected by Federal Inland Revenue Service, Abuja DCT and Gross
Domestic Product
Year Taxes Collected by Federal Inland Revenue Gross Domestic Product
Services, Abuja-FCT (Million)
2002 433,900,000,000 6,912,381.25
2003 703,100,000,000 8,487,031.57
2004 1,194,813,959,540.91 11,411,066.91
2005 1,741,477,131,459.72 14,572,239.12
2006 1,863,192,970,401.11 18,564,594.73
2007 1,841,107,016,067.39 20,657,317.67
2008 2,972,107,003,382.44 24,296,329.29
2009 2,196,474,879,708.54 24,794,238.66
2010 2,839,384,502,583.87 29,205,782.96
2011 3,449,394,505,683.97 31,305,882.98
Total 19,234,951,968,827.95 190,206,865.14
Source: Federal Inland Revenue Source: National
Service, Abuja- FCT Bureau of Statistics
Table 4 above shows that the data relating to taxes collected by Federal Inland
Revenue Service, Abuja FCT and Gross Domestic Product from 2002 – 2011.
Question 1: Do you agree that the use of taxes has assisted in the development of
the country?
TABLE 5: RESPONSES FROM QUESTION 1
Respondents
Responses Tax Authorities Percentage Tax Payers Percentage
Strongly Agreed 200 51 2 50
Agreed 140 35 1 25
Strongly 40 10 1 25
Disagreed
Disagreed 16 4 0 0
Total 396 100 4 100
Source: Field Survey (2012)
From the table 5 above, both tax authorities and tax payers strongly agreed that the
use of taxes has assisted in the development of the country.
This is seen from the number of respondents that strongly agreed which are
200(51%) and 2(50%) for both tax authorities and tax payers.
Question 2: Do you agree that taxes are one of the major tools for revenue
generation by the Federal, State and Local Governments?
Table 6: Responses from Question Two
Respondents
Agreed 120 30 1 25
Strongly Disagreed 70 18 1 25
39

Disagreed 66 17 0 0
Total 396 100 4 100
From table 6 above, both tax authorities and tax payers strongly agreed that taxes are
one of the major tools for revenue generation by the Federal, State and Local
Governments. This is seen from the number of respondents that strongly agreed
which are 140(35%) and 2(50%) for both tax authorities and tax payers.
Question 3: Has Taxation impacted on revenue generation in Nigeria?

Table 7: Responses from Question Three
Respondents
Agreed 130 33 1 25
Strongly 45 11 1 25
Disagreed
Disagreed 41 10 0 0
Total 396 100 4 100
From table 7 above, both tax authorities and tax payers strongly agreed that taxation
has impacted on revenue generation in Nigeria.
This is seen from the number of respondents that strongly agreed which are 180
(46%) and 2(50%) for both tax authorities and tax payers.
Question 4: Has the publicity made in the print and electronic media on the
importance of taxes payment impacted positively on revenue generation in Nigeria?
Table 8: Responses from Question Four
Respondents
Agreed 10 3 0 0
Strongly 210 53 2 50
Disagreed
Disagreed 160 40 1 25
Total 396 100 4 100
From table 8 above, both tax authorities and tax payers strongly disagreed that
Publicity made in the print and electronic media on the importance of taxes payment
have not impacted positively on revenue generation in Nigeria.
This is seen from the number of respondents that strongly disagreed which are
210(53%) and 2(50%) for both tax authorities and tax payers.
Question 5: Do you agree that if aggressive and innovative modes of collecting

revenue from existing Federal, State and Local Governments internal sources are put
in place the revenue generated by these governments would increase?
Table 8: Responses from Question Five
40

Respondents
Agreed 36 9 0 25
Strongly Disagreed 180 45 2 25
Disagreed 130 33 1 0
Total 396 100 4 100
From table 8 above, both tax authorities and tax payers strongly disagreed that if
aggressive and innovative modes of collecting revenue from existing Federal, State
and Local Governments internally sources are put in place, the revenue generated by
these governments would not increase. This is seen from the number of respondents
that strongly disagreed which are 180(45%) and 2(50%) for both tax authorities and
tax payers.
Test of Hypothesis 1:
H0: Taxation has not contributed significantly on revenue generation in Nigeria.
Decision rule:-
Since the p-value 0.001 is less than 0.05 (see Appendix A) we reject H0 and
conclude that taxation has a significant contribution on revenue generation at 0.05
significant level.
Test of hypotheses 2
H0: Taxation has not contributed significantly to the steady growth in Gross
Domestic Products in Nigeria.
Decision rule:
Since the p-value 0.000 is less than 0.05 (see appendix B) we reject H0 and conclude
that taxation has a significant contribution on Gross Domestic Product at 0.05
significant level.
Summary of Findings
This study revealed the following findings:
(i) That from the regression analysis, taxation has a significant contribution on
revenue generation in Nigeria.
(ii) That from the regression analysis, taxation has a significant contribution on
Gross Domestic Product of Nigeria.
(iii) That taxation is the most important source of revenue to the governments in
Nigeria from the point of view of certainty and consistency of taxation.
(iv) That taxation is regarded as a tool of fiscal policy used by government all
over the world to influence positively or negatively particular type of
economic activities in order to achieve desired government objectives such
as to increase the rate of economic growth and hence per capital income
which leads to a higher standard of living.
41

(v) That taxation is being used to achieve many objectives such as raising of
revenue required to meet government expenditure, wealth redistribution,
economic price stability, and economic growth and development.
Conclusion
In this study, effort has been made to analyze taxation as a tool for revenue
generation in Nigeria in the three tiers of government namely: Federal, State and
Local Governments for structural and economic developments. In this study, issues
relating to taxation as a tool for wealth creation and employments, the role of
taxation in wealth creation and employment, the role of taxation on economic and
social development sustainability and government revenue generation were
considered. This study also considered the two major categories of tax which are
direct and indirect taxes, and the study focused on the various types of taxes
collected by the Federal, state and Local Governments.
Furthermore, the study considered other problems militating against effective
tax administration in Nigeria such as identification of the person to be assessed,
identifying income for tax purpose, personnel problem and low image of tax
officials in the eyes of the public, attitudinal problem and cumbersome process of
payment.
Finally, the study concludes that taxation has significantly impacted on revenue
generation in Nigeria.
Recommendations
The following recommendations are made:
(a) There is an urgent need for all state governments to clearly state the basic
objectives of its tax system and the relationship between these objectives.
This will assist to give the tax administrators a sense of direction and make
the tax payer see clearly the reasons he/she should pay his/her tax as at when
due.
(b) The tax collection mechanism used by tax officials must be free from
corruption and embezzlement. If this is not done the revenue collected many
not reach the desired point.
(c) The Federal Government, state governments and local governments should
urgently fully modernize and automate all its tax system, improve tax payer
convenience in the assessment and payment process whilst at the same time
entrenching effective and modern human resource management practices in
the tax authorities.
(d) Judicious use of tax payers money should be made and be seen to have been
properly utilized. This will encourage tax payers to continue to pay taxes.
(e) Effort should be made by the Federal State and Local Government to
diversify the main revenue source from oil to other sectors of the economy
such as agriculture, extractive industries in order to attract direct and indirect
taxes.
42

(f) The Federal, State and Local Governments should ensure that all collected
revenue from either Pay As You Earn, with holding taxes, value added tax
etc are paid promptly into designated bank accounts and failure to do so
within the stipulated period of time should attract strict penalties to the tax
official.
References
Adams, C. (2001) For Good and Evil; The impact of Taxes on the Course of Civilization, U. S. A;
Madison Publishers.
Adams, S. (1910) The Wealth of Nations; London; Everyman’s Library Ltd.
Adefila, J.J. (2008) Research Methodology in Behavioural Sciences,
Kaduna, Nigeria; Apani Publications.
Aguolu,O. (2004) Taxation and Tax Management in Nigeria, 3rd Edition, Enugu; Meridan Associates.
Babalola, J.B (1999) Statistics with Applications (In Behavioural Sciences, Business and
Engineering) (Revised Edition), Ilorin, Evidence (Nig) Ventures Publisher.
Balls,O. (1965) The Problems of Tax Administration. In Latin America,
Baltimore; John Hopkins Press.
Cutt, J.(1969) Taxation and Economic Development in India, Fredrick A. Praeger Inc. New York.
Eckeston, H. (1983) Public Finance 4th Edition, New Jersey; Prentice Hall Inc. Englewood.
Farayola, G.O. (1987) Guide to Nigerian Taxation, Ikeja, All Group Nigeria Limited Publishers.
Keynes, J.M (1936) The General Theory of Employment, Interest and
Money; New York, Harcourt, Brace.
Musgrave, R.A and Peacock, A.I (1984) Classics in the Theory of Public Finance, New York;
Macmillan.
Ochiogu. A.C.(1994) Nigeria Taxation For Students, Enugu; A.C Ochiogu Publishers.
Okon, E. (1997) Company Income Tax In Nigeria (unpublished Monograph) University of Port
Harcourt
Orewa ,G.O (1979) Taxation in West and Mid- Western Nigeria 2nd
Edition, Institute of Social and Economic Research, Ibadan, Nigeria.
Osuala, E.C (2005) Introduction to Research Methodology The Millennium Edition, Enugu, Nigeria,
Cheston Agency Ltd.
Prest, A. R. and Barr. H. (1985) Personal Income Taxation; Public Finance Theory and Practice, 5th
Edition, London; E.L.B.S.
Sommefeld, R.M.(1980) An Introduction to Taxation, Harcourt Brace,
Jovanovich.
Soyode, L. and Kajola, S.O (2006) Taxation Principals and Practice in
Nigeria, Ibadan, Nigeria; Solicon Publishers.
Surrey, S.S (1965) Tax Administration In Under Developing Countries, Baltimore; John Hopkins
Press.
Yamane and Yaro (1967) Statistics: An Introductory Analysis, 2nd Edition, New York; Harper and
Row.
Journal publications:
Abiola, James and Asiweh, M. (2012) Impact of tax Administration on Government Revenue in a
developing economy. A case study of Nigeria. International Journal of Business and Social Science,
volume 3 No 8 (special issue- April).
Philips, A.O.(1973) “A Note on the Determinants of Income Tax Evasion”, Nigerian Journal of
Public Affairs. Volume 1 No 1
43

Conference papers:-
Adeyemi, K.S (2012). Sustainable Development strategies for poverty Alleviation the Tax
perspective. Paper delivered at the annual tax conference of the chartered institute of
taxation of Nigeria, Nicon Luxury Hotel, Abuja, 10th May.
Olotu, G.E. (2012) Welcome Address speech by the chairman, chartered institute of taxation of
Nigeria, 14th Annual Tax Conference, 10th May.
Omorogiuwa, P.A (1981) Tax Administration in Nigeria, Paper presented at the first National
symposium on taxation, Lagos. October.
Somorin, T.(2011) National Tax policy, issues, challenges and prospects. Paper Presented at the
MPTP workshop, Abuja, 19th October.
Internet materials:
Syndelle, S. (2009) Taxes- “Accountability and Revenue in Nigeria”.
Nigeria Curiosity: Com Available from: http://www.nigeriancuriosity.com.
/2009/11/taxes- accountability- revenue- in-Nigeria. html. Accessed 10/4/2010.
Islahi, A.A (2006) Ibn Khaldrun’s Theory of Taxation and its Relevance Today, Islamic Research
and Training Institute Spain. www.muslimheritage.com/default.cfm
Laffer, A. (2004), The Laffer Curve, Past Present and Future From Heritage Foundation June 9,
2011. www.heritage.org.
APPENDIX A
Regression Analysis of Revenue Generated on Taxes Collected
Descriptive Statistics
Mean Std. Deviation N
Revenue 1.6571E10 6.30257E9 10
Taxes 1.9235E12 9.78892E11 10
The table depicts the mean and the standard deviation of revenue and taxes
Correlations
Revenue Taxes
Pearson Correlation Revenue 1.000 .890
Taxes .890 1.000
Sig. (1-tailed) Revenue . .000
Taxes .000 .
N Revenue 10 10
Taxes 10 10
44

International JournalModel
of PublicSummary
Administration and Management Research (IJPAMR), Vol. 2, No 2,
Change
The Impact of Taxation on Revenue Generation in Nigeria: A study of Federal Capital TerritoryStatistics
and Selected States
R Adjusted R Std. Error of R Square F Sig. F

Model R Square Square the Estimate Change Change df1 df2 Change
1 .890a .792 .766 3.04800E9 .792 30.481 1 8 .001
a. Predictors: (Constant), Taxes

The correlation between revenue and taxes is 0.89, meaning that revenue and taxes
are strongly, and linearly correlated.
R Square is 0.792 meaning that 89.0% of the total variation in revenue could be
explained by the taxes collected
ANOVAb
Sum of
Model Squares Df Mean Square F P-value
1 Regression 2.832E20 1 2.832E20 30.481 .001a
Residual 7.432E19 8 9.290E18
Total 3.575E20 9
b. Dependent Variable: Revenue
HYPOTHESIS TO BE TESTED
H0 : Taxation has no significant contribution on the Revenue Generated
Vs
H1: Taxation has a significant contribution on the Revenue Generated
DECISION RULE
Accept H0 if the P-value is greater than 0.05, reject H0 if otherwise.
CONCLUSION
Since the P-value ( 0.001) is less than 0.05 we reject H0, we therefore accept H1 and
conclude that Taxation has a significant contribution on the Revenue Generated
at 0.05 significance leve
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients Correlations
Zero-
Model B Std. Error Beta T Sig. order Partial Part
1 (Constant) 5.549E9 2.217E9 2.503 .037
Taxes .006 .001 .890 5.521 .001 .890 .890 .890
a. Dependent Variable: Revenue
45

The simple linear regression model is given below

Yrevenue = 5.549E9 +0.006taxes
We deduced from the model that; revenue generated increase by 0.006 unit for every
1 unit increase in taxes collected.
APPENDIX B
Regression Analysis of GDP on Taxes collected
Descriptive Statistics
Mean Std. Deviation N
GDP 1.9021E7 8.52434E6 10
Taxes 1.9235E12 9.78892E11 10
The table depict the mean and the standard deviation of GDP and taxes
The correlation between GDP and taxes is 0.963, meaning that revenue and taxes are
strongly, and linearly correlated
Correlations
GDP Taxes
Pearson Correlation GDP 1.000 .963
Taxes .963 1.000
Sig. (1-tailed) GDP . .000
Taxes .000 .
N GDP 10 10
Taxes 10 10
Model Summary
Change Statistics
R Adjusted R Std. Error of R Square F Sig. F
Model R Square Square the Estimate Change Change df1 df2 Change
1 .963a .927 .918 2.43653E6 .927 102.159 1 8 .000
R Square is 0.927 meaning that 92.7% of the total variation in GDP could be
explained by the taxes collected
46

ANOVAb
Model Sum of Squares df Mean Square F P-value
1 Regression 6.065E14 1 6.065E14 102.159 .000a
Residual 4.749E13 8 5.937E12
Total 6.540E14 9
b. Dependent Variable: GDP
HYPOTHESIS TO BE TESTED
H0 : Taxation has no significant contribution on the GDP

Vs
H1: Taxation has a significant contribution on the GDP
DECISION RULE
Accept H0 if the P-value is greater than 0.05, reject H0 if otherwise.
CONCLUSION
Since the P-value ( 0.000) is less than 0.05 we reject H0, we therefore accept H1 and
conclude that Taxation has a significant contribution on the GDP
at 0.05 significance level.
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients Correlations
Zero-
Model B Std. Error Beta T Sig. order Partial Part
1 (Constant) 2.890E6 1.772E6 1.631 .142
Taxes 8.386E-6 .000 .963 10.107 .000 .963 .963 .963
a. Dependent Variable:
GDP
The simple linear regression model is given below
YGDP = 2.890E6 +8.386E-6taxes
We deduced from the model that; GDP increase by 8.386E-6 unit for every 1 unit
increase in taxes collected.
47

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International Journal of Public Administration and Management Research (IJPAMR), Vol.

The Impact of Taxation on Revenue Generation in Nigeria: A Study of Federal

Afuberoh, Dennis1 & Okoye Emmanuel, PhD2

Research Centre for Management and Social Studies

Statement of the Problem

Hypotheses of the Study

Scope of the Study

Research Centre for Management and Social Studies

Limitation of the Study

Research Centre for Management and Social Studies

Research Centre for Management and Social Studies

Functions of a Good Tax Administration

Research Centre for Management and Social Studies

The Principles of Taxation

(A) Equity/Equality of Sacrifices:

(B) The Principle of Certainty:

Research Centre for Management and Social Studies

(C)The Principle of Convenience:

(D) The Principle of Economy:

Research Centre for Management and Social Studies

Research Centre for Management and Social Studies

(c)Provision of Public Goods:

(d) Redistribution of Income and Wealth:-

Features of the Nigerian Tax System

Research Centre for Management and Social Studies

of any taxes and the entire machinery of Tax Administration in Nigeria

Utilization of Taxation as an Instrument of Fiscal Policy

Taxation as a tool for Wealth Creation and Employment

Research Centre for Management and Social Studies

(i) Stimulating growth in the economy, by increased trade and economic

The Role of Taxation on Economic and Social Development Sustainability

Research Centre for Management and Social Studies

countries would not take undue advantage of the development needs in

Government Revenue Generation

Nigeria’s Major Taxes

Research Centre for Management and Social Studies

(i) Companies Income Tax.

Problems of Tax Administration in Nigeria

Research Centre for Management and Social Studies

Research Centre for Management and Social Studies

Buying and article manufactured in Nigeria thereby avoiding import duty on

Other Problems Militating against Effective Tax Administration in Nigeria

(2) Identifying Income for Tax Purpose

Research Centre for Management and Social Studies

Table 1: Distribution of the Population

Research Centre for Management and Social Studies

Sample size and Sampling Techniques

Technique of Data Analysis

Data Presentation, Analysis and Findings

Research Centre for Management and Social Studies

Research Centre for Management and Social Studies

Question 3: Has Taxation impacted on revenue generation in Nigeria?

Question 5: Do you agree that if aggressive and innovative modes of collecting

Research Centre for Management and Social Studies

Research Centre for Management and Social Studies

Research Centre for Management and Social Studies

Research Centre for Management and Social Studies

Regression Analysis of Revenue Generated on Taxes Collected