Government taxes and economic growth

Thesis Overview

<p> </p><p><strong>1.1 BACKGROUND OF STUDY</strong></p><p><strong>…</strong></p><p><strong>1.2 &nbsp; STATEMENT OF THE PROBLEM</strong><br>In recent times, the revenue allocation to states from the federation account is not only dwindling but also grossly inadequate. This, coupled with the ever increasing financial needs of states compelled state governments to imbibe the culture of improving internally generated revenue as an alternative means of meeting and sustaining the various competing financing needs. This can be achieved through efficient tax system of the state.<br>There are several sources of tax revenue to the state government, but Akpan (2010) claimed most of the sources of state government’s tax revenue are untapped thereby undermining their revenue generation efforts. However, he did not clearly identify those state governments’ tax revenue sources that are untapped. More so, the state tax system particularly its administration is highly information intensive, information technology provides strategic opportunities for improving and transforming the visions, process and outputs of the state boards. Girini (2010) and Stum and Sparoh (2011) affirmed that information technology enhances tax revenue generation. These studies are of foreign origin and lack local contents. Environmental differences could cause differences in research findings across different nations of the world, hence the need for further investigations. It has also been reported that taxation enhances the economy of a nation as a means of achieving financial stability and promoting economic growth. Muyi (2006) reported that efficient tax administration enhances social and economic development, Suleiman (2009) revealed that taxation reduces the level of inflation and unemployment in the economy. However, these and many other studies do not pay particular attention to state government tax revenue and this created a gap in prior research.<br>According to Kiabel and Nwokah (2009), the tax system in most states of the federation is seen as an embodiment of contention and controversy whether in its policy formulation, legislation or administration. As a result, the role of taxation in promoting economic activity and growth is no more felt. There is, therefore, the need to examine these problems confronting the states’ tax system.<br>(i) &nbsp; &nbsp; The burden of tax is borne by the payer and would therefore seek for way and means of evading the payment of tax;<br>(ii) &nbsp; High income tax on the profit and dividend of companies may discourage the investment.<br>(iii) &nbsp; Taxes by their nature, increase the prices of goods and services on which the tax is imposed.<br>Based on the above, our point of departure is to increase the volume of literature and provide empirical evidence of the impact of the state government tax revenue on the Nigerian economy.</p><p><strong>1.3 &nbsp; OBJECTIVES OF THE STUDY </strong><br>This study shall examine state government system with a view to determining its impact on the Nigerian economy. Specifically the study is aimed at the following:<br>(i) &nbsp; &nbsp; To Ascertain the sources of state government tax revenue in Nigeria<br>(ii) &nbsp; To investigate the extent to which information technology enhances the revenue generation of state governments in Nigeria.<br>(iii) &nbsp; To examine the impact of state government tax revenue on Nigeria’s Gross Domestic Product (GDP);<br>(iv) &nbsp; To identify the problems of state governments tax system in Nigeria.</p><p><strong>1.4 &nbsp; RESEARCH QUESTION</strong><br>The following research questions are raised for this study<br>(i) &nbsp; &nbsp; What are the sources of state government tax revenue in Nigeria?<br>(ii) &nbsp; To what extent does information technology enhance tax revenue generation of state government tax revenue on Nigeria’s Gross Domestic Product?<br>(iii) &nbsp; What impact has state government tax revenue on Nigeria’s Gross Domestic Product?<br>(iv) &nbsp; What are the problems confronting state government tax system in Nigeria?</p> <br><p></p>