Home Project-material THE IMPACT OF TAX ON GOVERNMENT CAPITAL EXPENDITURE IN NIGERIA.

THE IMPACT OF TAX ON GOVERNMENT CAPITAL EXPENDITURE IN NIGERIA.

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Abstract

These problems binder the provisions of various services provided by the government for citizens and as well the functions of taxation such as taxation is imposed to generate revenue for the Government to meets its capital and recurrent expenditure; it reduces the inequalities of income through the more you earn, the more you pay Mechanism; is it used to increase output and employment; it serves as an instrument of fiscal policy. Though the funds which would have collected to provide the above services and function are not available to the Government thereby paralyzing the operational functions of the government and creating stability of the economy.

CHAPTER ONE

INTRODUCTION

1.1             

BACKGROUND OF THE STUDY

Tax is described as a compulsory fee or levy imposed on the goods, services and incomes of individuals and organizations. Taxes levied on incomes are widely regarded as direct taxes while those taxes imposed on goods are services are known as indirect taxes. Some of the reasons for the introduction and imposition of taxes is to generate revenue by the government for the purpose of financing certain projects which will ensure reliable and functional economic growth and development. Through the imposition of taxes, there will be redistribution of incomes and provision of essential services to the citizens there by promoting standard of living. A country‘s tax system is a major determinant of other macroeconomic indices, specifically, for both developed and developing economies. There exists a relationship between tax structure and the level of economic growth and development. Tax policy objectives vary with the stages of development. Similarly, the economic criteria by which a tax structure is to be judged and the relative importance of each tax source vary over time Vincent, (2001). For example, during the colonial era and immediately after the Nigeria‘s political independence in 1960, the sole objective of tax was to raise capital for government. Later on, emphasis shifted to the infant industries protection and income redistribution objectives. Tax revenue is a powerful tool of economic reform and a major player in every economy of the world. It is never static but dynamic and should reflect current realities prevailing in the economy. The tax system is an opportunity for government to collect additional revenue besides other sources of income, which is needed in discharging its pressing obligations. A good system of tax offers itself as one of the most effective means of mobilizing a nation


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