ABSTRACT
An investigation into the impact of multinational oil companies towards the Nigeria public revenue is just a project topic carried out to ascertain the role or influence of one of these multinational oil companies (ELF) on the economic life of our country (Nigeria).
The main objective of this study which was achieved at the end of this project work are.
1. To check or rather analyze the profit of the company as it affects the income tax.
2. To determine if the multinational oil companies in Nigeria has contributed to the growth of national economy.
3. To know the impact of multinational oil company in Nigeria.This research work was implemented by using data collection from the staff members of ELF oil company by the use of questionnaires and use of secondary data and by oral interview.Research methodology used as mentioned above especially the use of questionnaire was presented and analyze using chi-square (x2 square).At the end of the research work was able to achieve my objective of delving into it. And recommendation was given by the staff of the ELF oil company.
CHAPTER ONE
1.1 INTRODUCTION
As a matter of fact the search for petroleum in the country started as early as 1908 when a German company the Nigeria Bitumen Corporation (limited) exploration in the Araromi area of western Nigeria. Their pioneering effort was interrupted by the out break of the first world war in 1914.However in 1937 oil prospecting resumed in the country with shell D Arcy (the former of present awarded the side concessionary right covering the territory of Nigeria. Their activities were again affected by the second world war bit resumed in 1947. meanwhile, it was in 1956 that oil was discovered in commercial quantities of Olobiri in the Niger Delta after several years of oil prospecting and investing of over N30 billion with this development shell started oil production and expiration from its Olobiri field in 1958.Following the discovering of oil in the country other companies such as Mobil Agip Sc Frap (now ELF) Tennco and Amoseas (which we know today as Texaco/ Chevron) by 1961 began exploration right which has been formally granted to shell alone was extended to the new comers in line with the government policy of increasing the pace of oil exploration in the country Okigbo (1993).
So oil production and export from Olobirir field was first started in 1958 by shell at a production rate of 5, 000 barrels of crude oil per day. The quantity doubled the following year and crude oil exports form the country rose to 2.0miliom barrels per day in 1971.In fact in 1972, 631,000,000 barrels were exported yielding more than N600 million in tax and royalties. As production continued, Nigeria attained the status of a major oil producer being presently ranked the 6th oil producer in the world and second in African after Libya.
Furthermore initially government interest was only limited to collection of royalties and other due (taxes) offered it from the oil companies and rudimental laws to regulate the activities of the oil companies and industry. This was due to fact that oil revenue was very insignificant in the economy before the late ninety sixties and also relative lack of trained personnel and expertise.However immediately after the Nigeria civil war oil had become very important to our economy.
1.2 BACKGROUND OF THE STUDY
By multi-national oil companies we simply refer to certain specific business outfit which have their parent headquarters located in the developed countries and then their subsidiaries operating in a number of countries. They can equally be termed transnational contextual framework.
As a matter of fact the parent company assumes greater control of the subsidiary not with standing some certain influences by the home government where the subsidiaries are located in fact the multi national oil companies control most of the meaningful economic activities in t he developing countries.
This control gives them very wide jurisdiction in the manipulation of the economic policies and circumstances of their country. Meanwhile our emphasis in this case is much on the multinational that participates on Nigeria oil industry among these companies are:
1. Shell petroleum development company of Nigeria
2. ELF petroleum
3. Cheavon petroleum
4. Mobile petroleum
5. Schlumberger
6. Texaco oil etc.
Initially when companies started their operation were in the country they were granted income tax relief (industrial development ordinance 1950). There were equally several amendment and laws which were put in place to encourage these companies towards a favourable operation and investment in Nigeria. With these opportunities, which were not obtainable in their home countries. So many multinational companies found Nigeria with her teeming population and abundant natural resources, a very fertile ground for operations.
Hence the scramble for oil prospecting which followed the discovery of oil granted to these companies was magnifying their profit. Assuming the reverse is the case their tax would have been divested as such expanding the economy and at the same time accruing much public revenue. Schwarzenberge (1957).
PUBLIC REVENUE
Revenue or funds is the live wire of any successful undertaking not only for the private sector but much also for the public sector.
The function which government must perform can only be discharged with resources in the from of money. This must be collected and used to serve the entire citizenry.
Financial regulations, financial legislations and the constitutions of the federal republic of Nigeria from the bedrock for revenue mobilization and expenditure.
Section 80 (1) of 1999 Nigeria constitution provides that “All revenue or other Monies raised or received by the federation (not being revenues or other money payable under this constitution or any other act of the national assembly into any other public fund of the federal established for a special purpose) shall be paid into and from one consolidated revenue fund of the federation.
Financial regulation 301 stipulates that “public fund shall include cash fixed fee receipt, tax tickets stamped promissory notes money collected by tax collectors.
The authorizing documents for various tax levies are the finance legislation and acts approved and issued from time to time.
In order to comprehend what public revenue is all about, brief explanation is done below.
When we are talking about public revenue we are just referring or emphasizing on government revenue that is incomes of the government. In other words we are looking at returns or yields from any kind of property which is directed which is directed to government or public coffers. Such revenue are mainly for the provision of social economic development. We should equally note that public or government revenue is quite different from national income which is the value of all the economic activities of the country within a specific period.
Conversely the government revenue itself contributed to the national income. Okigbo (1993).
SOURCES OF GOVERNMENT REVENUES
There are three tiers of government in Nigeria each with distinct sources and classification of revenue.
FEDERAL GOVERNMENT REVENUES SOURCES
The sources of federal government revenue form 1989 fall into twelve major revenue heads.
These are listed and as well explained below.
1. Statutory allocation form federation account:
2. Direct taxes
3. Licenses and internal revenue
4. Mining
5. Fees
6. Earnings and sales fees
7. Rent on government property
8. Interest and repayment federal
9. Interest and repayment state government
10. Armed forces
11. Miscellaneous
Their explanation in details are below:
1. Statuary allocation from federation account:Currently the federal government receives 48.5% share of the federal account. Three major revenue heads make the federation account already detailed. In the summary of the heads of revenue are indirect taxes direct taxes and mining. They could alternatively be categorized as revenue form oil and non-oil.
2. Direct taxes:These cover the personal income tax of the armed forces polices forces residents of the federal capital territory foreign services officers etc. although these do not include those direct taxes that come under the federation account.
3. Licenses and internal revenue: The revenue derived form this sources is in respect of fees paid by individual for the provision of services and the granting of privileges by the government. The constituents of these sources of revenue are goldsmiths and gold dealers licenses, wireless and television licenses arms and ammunition licenses boats and canoe (small craft) licenses court fines and nationalization and citizenship the licensees confer the right on individuals and organization for the use of their properties taxed.
4. Mining: This includes mining fees penalties for arrears of rent prospecting right fees royalties on tin, zinc ore, morium, marble lime stone quarriable and others here will likely coal.
5. Fees: This include court fees trade market fees company and business names fees passports fees carriage fees and a host of others.
6. Earning and sales fees: These include proceeds from sales of publication proceeds form sales of goods forfeits by price control board use of government and a host of others.
7. Rent on government property: This includes rent on federal government land, rent of quarters plot rents and aerodromes rent of bank premises in the federal government new secretariat.
8. Interest and repayment federal:This includes interest and payment of loan of federal government.
9. Interest and repayment State government: This represents the interest and payment of loans to state government.
10. Reimbursement: This represents reimbursement of audit fees, police secondment fees and reimbursement cost of collection of individual tax part reimbursement by state government.
11. Armed forces: Armed forces rent sale of stores and clothing transport receipts and educational receipts
12. Miscellaneous: This represents receipts which cannot be appropriately classified under other heads of revenue but are money realized or recovered by ministries and department in the process of carrying out their responsibilities. Revenue so earned are authorized to be used to meet expenditure. Examples this are refund of government sale of government shareholding penalty for loss of pensioners industry card.