CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
One major functions of the government especially in a developing countries such as Nigeria is the provision of infrastructure service such as electricity, pipe-born water, Hospitals, schools to mention a few. For these services to be adequately provided government should have enough revenue to finance them. The task of financing there enough revenue to financing there enormous responsibilities is one of the major problem facing the government, given the limited resources to them. Because of this, it is utmost relevance to inculcate into the citizens the concept of taxation through proper imposition of taxes on all taxable individuals and companies to argument government’s financial position.
According to Odoh (2004) tax is the most important sources of government revenue. The state uses the revenue collected from taxes for providing schools, hospitals etc. according to P.U. Amaechina (2009) (p.10) Tax is a very which government imposes on the income of the citizen of a states for which the government makes no direct benefits to the tax payer (i.e no quid Pro quo). I.E Okonkwo (1994) says that government at various levels drive revenue from taxes.
According to Collins English dictionary (2006) taxation is the act or principles of levying taxes or the conditions of being taxed. In this regard tax has been being taxed. In this regard tax has been defines as a monetary chares imposed by the government on persons, entities, transactions or properties to yield revenue. It can also been defined as the enforced proportional contribution by a persons and property levied by the state by virtue of the sovereignty for the support of government and for all public needs. Again, according to Anthony D.U. Okoye (1999) defined taxation as tax is a compulsory levy imposed by the government on individuals, businesses, organization, goods and services. It can be defined into direct and indirect taxes. In developing economy lack of tax structure is the major causes of weak, unresponsive government it also lead to over reliance on aids, with tax the public can hold but they can also use it to help strength their tax capacity increase their autonomy and reduce their long-term dependence on external assistance. It is significant that development and growth can not be achieved without proper installation of taxation. Following these government has enacted several tax laws and reformed the existing once in order for it to be effectives and efficient also to stand the test of time. Some of these laws in existence are: income tax management act (ITMA) 1961 petroleum profit tax (PPT) value added tax (VAT) to mention but few.
All these laws are geared payment of taxes due and discourage tax avoidance and evasion. Attitudes have to change, the attitude in question is not only the one of the tax payer but also that of the tax collectors and the government at large.
For the purpose of these studies, it tends to establish the impact of taxation as an aid to the economic development of Enugu state.
1.2 STATEMENT OF THE PROBLEM
Taxation is by far the major significant source of revenue for the government. In Nigeria, paying tax is very big problem because the populace regards tax as a means whereby government extorts. Money from citizen in an unjustified manner. It has been noticed that people endulge in tax avoidance and tax evasion. Many tax payers do not declare correctly their income for tax purposes example company income tax. Government inability to utilize the revenue from tax in most appropriate manner like building of road providing of electricity pipe-borne water and other social amenities in other to develop the state, has made the citizens to pay taxes grugenly.
1.8 OBJECTIVE OF THE STUDY
The objectives of this study specifically is to assess the contribution of taxe towards the growth and development of Enugu state and Nigeria as a whole. Other objectives include determine why people feel cheated when it comes to pay tax. To determine the extent to which revenue generated. From taxes affect other sources of revenue in Enugu state. To find out the extent to which government has utilized the revenue generated from taxes in the development of the state.
1.9 RESEARCH QUESTION
Does revenue generated from tax affect other source of revenue?
To what extent do people react toward the payment of tax?
What is the rate of tax evasion and tax avoidance?
1.10 SIGNIFICANCE OF THE STUDY
This work will enables the citizens to understand that government uses the revenue generated form taxes in providing infrastructure like hospitals etc. it will enable the students especially those in other disciplines to understand the concept of taxation and its principles.
The work enable the government to know that taxation can be used as an instrument of fiscal policy. It will also enable the government to know how to handle tax evasion and tax avoidance.
It will be a reference material for any student who will want to research on a related topic.
1.11 SCOPE OF THE STUDY
The study is on the impact taxation as an aid to economic development in the rural areas of Enugu state. The researcher will restrict her work to selected three local government area of Enugu state. Any other reference to materials, place, items, activities, periods is just for purpose of clarify and vivid understanding of the topic and not within he scope.
1.12 LIMITATIONS OF THE STUDY
The researcher in carrying out this study encountered numerous problems, which include:
i) Fund.
Time.
Lack of research materials
Responds of the respondents
FUND – This include lack of enough fund to move around and visit the various areas in the state, and also lack of money to buy enough research material which constitutes an impediment to the researchers, high cost of transportation in the city due to long distance also imposed its own limitation on the researcher.
TIME – Time is also another constraints to the researcher. This is because the researcher is combining school activities an that the same time this made her unable to cover a lot of interesting areas but limited her research work only at Enugu metropolis.
LACK OF RESEARCH MATERIALS: lack of research materials was also one of the problems faces by the researcher in the cause of this research work. The researcher made use of questionnaire while obtaining information from respondent.
RESPONDS OF THE RESPONDENTS: Another constraint to the researcher is that some of the respondents found it difficult to express their problem as regards the subject matter.
From the above points the researcher tried her best to bring out in details study on the impact of taxation as an aid to economic development in the rural areas of Enugu state (a case study of selected three local government areas of Enugu state) but the above constraints have limited the researcher to carry out her research work effectively.