IMPACT OF COMPANY INCOME TAX ON ECONOMIC GROWTH IN NIGERIA
ABSTRACT
This study examined the impact of companies’ income taxon economic growth (proxy by gross domestic product) in Nigeria. Secondary time series panel data was collected for the period 2005 to 2014 from the Statistical Bulletin of the Central Bank of Nigeria (CBN). The study employed Ordinary Least Squares (OLS) technique based on the computer software Windows SPSS 20 version for the analysis of data, where gross Domestic product (GDP), the dependent variable and proxy for economic growth, was regressed as a function of company income tax (CIT) and value-added tax (VAT), the independent variables.
The results of the analysis showed that both company income tax and value-added tax have significantly positive impact on economic growth. Based on the findings, the study recommended that government should strengthen the tax administration system to broaden the tax income, and embark on tax education to ensure voluntary tax compliance. The study also recommended that the tax authorities should employ qualified tax professionals who should be regularly trained and be retained in the tax administration system for efficient tax administration and collection.
CHAPTER ONE
Introduction
1.1 Background Of The Study
Taxation is the system of raising money in form of taxes paid by the citizens of the country in return for the services rendered by the government.
It could be recalled that taxation is instituted by God, this is traced back to “Mattew chapter 22 vs. 17-21”, when the Pharisees asked Jesus whether it is lawful to pay taxes or not. The Pharisees were later told render therefore to Caesars the things that are Caesar’s and to God the things that are to God.
According to Lekan .S. etal (2006), tax was described and not defined in the statues, but according to Cambridge international dictionary of English, it is “an amount of money paid to the government usually a percentage (%) of personal income or company profits”.
According to Okpe I.I (2000) tax is the transfer of resources and income from the private sector to the public sector in order to achieve some of the nation’s economic and social goals.
Taxation is universally accepted as a powerful tool in the hands of any government to raise income for its services and to ensure equitable distribution of income among its citizens.
Therefore, in every modern communities, a large amount of taxation is necessary for a public expenditure increases to promote social progress, taxation which is the main sources of funds also increases.
The present tax laws in Nigeria emanated from the Raismais commission in 1957. Before this time we only had what was called the income tax ordinance for the colonies and which was rather common in all the colonies and the provisions were very similar. Raim’s recommendation was the basis of provision in the Nigerian constitution order council of 1960 section 70(1) which conferred an exclusive power upon the parliament to make laws for Nigeria or any part thereof with certain uniform principles in respect of personnel and company income tax.
During 1963 when Nigeria became a republic, the mid-western region was created out of the western region and they adopted the western region tax law accordingly with the amendments, the position under the republican constitution of 1963 and that the regions (now divided into states) assumed jurisdiction over the income tax of person other than companies. While the federal government assumed jurisdiction over the taxation of companies, the uniform principles under the income tax management act and the regional taxes in the federal territory of Lagos.
Thus, after the creation of former 12 states in 27th may 1967, the state assumed the tax laws of the regions in which they were before the creation of such states. The uniform principle covered by the income tax management act of 1961 was as follows:
- Specifies what income are exempted from tax.
- What constitute income for tax purposes.
- Upholds residence on the basis for taxation or in the alternative, the principal place of business.
- And recently prescribed the rates of tax and personal reliefs.
1.2 Statement of The Problem
There is high incidence of tax evasion and avoidance by tax payers. This may affect the amount of revenue collectible by the government for the running of administration. Furthermore, it is hoped that people were wrongly assessed and the assessment sometimes result to regressive taxation.
1.3 Objective Of The Study
The purpose of this study include the following:
- To examine the causes and reasons for high tax evasion and avoidance.
- To generate revenue to help the government to finance ever-increasing public sector expenditure.
- To promote social, economic, and good governance through provision of merit goods.
- To examine the effect on economy, the high incidence of tax evasion and avoidance.
- To examine people’s perception on taxation.
1.4 Significance Of The Study
The topic “company income tax on economic growth in Nigeria”, will educate the entire public on how the federation could encourage economic development and also how a reduced tax could promote the standard of living of the tax payer and increases his capital formation and investment thereby, resulting in a higher gross National Product (GNP) of the economy (country) and also promote the industrial development of the nation.
The study will be of immense benefit to the following group of persons.
- Government of the federation of Nigeria.
- The business community for the purpose of companies income tax.
- The tax experts especially the practicing professional accountants.
- Enugu state university community.
- The Nigerian Institute of Management and Nigerian Statisticians.
- The economist and financial analysts or capitalist.
- The students of Accountancy profession and other allied professions.
- The tax-payers, especially the employers of labour and the employees of various organisations.
- Tax researchers.
1.5 Scope And Delimitation
This topic company income tax on economic growth in Nigeria we cover all the 36 states of the federation and Abuja and the entire economy but the writer intends to limit this topic to only Lagos and Ogun state due to financial handicap, distance and time constraints.
Therefore, since the same tax Acts are applied throughout the federation Republic of Nigeria, the study of Lagos and Ogun tax system and economy shall be deemed to serve other states of the federation. Thus, the writer will rely heavily on the board of internal Revenue and state ministry of finance and Economy planning since they have adequate information and data on the government of Lagos and Ogun state of Nigeria, thereby covering all the local government areas of the state.
Since there are often changes in the tax laws of Acts both at the state and federal level of government, the writer may wish to visit the chief inspector of taxes of some urban and rural local government areas in the state in other to confirm the information or data so collected from the Board of Internal Revenue and the state Ministry of Finance and Economy Planning.
1.6 Definition Of Terms.
I.T.M.A:
Income tax management Act of 1961, which deals with chargeable income and how they are administered.
C.I.T.A:
Companies income tax Acts of 1979 which deals with profit chargeable in respects to companies.
P.I.T.D:
Personal income tax degree/Act of 1993 as amended deals with profit chargeable in respect of individuals.
Hypothesis:
It is an idea or suggestion put forward for reasoning or explanation .subject to confirmation or rejection.
Law Of Territory:
This means any enforce in a particular territory example, state, or country.
Methodology:
It is the science or study of methods or ways to be adopted in a given direction.
Tax Evasion:
This means trying to escape tax liability by an individual.
Direct Taxes:
This means that taxes are levied on income and property of individuals or group of individuals who bears their full burden.
Indirect Taxes:
These are the taxes levied on goods and services and are paid by individuals by virtue of their associating with the goods and services.
Earned Income:
It is the income which the tax payer actually earned, which may require mental and physical exercise such as salaries, wages, e t c.
Unearned Income:
This income accrue whether or not the tax payer is there or not, example, rent, interest, royalties, and dividends.
Other Incomes:
It is the income which comes once in a while and they are not regular, thereby undetermined example, gift of windfall income, lottery winnings e t c.
CHAPTER TWO
2.0 Literature Review
2.1 Introduction
The review of relevant literature is the main topic of this chapter. A literature review covers theoretical and methodological contributions to a certain issue in addition to the state of knowledge at the time of writing. It provides information about the state of the art in relation to the subject you are writing about. It examines the body of work on the chosen subject. The literature evaluation in this study comprises the …
Procedure for Downloading the PDF (Docx) Material
Impact of Company Income Tax on Economic Growth in Nigeria can be downloaded by requesting the full set of materials at the project or seminar cost. The document will be sent via Microsoft Word (MS-Word) format via WhatsApp (e-mail) following payment confirmation.
| Seminar Material Cost ₦3,000 | Project Material Cost ₦5,000 |
Request Complete Material
 | Click here to request the Complete Material via WhatsApp including;
|
Disclaimer for Complete Material Utilization
The displayed research work titled "Impact of Company Income Tax on Economic Growth in Nigeria" is stated as a research guideline towards accomplishing your assigned project / seminar research work. All the research materials on this website are ONLY for research purposes and should be used as a guideline in developing your research work. For no reason should you copy word for word as projectlist.com.ng will not be liable for any who copied the material. By ordering the complete research guideline, it signifies that you've accepted our terms of service.
Frequently Asked Questions (FAQ)
Can the material for “The Role of Mortgage Institution in Housing in Nigeria” be used as a guide for Banking and Finance (BF) Project?
Yes it can be used — This research work focuses on the “The role of mortgage institution in housing delivery in Nigeria. A case study of Anambra Home Limited (2006-2014). The study aimed at finding out how to reduce the cost of housing in Nigeria and to find out how to deal with the problem of over population in Nigeria effectively so that there will be an effective housing delivery. The instrument used in this research work is questionnaire. In analyzing the data collected the researcher checked all the responses to ensue that each question was well responded. I found out that over population is one of the major problem of housing delivery in Nigeria since Nigeria population seek to rise every day and the government …
Can the material for “Design and Implementation of a Computerized Recruitment Management System” be used as a guide for Computer Science (CS) Project?
Yes it can be used — A recruitment management system is a comprehensive tool to manage the entire recruitment processes of an organization. The aim of the study is to Design and Implement an Online Recruitment Management System. In achieving this aim, the following specific objectives were laid out as follows to design and develop an application software that will properly document an individual’s job profile in the organization or firm and create a quick search and advance search that the user will use during the recruitment process. The motivation that led to the implementation of the proposed system is that applicants are increasing day by day, and are putting in their application for available job being advertised for enlistment in any company of their choice …
Can the material for “Determinant of Internal Control System Effectiveness in a Manufacturing Company” be used as a guide for Accountancy / Accounting Project?
Yes it can be used — The study sought to determine the effect of internal control system on financial performance of manufacturing firms in Tuyil pharmaceutical ltd. To achieve the objective of this study, the study used hypothesis testing research design. The study tested the following hypotheses: H1: Internal Controls and Financial Performance are positively related; H2: Internal Controls have a significant impact on Financial Performance. The population chosen for this study was 65 working staff of the Tuyil ltd. The study selected a sample of 20 working staff from a target population of 65 working staff. The sample was drawn using stratified random sampling technique. The study relied on both primary and secondary data. Primary data was collected using structured questionnaires while the secondary data …
Is the topic “Appraising the Effectiveness of Credit Administration and Management in Banking Industry” recommended for Banking and Finance (BF) Project?
Yes it is highly recommended — This research work was undertaken in order to appraise the effectives of credit administration in banking industry. We narrowed or investigation to four (4) commercials bank in Nigeria (Union Bank, UBA, Afribank and Bank PHB) The method of study adopted includes data obtained from both primary and secondary sources. The primary data mostly involves personal interviews, and questionnaire administered to the respondents of the management and staff of these banks. The secondary data was mainly information collected from textbooks, journals, magazines, unpublished monograms and various works of professional in the related fields to aid our inquiry. The total number of questionnaires administered to both management and staff of the banks amounted to 98 and a total of 80 questionnaires were recovery showing about …
Can the material for “The Causes and Consequences of Cigarette Smoking Among Youth” be used as a guide for Sociology Project?
Yes it can be used — This study is set to examine the causes and consequences of cigarette smoking among youths in Dutsinma local government Area of Katsina State. The study examined the factors responsible for youth involvement in cigarette smoking and its effect on the health and general well-being of youths in the study area. The study employed the quantitative and qualitative research methods to obtain data from the respondents. The stratified random sampling technique was used to select 100 respondents for the study. Questionnaires and indepth interviews methods were used to obtain data from the respondents. Findings of the study revealed that the major factors responsible for cigarette smoking among youths include the need to feel sociable, to chase bore-dam and to feel warm. It …
Can the material for “The Language of Christian Religion: A Comparative Study of Roman Catholic Church and Some Selected Pentecostal Denominations” be used as a guide for English Education Project?
Yes it can be used — Language of religion is a register that represents the variation of language, used in the setup of religion, from the everyday language and other setups. The motivation that led to this study is that the need to know if actually there is any difference in the language of Christian religion considering its multifarious denominations. The study identifies the Language of Christian Religion using Roman Catholic Church and Some Selected Pentecostal Denominations as a case study. In achieving this aim, the following specific objectives were laid out to assess the written and written forms of language in Roman Catholic Church and Some Selected Pentecostal Denominations and identify the language of Christian religion with particular reference to that of the Roman Catholic …
Can the material for “As-Built Survey of Medium Density Layout” be used as a guide for Quantity Surveying (QS) Project?
Yes it can be used — As-built survey has been an essential element in the development of the human environment since the beginning of recorded history. It is performed to verify that a particular improvement on a parcel of land has been built according to the proposed design plans, specifications and setback requirement. The aim of this project was to produce an As-built plan of medium density layout, Ifuho, Ikot Ekpene Local Government Area for the purpose of ascertaining variations of detail as constructed from the design. This was achieved through the following objectives: establishing the perimeter using traverse, measurement of relative position of the detail within the study area, preparation of an overlay plan which facilitated the comparison, and to explore the power of computer …
Is the topic “Design and Implementation of a Collaborative and File Management System for Mobile Applications” recommended for Computer Science (CS) Project?
Yes it is highly recommended — Collaborative work and file management is one of the major functions in any organization. According to the Collins English dictionary, 11th edition, collaboration entails working together to achieve a common goal. The aim of the study is to develop a Collaborative and File Management System for Mobile Application. In achieving this aim, the following specific objectives were laid out to Manage data on a server as a web service and Serve as a client side office suite for effectively carrying out collaboration and file management in mobile devices. The methodology adopted in this study is the object oriented analysis and design methodology (OOADM) which is a technical approach for analyzing and designing an application or system by applying object throughout …
Can the material for “Effects of Unhygienic Practices on the Health of People and Its Environment” be used as a guide for Public Health Project?
Yes it can be used — The study was carried out to investigate the Effects of Unhygienic Practices on the Health of People and its Environment. Investigation revealed that despite awareness of the risks associated with unhygienic practices in schools, the issue of inadequate environmental hygiene has continued to pose a hazard to people's urinary systems. The research design used in this report is descriptive design, utilizing questionnaire method to obtain information from the respondents for this project. A total of 200 (two hundred) residents were selected for this study to represent the entire population of the study. Primary data were collected from the primary source which questionnaire was used as an instrument of data collection while secondary data were sources from textbooks, journals, newspapers and …
Can the material for “The Role of Microfinance Bank in the Development of Small Scale Enterprise” be used as a guide for Finance Project?
Yes it can be used — This study examines the role of Microfinance bank in the development of small scale enterprise using Afemai Microfinance Bank as a Case Study. The main objective of this study is to ascertain if microfinance bank provide for the needs of the people and also to examine if microfinance bank help in the provision of soft loan to assist the small scale investors. The small scale entrepreneurs in rural areas lack the necessary financial services, especially credit from the commercial banks. It was discovered from the study that microfinance bank assists in the development of small scale. The study concluded that the proportion of overdraft granted over the period is much higher than that of loans granted. This result from the …