CHAPTER ONE

1.0            INTRODUCTION:

1.1     BACKGROUND OF THE STUDY:

One of the major functions of any government especially developing countries such as Nigeria is the provision of infrastructural services such as electricity, pipe-borne water, hospitals, schools, good roads and as well as ensure a rise in per capita income, poverty alleviation to mention a few.

For these services to be adequately provided, government should have enough revenue to finance them.  The task of financing these enormous responsibilities is one of the major problems facing the government.  Based on the limited resources of government, there is need to carry the citizens (governed) along hence the imposition of tax on all taxable individuals and companies to augment government financial position.  To this end, government have always enacted various tax laws and reformed existing ones to stand the taste of time.  They include:  Income Tax Management Act (ITMA), Companies Income Tax Decree (CIID), Joint Tax Board (JIB) etc.

All these are aimed at ensuring adherence to tax payment and discouraging tax evasion and avoidance.  For the purpose of this study, the researcher would be concerned with the impact of taxation as an aid to the economic development of Enugu State (Nigeria).

1.2            STATEMENT OF THE PROBLEM:

The first need of any modern government is to generate enough revenuewhich is indeed “the breath of its nostril”.  Thus taxation is by far the most significant source of revenue for the government.  Nigerians regard payment of tax as a means whereby government raises revenue on herself at the expense of their sweat.

It is good to note that no tax succeeds without the taxpayer’s co-operation.  Here, we can ask some thought-provoking questions such as: what makes taxation such a difficult issue?  Why do people feel cheated when it comes to tax?  Is government making judicious use of taxpayer’s money?  In view of these questions above, this study is going to be carried out to offer solution to them.

We shall also look at the following issues and offer recommendations.

1.       Problems affecting the successful operation of tax system in Nigeria.

2.       How to determine the Assessable income.

3.       Process of tax administration in Nigeria.

1.3     OBJECTIVE OF THE STUDY:

The general objective of the study is to assess the contribution of taxes towards the growth of the Enugu State Economy.

However, the specific objective of the study includes:

1.       To examine the relevance of taxation in Enugu State.

2.       To determine why people feel cheated when it comes to tax.

3.       To determine the extent government has been using revenue generated from tax.

4.       To examine how tax rate affects the rate of investment in the economy.

5.       To know general desirability of firms to invest as a result of tax incentive measures.

Generally, the work is done to find out if tax constitutes the bulk of government revenue and to erase the erroneous that it is an exploitation by government for their selfish interest.

1.4     SIGNIFICANCE OF THE STUDY:

One of the most frequently discussed issues in Nigeria is how to solve the economic hardship in the country and how to create an industrial base that can be guarantee self sustaining economic development.  Also one wonders why a country which is richly endowed with the necessary human and material resources and which the people pay tax has been turned a heavily indebted country.

The study will afford us the opportunity to know the roles taxation play in the Enugu State economy such roles includes:

1.       Taxation is a major source of revenue to the government.

2.       Revenue generated from tax enables government performs its functions effectively.

3.       Taxation acts as an instrument of fiscal policy.

4.       The impact of tax on small business in the state.

5.       The study will in addition reveal if there are other better sources of government funding.

1.5.1  SCOPE OF THE STUDY:

The scope of this study covers critical examinations on the impact of taxation on Enugu State economic development.  It will also analyse other related issues such as structure and administrative machinery of tax in Enugu State and their associated problems.  The essence of this digression is to possibly find out the obstacles if any, that hinder the effective collection and administration of tax in the State.