Abstract:In this chapter, we examine the relationship between taxation and economic growth in a resource rich country, using Nigeria as a case study. We explore the linkages between availability of higher resource revenue and lower taxation effort of other revenue categories and the effects of these on growth. Ordinary least square (OLS) estimation technique is employed in estimating the specified model. Also, descriptive analysis is carried out regarding tax trends and tax efforts in Nigeria to determine the effective… Show more
“…Tax has been given alternative definitions by different individuals.For instance, theInstitute of Chartered Accountants of Nigeria [ICAN](2009) defines tax as an obligatory contribution imposed on the citizens by the government in order to provide social services and to ensure the citizens" social and economic welfare . The National Tax Policy for Nigeria considers tax as a monetary charge on a person"s or entity"s income, property or transaction and is usually collected by a defined authority at Federal, State or local level.For Obatola (2013), tax is an obligatory levy imposed by government or any recognized authority of the state on the property, goods, services and people living in an area for revenue generation to offset the expenses incurred by the government or the authority on behalf of the citizens.Some others ragard tax as a fiscal policy tool employed by government to redistribute wealth or to achieveother macroeconomic objectives; they treat tax as a fiscal tool used for stabilizing an economy. As many as the definitions above and other similar definitions may be, there exists some common basic elements in them.For instance,they all consider tax as a compulsory levy imposed by the government on its citizens and business entities to raise fund utilized to finance government operations.…”
Section: Review Of Related Literature 21conceptual and Contextual Review 211 The Concept Of Taxmentioning
This study has the objective of identifying the challenges militating against the growth of tax-to-GDP ratiosof sub-Sahara African countries,their causes and remedies. Nigeria is used as a case studywhile the content analysis research approach is adopted.Reports from some apex international monetaryauthorities indicate that, while a typical advanced country has a tax-to-GDP ratio of around 40% , manysub-Sahara African countries maintain tax-to-GDP ratios that fall below the 15% threshold..Though the tax structures in many of thosecountries have improved in recent times, growth in their domestic revenue mobilization has been generally sluggish.Many of them persistently experience significanttax-gaps,overwhelming incerase in external debt-to-GDP ratio and budget deficits -a clear manifestationthat their tax policiesrequire serious overhauling. The paper reveals that the low-rated countries are characterized by Gulf countries while the high rated ones are dominated by European countries and that, even as one the largest economies in Africa, Nigeria is one of the sub-Sahara African countries having the lowest tax-to-GDP ratios. It suggests that, in line with best practices, thesub-Sahara African countries should put in place clear political mandates to tackle low levels of tax payment and a simpler tax system with a restricted number of rates and exemptions.
“…Tax has been given alternative definitions by different individuals.For instance, theInstitute of Chartered Accountants of Nigeria [ICAN](2009) defines tax as an obligatory contribution imposed on the citizens by the government in order to provide social services and to ensure the citizens" social and economic welfare . The National Tax Policy for Nigeria considers tax as a monetary charge on a person"s or entity"s income, property or transaction and is usually collected by a defined authority at Federal, State or local level.For Obatola (2013), tax is an obligatory levy imposed by government or any recognized authority of the state on the property, goods, services and people living in an area for revenue generation to offset the expenses incurred by the government or the authority on behalf of the citizens.Some others ragard tax as a fiscal policy tool employed by government to redistribute wealth or to achieveother macroeconomic objectives; they treat tax as a fiscal tool used for stabilizing an economy. As many as the definitions above and other similar definitions may be, there exists some common basic elements in them.For instance,they all consider tax as a compulsory levy imposed by the government on its citizens and business entities to raise fund utilized to finance government operations.…”
Section: Review Of Related Literature 21conceptual and Contextual Review 211 The Concept Of Taxmentioning
This study has the objective of identifying the challenges militating against the growth of tax-to-GDP ratiosof sub-Sahara African countries,their causes and remedies. Nigeria is used as a case studywhile the content analysis research approach is adopted.Reports from some apex international monetaryauthorities indicate that, while a typical advanced country has a tax-to-GDP ratio of around 40% , manysub-Sahara African countries maintain tax-to-GDP ratios that fall below the 15% threshold..Though the tax structures in many of thosecountries have improved in recent times, growth in their domestic revenue mobilization has been generally sluggish.Many of them persistently experience significanttax-gaps,overwhelming incerase in external debt-to-GDP ratio and budget deficits -a clear manifestationthat their tax policiesrequire serious overhauling. The paper reveals that the low-rated countries are characterized by Gulf countries while the high rated ones are dominated by European countries and that, even as one the largest economies in Africa, Nigeria is one of the sub-Sahara African countries having the lowest tax-to-GDP ratios. It suggests that, in line with best practices, thesub-Sahara African countries should put in place clear political mandates to tackle low levels of tax payment and a simpler tax system with a restricted number of rates and exemptions.
“…The tax on corporate profit yielded nine percent of the revenue for the Nigerian government in 2017, a revenue source that has been trending downwards (Odhiambo & Olushola, 2018). The share of revenue coming from the corporate income tax dropped from one-third of the total in the early 1950s to less than one-tenth in 2017.…”
This study investigates the effect of accounting conservatism on the corporate tax avoidance of listed non-financial firms in Nigeria. This study computes corporate tax avoidance based on the cash effective tax rate (CETR), GAAP effective tax rate (GETR) and book taxdifference (BTD). Accounting conservatism was measured using negative accruals. The study employed an ex-post factor researchdesign utilizing unbalanced panel data. The study covered 48 listed non-financial firms during the period between 2014 and 2020. Three regression models were developed and utilized in the study. The study has revealed that accounting conservatism has a negative and significant effect on both the GETR and BTD. It is recommended that the Financial Reporting Council of Nigeria should encourage promulgation of standards which improve conservatism in financial reporting, as it has been empirically proven to reduce tax avoidance practices by non-financial firms in Nigeria.
“…Schneider (2020) and De Mooij et al (2018) stressed that preference should be given to domestic revenue mobilization in developing countries because there exists tax revenue potential. This untapped tax potential results in a low tax to GDP ratio in most developing countries (Bogetić et al, 2022; Odhiambo & Olushola, 2018).…”
The question of how much of the potential tax revenue is actually obtained remains very critical in Ghana’s efforts to improve domestic revenue mobilization. This paper computes and examines tax gap and compliance burden among micro and small businesses which constitute more than 90% of Ghana’s informal economy. Using data on 485 businesses in Ghana, the study finds that while some businesses underpay their taxes, surprisingly others actually pay more than expected. The average tax gap is computed to be about GHC 109.2 (US$19.2). Small businesses are associated with a higher tax gap of 24.9% compared to their micro counterparts. Moreover, we find that as compliance burden increases, the tax gap also increases, albeit significant variation in the effect of compliance burden on tax gap across regions and different tax handles. JEL Classification: H25, H26, H27, H32
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