TAXATION AS A MAJOR SOURCE OF GOVERNMENT FUNDING
CHAPTER ONE
INTRODUCTION
1.1. BACKGROUND OF THE STUDY
Taxation is a major instrument for the conduct of public policy. This is true for both developed and developing countries. Taxation is known to accomplish a number of objectives revenue generation for government, economic stabilization and income re-distribution. Taxation as an instrument of public policy is essentially concerned with the manipulation of financial operations of both the government anti private sectors with a view of furthering certain economic objectives. In Nigeria these economic objectives includes the attainment of appreciable level of full employment, avoidance of excessive inflation, achievement of satisfactory balance of payment position. Appreciable increase in the national income and a reduction of extreme inequality among the citizens, provision of other essential necessities of life like water, school building of bridges roads and others. The question now arises, How does the finding of these activities come about? The government can only discharge these duties by generating enough revenue to provide enough finance for the accomplishment of these tasks ahead and the Board of Internal Revenue is by law charged with the responsibility for assessing, collection and accounting of all taxes in Enugu State. The government to the individual and payable to the economic and social responsibilities define taxation as a compulsory levy. In Simon’s income tax (1852) Lord Maccnaghten quoted “ Income tax is a on income. Its not meant to be tax on anything else”. Dalton (1954:23) defined tax as a compulsory contribution imposed by a public authority irrespective of service rendered in return. Income tax law and practice by
Njokamma. CA. Defined income tax as a creative of statute. In interpreting its provisions. “ No equity, no intendment” or anything else should be implied. The clean terms of the law should be applied but no necessarily restricted against the revenue. Nevertheless tax is not the only sources of government revenue other sources include.
- Fines and fees
- Motor licensing fees
- Rent on government quotas
- Interest and depayments
- Dividends and Royalties on government
- Share holdings
- Miscellaneous
- State share of federal government disbursement.
- Loans and grants
- School fees
- Hospital fees
Revenue from government parastatals likes the water co- operation department. The private sector is not le out in the fund generation do their own fund comes inform of borrowing private savings etc The absence of well organized and locally controlled money markets for borrowing has faced private sectors in most developing countries especially Nigeria to rely primarily on fiscal measures to mobilize domestic monetary resources for fund generation. For instance if profits of taxation, the marginal efficiency of investment will decline and consequently a fall in investment is observed. On the other hand if profit of investment are increased through low tax rate the marginal efficiency of investment will in investment is observed.
