Personal Income Tax and Provisions of Education and Road Infrastructures in Lagos State, Nigeria

Abstract

Infrastructural provision has been the major point of concern to governments in all states of the federation in Nigeria. Government of Lagos State without exception has been facing serious challenges in provision of infrastructure to Lagosians. The state has been witnessing infrastructural deficit despite huge revenues accruing to the government monthly and this is actually affecting the standard of living of the citizens. Since the advent of civilian government in the state, internally generated revenue has been on the increase, yet the state is still witnessing many infrastructural deficits. This study examined the effect of personal income tax revenue on infrastructural provisions in Lagos state with respect to Education and Road Infrastructures. The study adopted ex-post facto research design. The study covered Personal Income Tax and Infrastructures provisions on Education and Road by the government of Lagos State from 1997 to 2018. Data were obtained from Lagos State Internal Revenue Services (LIRS), Lagos State Ministry of budget and planning and Lagos State Ministry of Finance. The validity of data was premised on the statutory audit of the financial statements by the office of the Auditor General of Lagos State. Data were analyzed using descriptive and inferential statistics. The study found that Personal Income Tax has significant effect on infrastructural provision by the government of the state. On IFED, Adjusted R2 = 0.372, Prob(F-stat) = 4.753, at 5% significance level [β = -0.815; P – value = 0.036]. Also on IFDR, Adjusted R2 = 0.315, F-stat = 3.915, Prob(F-stat) = 0.028), at 5% significance level [β = 0.352; P – value = 0.154]. The study concluded that Personal income tax has impacts that are significant on infrastructural provisions of the state. The study recommended that, government should make it a top priority, the provisions of infrastructures on education to guarantee quality education of the pupils in the state. Also, government should embark on massive road network construction with proper maintenance of the existing ones so as to avoid frequent occurrence of carnage on the roads and government should make more effort to widen the tax net especially among the rural dwellers so that more revenues can be collected as personal income tax in the state.