The Impact of Tax Revenue on Nigerian Economy : Case of Federal Board of Inland Revenue

Abstract

In recent time, the impact of paying tax is not felt by payees in Nigeria and indeed has put them in doubt and confusion as to the use of the fund by the relevant government in the development of the economy. This uncalled for practices have definitely made some Nigerians want to avoid and evade tax. The study focused on the impact of tax revenue on Nigeria economy. Descriptive survey design was adopted and simple random sampling technique was used in the selection of the sample size. 100 copies of questionnaires were administered to workers of the Federal Board of Inland Revenue (FBIR), Lagos, Nigeria. 75 questionnaires were retrieved and found usable for the study hence, giving a 75% response rate. A pilot study was conducted and this gave a reliability value of 0.78 which according to Nunnally (1978) is reliable enough to measure the research construct. Four Hypotheses were formulated and tested using Chi-square statistical tool of analysis. The findings show that tax revenue significantly impact on Federal Government Budget implementation in Nigeria, Tax administrative system significantly affected the revenue generated in Nigeria, Tax evasion significantly affected government revenue in Nigeria, and Lack of training on the part of tax officers significantly affected the generation of government revenue in Nigeria. It was recommended that Notice of tax returns at the beginning of every financial year should be supported with handbills and poster written in local languages such as Yoruba, Hausa, Igbo and other languages as this will enable illiterates perform their civil responsibilities; Tax payment should meet convenience of the tax-payers; an advance payment of tax should be encouraged and estimated by the tax-payer himself, based on the tax payable for the previous year or on 80% of tax payable for the preceding year. The balance of tax is payable when the final assessment has been paid within one month of issue of the notice of assessment. It further recommended that the state should set up its own revenue courts. The Federal Government has set that ball rolling by setting up a federal revenue court to look into cases of tax avoidance and evasion. The jurisdiction of these courts should be extended to states to ensure prompt prosecution of tax evaders.