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THE IMPACT OF TAX EVASION AND AVOIDANCE ON REVENUE GENERATION IN NIGERIA”, A STUDY OF DELTA STATE.
1.1 BACKGROUND OF THE STUDY
The history of revenue generation of government is as old as the existence of government. Government generates revenue not only for the purpose of taking care of the cost administration, defense, security, but for the provision of various other social and economic amenities.
There are several means by which government can generate revenue. Among which is taxation which is very paramount in such a way that it can be used further to influence economic behavior.
Nevertheless, two principles have been posited about the collection of taxes. First is the ability to pay principles which goes with the notation that the higher the income the higher the taxes to be paid. Second is the benefit principle and it has to do with paying from what you get (Gbosi 1980).
In ancient days taxes were paid in kind, that was before the advent of money and after which it was paid both in cash and kind base on the level of complexity of the society.
Furthermore, several reports have shown that government lose huge sum of money that would have been revenue due to individual and corporate bodies evading tax not only that but giving false information in order to reduce their tax liabilities.
1.2 STATEMENT OF PROBLEM
In this report the impact of tax evasion and avoidance on the revenue generation of delta state would be investigated on the impact of tax evasion and avoidance will enable effective and efficient administration of tax and also enable the ascertainment of the likely problem encountered in the process of administering tax. It will also go a long way in meeting the revenue needs of government.
Apart from the statutory allocation from the federal government, component governments needs to generate more revenue more revenue (internally generate revenue) to meet their obligations to the citizen. This is more visible in the area of taxation.
Tax evasion is fast becoming a culture to the people of delta state. And this has posed a problem on the amount of revenue expected and received by the state government.
1.3 THE OBJECTIVE OF THE STUDY
The objective of this study is to ascertain how the government can effectively get a remedy to the problem that will be incurred in the process of tax administration especially tax evasion in order to boost its internally generate revenue. This work will seek to investigate the various factors that are responsible for tax evasion and avoidance in the state.
Most importantly, it aims at ascertaining the degree of impact that tax evasion and avoidance have on revenue generation of the state. It is also the intention of the researcher to suggest more ways of curbing tax evasion of the state.
1.4 SIGNIFICANCE OF THE STUDY
This work will be relevant to individuals in the society both tax payers and potentials ones. Secondly,
It will enable the government in fashioning the state. Similarly, to tax officials the suggestion to be made out of this work will assist in improving the techniques of generating revenue through taxation. Finally, to prospective students who want to research further on similar topics, this research will serve as a good base.
1.5 RESEARCH QUESTIONS
In course of this study, the following research questions were raised in by the researcher:
- Is the displarity in the estimated and the actual tax revenue caused by tax evasion other than other factors?
- To what extent have tax evasion and avoidance cause the difference in actual tax revenue and estimated tax revenue in the state.
- What are the cause of tax evasion and avoidance in the state? If tax evasion can be controlled.
- Is ineffective tax administration system the major cause of tax evasion?
- How can the state government improve its tax administration machinery to minimize the increasing scandal of tax evasion?
- To what extent has the scandal of tax evasion impeded the actualization of the objective of the objective of revenue of the state government?
1.6 RESEARCH HYPOTHESIS
Having stated the research questions, the researchers hereby state the following hypothesis.
H0: Tax evasion and avoidance have no significant impact on revenue generation in the state.
H1: Tax evasion and avoidance have a significant impact on revenue generation in the state.
H0: Ineffective tax administration is not the major cause of tax evasion in the state.
H1: Ineffective tax administration is the major cause of tax evasion in the tax.
1.7 SCOPE OF THE STUDY
The study covered only delta state and a period of four years that is 2008-2011. It takes a view on the .tax evasion.
1.8 LIMITATION OF THE STUDY
A study of the nature cannot be carry out without difficulties backs in the process. An important constraint is the time constraint. The research work was carried out simultaneously with other class work and examination and the research was completed complied within a very short period of less than a year.
Another constraint is finance: research of this kind involves traveling to different local government area to search for adequate date (raw materials). Lastly, difficulties in securing relevant data because of the refusal of some civil servant and business organizations in the state to answer the question in the questionnaire of the board of internal revenue to provide the need secondary dada in time.