THE ROLE OF TAXATION IN AN ECONOMIC DEVELOPMENT AND PLANNING (A CASE STUDY OF OGBOMOSHO NORTH LOCAL GOVERNMENT)

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Taxation comes from the words “LAT TAX RE” which means “to estimate”. It is a system of compulsory contribution usually in monetary term charged by the government of any country or its agencies against the income or wealth of a co-operative body, individuals or partnership for the provision of amenities.

Taxes are the most important sources of government revenue. According to K. A. Ishola (2002) he defines tax as a compulsory levy imposed by the public authority on income, consumption and production of goods and services such levies are, for example, made on personal income (consisting of salaries, business profit, interest, income dividend, royalties). Company profit, petroleum profit, capital gain and capital transformers.

The government has certain functions to perform for the benefits of those its governs. The scope of the economic orientation of the members of a particular society of a giver point in time, their need, aspiration and their willingness or ability to pay tax. This among traditional function of the government is the provision of collective of public goods i.e. goods that cannot be divided among the separate members of the society, but which must be used for the benefit of all, such goods include the maintenance of land order, defense against external aggressiveness and regulation of trade business to ensure social economic justice. A society which deserves to accomplish more benefits through the activities of the government, citizen of a country must be willing to pay more tax to enable the government to meet those objectives and if necessary assume the self discipline needed to create the desire environment for realization of such objectives.

1.2     STATEMENT OF THE RESEARCH PROBLEM

The collection of personal income tax individuals which is the responsibility of the state government and since taxation is the easiest and flexible source of revenue for those government in an area which every government should show a lot of concern. The researcher attempts to embarks on the role of taxation in an economic development and planning (A case study of Ogbomosho North Local Government) the following are the major researcher problems;

• The historical background of the taxation
• The reason for taxation.
• The various methods of collecting tax
• The effect of taxation economic development and planning
• The examination of likely problems of administration and collection of tax in Ogbomosho north local government.
• The expatiation of the problem associate with the judicious use of public funds etc.

1.3     OBJECTIVE OF THE STUDY

It is apparent that taxation forms the compulsory levy imposed by the government authority on the income of individual firms and co-operate bodies. The objectives of the study are;

1. To examine the historical background of taxation.
2. To identify, constitute factors impending effectiveness and efficiency generation of revenue in Ogbomosho north local government.

• To determine the economic development and planning

1. Discuss various method of collecting tax
2. To enumerate the effect of taxation in economic development.
3. To critically examine the likely problem of administration and collection in Ogbomosho north local government.

RESEARCH HYPOTHESIS

H₀: The role of taxation helps in economic development and planning.

H_i: The role of taxation does not help in economic development and planning.

H₀: Taxation is promoting economic activities of a country.

H_i:  Taxation is not promoting economic activities of a country.

H₀: Taxation does not play a major role in the economic development and planning.

H_i: Taxation play a major role in the economic development and planning.

1.4     SIGNIFICANCE OF THE STUDY

This research is carried out mainly to identify the factors impending effective and efficient generation of revenue, economic development and planning in Ogbomosho North Local Government and also the judicious use of public funds. The research will identify possible solution of taken seriously will enhance state economic and development. The improve economic could be used as a model for other western local government who share similar problem, social, political and cultural background. This may eventually lead to an improve national economy and social, political stability in the state.

1.5     RESEARCH QUESTION

The focus of this study by the researcher is to identify the role of taxation in an economic development and planning. Hence, in the course of the study, effort has made to find solution to the following research question;

1. What is the historical background of taxation in Ogbomosho North Local Government?
2. What is the impact of taxation in economic development and planning?
3. What is the background of economic development of Ogbomosho North Local Government?
4. What are the various methods adopted in the collection of tax in Ogbomosho North Local Government?
5. What are the contributions of tax to the current revenue of government?
6. What are the problems of administration and collection of tax in Ogbomosho North Local Government?
7. What are the problems associated with the judicious use of public funds etc?

1.6     SCOPE OF THE STUDY

The research is an account for economic development and planning in Ogbomosho as a whole. This research endeavour to identify factors and forces militating against effective economical development and hence, economical growth in the local government. Possible solution aimed of bringing about better economic development and growth using tax generated revenue are suggested.

1.7     LIMITATION OF THE STUDY

The researcher intends to carry out research on the rule of taxation in economic development and planning using Ogbomosho North Local Government as a case study.

However, the research work has been constrain as to time, lack of recent and adequate materials, unwillingness of the respond and the case study to give true replies lack of co-operative of the case study. However, effort has been made to ensure that the above limitation did not hinder effective completion and quality of the research work.

1.8     STUDY PLAN

The research work has been divided into five chapters for every presentation of the facts and figure gathered.

Chapter one will contain the background of the study, significance of the study, research question, research hypothesis, scope of the study and limitation and definition of the key term and plan of the study.

Chapter two treated past and current literature review, which include historical background of taxation, economic development planning and growth, principle and canon of a good tax system, tax classification, incidence of tax and type of tax collected by Ogbomosho North Local Government.

Chapter three highlighted research methodology and a case study effort on the topic which include brief historical of the local government, background of economic development in Ogbomosho North Local Government, general trend in tax revenue and contribution to the current revenue and contribution to the revenue of government.

Chapter four discusses the presentation and data analysis which include brief introduction of the chapter presentation and analysis of data according to research question, problem of tax administration and collection in Ogbomosho North Local Government and the problem associated with the judicious use of public funds.

Finally chapter five through light on summary, conclusion and recommendations.

1.9     DEFINITION OF KEY TERM.

In the course of reading the research work, the reader will come across some terms which will be explained below;

1. Tax Evasion: This is deliberately refusal to pay tax, by tax payer and it is done by their refusal to fill income tax forms.
2. The Avoidance: This is an attempt to lowe the ability by tax payer.

• Exercise duties: These are tax imposed on specific goods produced and consumed in the country imposing the tax.

1. Value Added Tax (VAT): This is a tax levied on goods and services at each production.
2. Purchase tax: These are taxes levied on specific income assess on the bases of the value of the goods.
3. Progressive Tax: This is a situation which increase as income of the tax payers increase.

• Tariff: These are taxes levied on imported goods and services.

Related Project Topics :