Taxation as an Alternative to Dwindling Oil Revenue in Nigeria
1.1 BACKGROUND TO THE STUDY
Nigeria is currently not enjoying the best of times. The country is presently suffering the adverse effects of the dwindling revenue from the crude oil and gas sector, which today accounts for about 95 percent of its revenue. The fallen price of crude at the world market has orchestrated the devaluation of the Naira and increased inflation. The manufacturing and other productive sectors are the worst hit because, as the country is highly imports dependent, they find it extremely difficult to bring in raw materials, especially now that the central bank has closed its auction market window. The dollar is expensive to procure at the interbank window and the black market. More worrisome was the need for government to review its 2015 fiscal policy by slashing the benchmark of oil, in the 2015 budget from $120 to $75, and now to $53. The implication of the budget review may not manifest now (Vanguard, 2015). It may result in a scale down in the capital and recurrent spending. That alone can translate to a reduction in money in circulation.
Looking at what this portends for the nation should this trend continue unchecked, experts have called on the government not to fold its hands, but to explore other potential sources of revenue through the diversification of the nation’s economy (Dike, 2015). While some urged the government to redirect its focus to the agriculture sector, others asked the government to explore the numerous mineral resources for an alternative source of income. Yet, few others said Nigeria, like many other advanced countries, can rely on tax revenue for survival. However, this study is examining taxation as an alternative to the dwindling oil revenue in Nigeria.
Taxation is a means of generating revenue by the government to provide social services to the people (Okauru, 2014). Taxation all over the world is a function of reciprocity (Okauru, 2014). While the government owes it as a duty to empower the citizens by providing jobs, infrastructure, and other development projects, the citizens are usually expected to reciprocate by performing their obligations, the principal of which is the payment of taxes (Okauru, 2014). Revenue generated from citizens’ taxes is usually recycled by the state (government) in the area of provision of basic amenities such as water, roads, electricity, schools, among others (Okauru, 2014).
The new reality considering the present situation in Nigeria is that governments at all levels have to raise the bar by embarking on an aggressive tax drive, considering the dwindling revenue profile arising from the fall in oil prices (Dike, 2015). Therefore, Nigerians have to come to terms with the present reality. Taxes come in various forms, ranging from personal income tax, value added tax, and companies income tax, among others. To bridge the yawning gap in revenue accruals, there arose the need for government to embark on aggressive taxation which is the most recognized and plausible means of generating revenue for social services across the globe.
The Vanguard of December 15th, 2015 indicates that revenue accruable from value added tax from January to June 2015 came to about N376 billion, but this figure has doubled from July till December. The reason of course can be attributed to the Federal Government’s commitment towards diversification of revenue sources. With aggressive tax laws and enforcement, there is no doubt that Nigeria can withstand the shocks of the uncertainties in the oil market. What this means is that there will be more revenue available for the government to cater to the needs of the Nigerian people. This is the best time in our history for Nigerians to embrace the tax system. By this, Nigerians can be involved in the contributory social contract by paying their taxes regularly.
1.2 STATEMENT OF THE PROBLEM
According to reports that Nigeria has lost its position as the lead supplier of oil to the United States of America, there is a need for the Nigerian government to diversify its revenue base through taxation as the alternative means of revenue generation to keep fit in the face of dwindling revenue from oil. However, there is a need to harmonize the tax system and ensure collaboration between government tax agencies and professional tax institutes and consultants. The government needs to practically shift attention from oil to the development of other revenue sources especially non-oil exports to support internally generating revenue from taxes. The reliability of the institutional framework for tax processing and enforcement must not be questionable to ensure sustainable development through taxation. However, this study is examining taxation as an alternative to dwindling oil revenue in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
1. To examine taxation as an alternative to dwindling oil revenue in Nigeria.
2. To examine the effect of taxation on the taxation economy and development in general.
3. To examine the effectiveness of the institutional framework for the collection and enforcement of tax duties.
1.4 RESEARCH QUESTIONS
1. Can taxation serve as an alternative to dwindling oil revenue in Nigeria?
2. What is the effect of taxation on the taxation economy and development in general?
3. What is the effectiveness of the institutional framework for the collection and enforcement of tax duties?
HO: Taxation cannot serve as an alternative to dwindling oil revenue in Nigeria.
HA: Taxation serves as an alternative to dwindling oil revenue in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
The results from this study will educate the stakeholders saddled with the management of Nigeria’s economy and the general public on how huge revenue capable of replacing oil revenue can be generated through taxation and its effect on national development.
Findings from this study will also educate the government of Nigeria and the general public on the effectiveness of the institutional framework saddled with the responsibility of collection and enforcement of tax duties.
This research will be a contribution to the body of literature in the area of the effect of personality traits on students’ academic performance, thereby constituting the empirical literature for future research in the subject area.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study will cover the process of taxation in Nigeria. It will also cover the activities of the tax collection and enforcement officers.
LIMITATION OF STUDY
Financial constraint- Insufficient funding tends to impede the efficiency of the researcher in sourcing the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted to the research work.
Dike M.A.C (2015): An overview of the Nigerian Tax System and the Taxes payable by individuals and Corporate Bodies.
Okauru Ifueko Omoigui (2014): “Tax Incentives for Foreign Investors in Nigeria” at The Nigeria Investors Business Forum in Berne Switzerland Vanguard, 15th December 2015
Copyright © 2023 Author(s) retain the copyright of this article.
This article is published under the terms of the Creative Commons Attribution License 4.0
If you like this article, see others like it:
- The Impact of Technology Changes in the Accounting Profession
- The Impact of Accounting Systems for Improving the Performance of Private Businesses in Imo State
- Government Auditing of the National Home Grown School Feeding Programme (NHGSFP) and Its Impact on the Programme’s Efficiency and Effectiveness in Katsina
- A Critical Investigation of Financial Literacy and Its Impact on Small Scale Businesses Performance in Portharcourt, Rivers State
- An Evaluation of Capital Market Reform and Its Impact on the Performance of the Nigerian Stock Exchange