Banking & Finance

Taxation as a Major Source of Government Funds and the Impact on Management Decision Making

Taxation as a Major Source of Government Funds and the Impact on Management Decision Making

(A Case Study of Enugu State Board of Internal Revenue)


This research work is aimed at evaluating taxation as a major source of government funds and the impact on management decision making with particular reference to the Enugu state board of internal revenue, this work examined the following: The impact of taxation on management decision making. To evaluate the role of taxation in the development of Nigeria, Enugu state in particular. The various problems associated with taxation in Enugu state. Data for the study was sourced from two main sources which include Primary and Secondary sources of data collection. Primary data: Questionnaires and oral interviews were used to collect information from the respondents. Secondary data: Journals, magazines, and other relevant materials relating to the area of my investigation will be reviewed. An extensive literature review was carried out on direct literature and indirect literature on books, journals, and past works. The research instrument used in this study includes an oral interview and questionnaire. The questionnaire is structured to contain both close and open-ended questions. Simple tables, pie charts, and percentages were used in the treatment of data while chi-square was used in the research work. The researcher found out that taxation has a significant impact on management decision-making. Taxation has so many roles to play in the development of Nigeria, the Enugu state in particular. The researcher equally found out that there are so many problems associated with taxation in Enugu state. Based on the findings I recommend that The state government should establish revenue counts or open up more customary areas recommended by the board of internal revenue tax office should be established in strategic areas for easy access to taxpayers. Special allowances and incentives should be provided to staff of the board of internal revenue staff like hazard allowance or any such allowance.


Title page

Approval page/Certification




Table of contents


1.1   Background of study

1.2   Statement of the problem

1.3   Objectives or purpose of the study

1.4   Scope of the study

1.5   Research questions

1.6   Hypothesis

1.7   Significance of the study



3.1      Research design

3.2      Area of the study

3.3   Sample and sample procedure


4.1      Summary of results / findings


5.1      Discussion  of results

5.2      Conclusion

5.3      Recommendations






Taxation is a major instrument for the conduct of both developed and developing countries. Taxation is known to accomplish several objectives revenue generation for government, economic stabilization, and income redistribution. Taxation as an instrument of public policy is essentially concerned with the manipulation of financial operations of both the government and private sectors with a view of furthering certain economic objective.

In Nigeria, these economic objectives include the attainment of an appreciable level of full employment, avoidance of excessive inflation, and achievement of a satisfactory balance of payment position. An appreciable increase in the national income and a reduction of extreme inequality among the citizens, provision of other necessities of life like water, school building of bridges roads, and others.

The question now arises, how does the finding of these activities come about?

The government can only discharge these duties by generating enough revenue to provide enough finance for the accomplishment of these tasks ahead and the board of internal revenue is by law charged with the responsibility for assessing, collecting, and accounting for all taxes in Enugu state.

The government to the individual and payable to the economic and social responsibilities define taxation as a compulsory levy. In Simon’s income tax (1852)

Lord Maccnaghten quoted “income tax is a on income. It’s not meant to be a tax on anything else”. Dalton (1954:23) defined tax as a compulsory contribution imposed by a public authority irrespective of service rendered in return. Income tax law and practice by Njokamma. C.A. defined income tax as a creative of status. In interpreting its provisions. “No equity, no intendment” or anything else should be implied. The clean terms of the law should be applied but not necessarily restricted against the revenue.

Nevertheless, tax is not the only source of government revenue other sources include.

Fines and fees

Motor licensing fees

Interest and repayments

Dividends and royalties on government



State share of federal government disbursement loans and grants

School fees

Hospital fees

Revenue from government parastatals like the water cooperation department.

The private sector is not left out in the fund generation do their fund comes to inform of borrowing private savings etc.

The absence of well-organized and locally controlled money in most markets for borrowing has faced private sectors in most developing countries especially Nigeria to rely primarily on fiscal measures to mobilize domestic monetary resources for revenue generation. For instance, if profits of taxation, the marginal efficiency of investment will decline and consequently a fall in investment is observed the other hand if the profit of investment is increased through a low tax rate the marginal efficiency of investment will in investment is observed.

However Duke man (1962 p. 462) said that an effective tax system that encourages investment, has to some extent be based on high rates, a fact peculiar with the paradox of investment stimulating taxation, and as well discrimination, so long as it is significantly qualitative and psychologically substantial. This suggestion may not augur well for investment activity where retained profits and savings form the bank of capital formation.

Realizing the importance to finance as the train wires of economic growth the government initiates financial policies through annual budget extension services for these business enterprises and also through various government financial enterprises.

We are now convinced that of all these source of revenue by government that contributes the largest proportion. With charges in this consideration above attention has been focused on the fiscal policy best suited to the economic development of the country. As part of the search for desirable fiscal policies high consideration is placed on the value of goods and services payable by the final consumers. The collection of this tax accountable to the federal government by VAT is collected from.

Nevertheless the implementation of various government measure the their effects are most times, at variance with the objective of government. Some of the revenue collection agencies are either ill-equipped to carry out their functions effectively or equipped with personal of dubious character who trust laudable objectives of the government. Most taxpayers don’t pay willingly, some take laws into their hands to either evade or avoid tax while others collide with some tax officials as well as employ the services of tax experts to explore the tax loophole. As a result of such ill activities toward taxation, there is always a shortfall in the government’s projected revenue.

Given the importance of taxation as a principal source o government revenue as well as a powerful instrument in the conduct of public policies. This study is aimed at exploring all avenues of tax collection in Enugu state and the performance of the Enugu state board of internal revenue to keep the flag flying in support of the topic the study that taxation is a major source of government revenue.


Tax constitutes the greater percentage of internally generated revenue in Enugu state and a well the major source of revenue for the government financing its activities.

Tax however has its fundamental problems in the area of administration and management.

There is a deficit in planning, control, and adequate information flow of tax collection generally. The government’s financial policy and objectives are to ensure adequate revenue and a conducive environment for the people’s satisfaction through progressive taxation and other fiscal measures designed to end the rapid growth and development of the society for the benefit of the citizenry.

It is, therefore, necessary that these avenues of fun are solidified. But on the other way the implementation of the government taxation policy and the realization of the taxation goal most a times run at variance with the policy outlined in the annual as well as the tax laws provision. Many individuals, as well as organizations, see taxation policy as being harsh and unfavorable.  They argue that few enterprises especially large company continues to benefit from government support through grants, subsidies, and another tax incentive. Others find the policies unbearable a result any little opportunity by such people to evade or avoid tax is highly utilized.

The results of all these tax evasions and avoidance are that less revenue than envisaged is collected through tax by the government and thereby less social amenities than proposed are carried out.

This problem will be solved as soon as efficient machinery is set in motion for effective administration and review of state tax laws if made or amended.


This research work titled “ Taxation as a major source of government funds and the impact on management decision making” with particular reference to the Enugu state board of internal revenue is aimed at:

1.  Examining the impact of taxation on management decision-making.

2.  To evaluate the role of taxation in the development of Nigeria, Enugu state in particular.

3.  Determining the various problems associated with taxation in Enugu state.

4.  And also proffer possible solutions to the problems identified.

1.4 Research Questions

The researcher formulated the following research question:

1.  What are the impacts of taxation on management decision-making?

2.  What are the roles of taxation in the development of Nigeria, Enugu state in particular?

3.  Is there any problem associated with taxation in Enugu state?

4.  What are the possible ways of solving the problems of taxation in Enugu state?


For the researcher to carry out an extensive study on the subject matter, the following research hypothesis was formulated:

Ho: Taxation does not have any impact on management decision-making.

H1: Taxation has a significant impact on management decision-making.

Ho: taxation has not played any role in the development of Nigeria, Enugu state in particular.

H1: Taxation has played so many roles in the development of Nigeria, the Enugu state in particular.


This research work will be of immense help to:

The Researcher: it will help the researcher to know more about the importance of Taxation as a major source of government funds and the impact on management decision making.

It will also be of great importance to stakeholders as it will enrich their knowledge on the benefits and usefulness of taxpaying by individuals and organizations.

This study will be of great importance to the country of Nigeria as it will help the policymakers to prorogate laws that will guide the collection and taxation in Nigeria as a major source of revenue for the government.

1.7 Scope and Limitations of the Study

The study shall focus on Taxation as a major source of government funds and the impact on management decision making with specific reference to Enugu state board of internal revenue.

The researcher in carrying out this study encountered numerous problems, which includes:

FUND – This included a lack of enough funds to move around and visit the organizations, the researcher has to visit the organizations more than two times, and the researcher equally needed enough money to source material which constitutes an impediment. The high cost of transportation in the city due to long-distance also imposed its limitation on the researcher.

LACK OF RESEARCH MATERIALS: lack of research materials was also one of the problems faced by the researcher in the cause of this research work.

RESPONSE OF THE RESPONDENTS: Another constraint to the researcher is that some of the respondents found it difficult to express their views about the subject matter.

From the above points, the researcher tried his best to bring out a detailed study on taxation as a major source of government funds and the impact on management decision making but the above constraints have limited the researcher to only the Enugu state board of internal revenue.


Some of the terms used during this research, which have special application to study are defined:

Revenue: This is the gross receipt or receivable of a governmental unit derived from taxes, customs, and another main source of government revenue but excluding appropriation and allotment from the consolidated revenue fund (CRF)

Tax: The oxford advanced learners dictionary of current EnglishDefines tax as “(sum of money purchase etc) to the government for public purpose”. Tax can also be defined as a compulsory levy by natural or cooperative, payable to the government for the benefit of the citizenry.

Tax Assessment: the calculation of the tax paid by an individual.

Zonal Tax Authorities: these are senior tax officers charged with assessing and collecting taxes within their zone.

Tax Law: Theses are laws made by the government prone to review as well giving the guidelines and draft on how and paid. These laws are standard guiding all the tax offices in the federation. Examples are ITMA 1961 income tax management act 1991 etc. income management act (ITMA). These are law committees guiding the collection and payment of tax in Nigeria.

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