The Effect Of Tax Evasion On Revenue Generation
1.1 BACKGROUND TO THE STUDY
Tax revenue serves as a lifeblood of any government in power if not utilized surely leads to reduction of revenue generated by the government, according to Olasieyitan&Sankay (2012). Saratu (2015) stated that taxes constitute the principal source of government revenue, and effectiveness of any government largely depends on the ability of its citizens to voluntarily discharge their tax obligations without any coercion or harassment. Tax has been an important tool of government fiscal policy. A good tax system is said to be an instrument for regulating and stabilizing erected behaviors in an economy (Ezeoha and Ogamba, 2010 and Toby,1983). Eboziegbe (2007) assume that the act of tax evasion remained one of the most threats to revenue generating and the entire economy of the nation. Tax evasion is one of the most challenging practice in developing countries. Tax revenue can be used to finance rapid economic growth, generating employment, maintaining price level, exchange rates stability and balance of payment equilibrium. The decline in the price of oil in recent years has led to a decrease in the fund available for the distribution to the federal government and to the state government. The need for state and local government to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance. Aguolu (2004) however, state that taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derived from taxation, however, taxation is the most important source of revenue to the government, from the point of view of certainty and consistency of taxation. Aguolu (2014) further mentioned that taxation is hence the most important source of revenue to the government.
1.4. OBJECTIVES OF STUDY
The general objective of study is to examine the effect of tax evasion by informal sector on revenue generation in Nigeria. Therefore, other objectives are to;
·
determine the extent of effects of tax evasion on government revenue in Kwara state.
·
identify challenges encountered by tax administration among informal sector in Kwara state.
·
identify the motivating factors that encourage potential tax payers to avoid their tax obligation.
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Tax revenue serves as a lifeblood of any government in power if not utilized surely leads to reduction of revenue generated by the government, according to Olasieyitan&Sankay (2012). Saratu (2015) stated that taxes constitute the principal source of government revenue, and effectiveness of any government largely depends on the ability of its citizens to voluntarily discharge their tax obligations without any coercion or harassment. Tax has been an important tool of government fiscal policy. A good tax system is said to be an instrument for regulating and stabilizing erected behaviors in an economy (Ezeoha and Ogamba, 2010 and Toby,1983). Eboziegbe (2007) assume that the act of tax evasion remained one of the most threats to revenue generating and the entire economy of the nation. Tax evasion is one of the most challenging practice in developing countries. Tax revenue can be used to finance rapid economic growth, generating employment, maintaining price level, exchange rates stability and balance of payment equilibrium. The decline in the price of oil in recent years has led to a decrease in the fund available for the distribution to the federal government and to the state government. The need for state and local government to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance. Aguolu (2004) however, state that taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derived from taxation, however, taxation is the most important source of revenue to the government, from the point of view of certainty and consistency of taxation. Aguolu (2014) further mentioned that taxation is hence the most important source of revenue to the government.
1.4. OBJECTIVES OF STUDY
The general objective of study is to examine the effect of tax evasion by informal sector on revenue generation in Nigeria. Therefore, other objectives are to;
·
determine the extent of effects of tax evasion on government revenue in Kwara state.
·
identify challenges encountered by tax administration among informal sector in Kwara state.
·
identify the motivating factors that encourage potential tax payers to avoid their tax obligation.
Read more
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