TABLE OF CONTENTS
Title page i
Approval Page ii
Dedication iii
Acknowledgement iv
Abstract v
Table of Contents vi
CHAPTER ONE:
INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 5
1.4 Research Questions 5
1.5 Statement of Hypothesis 6
1.6 Significance of the Study 6
1.7 Scope of the Study 7
CHAPTER TWO: LITERATURE
REVIEW
2.0. Conceptual Framework 8
2.1.2 Concept of Internal Revenue Generation 10
2.1.3. Approaches to Internal Revenue Generation in Local
Governments 11
2.1.4. Problems of Internal Revenue
Generation in Local Governments 16
2.1.5. Impact of Internal Revenue on Local Government
Development 21
2.1.6
Meaning and Nature of Economic Development and Real Gross Domestic Product 23
2.1.7
Means of Government Revenue 24
2.1.8
Major Sources of Revenue to the Governments 25
2.1.9 Strategies for expanding IGR in Niger State 27
2.1.10 Tax as a
major source of revenue to the government 30
2.1.11 Characteristics
of a Good Tax System
30
2.1.12 Importance of Taxation for Economic Development 33
2.1.13 Economic Effect of Taxation
35
2.2. Theoretical Framework 37
2.8
Empirical Review 39
CHAPTER THREE: RESEARCH
METHODOLOGY
3.1. Design of the study 44
3.2. Sources and
Instrument of Data Collection 44
3.3. Research
Population and Sample Size 44
3.4. Techniques of
Data Analysis and Justification 45
CHAPTER FOUR: DATA
PRESENTATION AND ANALYSIS
4.1 Data
Presentation and Analysis 47
4.2 Test of
Hypothesis 47
4.3 Summary of Major
Findings
CHAPTERFIVE: SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary 51
5.2 Conclusions 52
5.3 Recommendation 52
Biography 54
Appendixes 59
CHAPTER ONE
INTRODUCTION
1.1 Background of The Study
Internally
Generated Revenue (IGR) denotes the revenue that the federal, state and local governments
generate within their respective areas of jurisdiction (Abiola &
Ehigiamusoe, 2014). IGR for State governments has also been described as
revenues that are derived within the state from various sources such as taxes
(pay as you earn, direct assessment, capital gain taxes, etc.) and motor
vehicle license, among others (Adenugba & Chike, 2013). According to
Asimiyu and Kizito (2014), economic development and sustainability of states in
Nigeria depend on the ability of such states to generate revenue internally to
supplement the revenue allocation from federation account. In other words,
federal allocations are not sufficient to guarantee economic development of
states and local governments, hence the emphasis on local generation of
revenues to sustain the economy of the nation locally and at the federal level.
The
specific objective of this study is to assess the extent to which Total IGR
(TIGR), Federal Government Independent Revenue (FGIR), States IGR (SIGR) and
Local governments IGR (LIGR) influence economic development in Nigeria as
measured by real gross domestic product (RGDP). IGR is the primary source of
local government sustenance. Ola and Tonwe (2003) described IGR as the live
wire of a local government, which implies that, the existence and sustenance of
a local government area depends on their ability to generate sufficient
revenue.
Considering
the fact that local governments have control over IGR economic development is
made possible and faster. However, the capacity of a local government to
receive IGR is one of the criteria and critical consideration for the creation
of a local government (Olusola & Siyanbola, 2014). Looking at the
theoretical and empirical evidence on how state governments could increase IGR
capable of absorbing increasing recurrent and capital expenditures of states,
Ekankumo and Braye (2011) submitted that economic development and viability of
states in Nigeria depend on the ability of a state to boost IGR which is not
only dependent on tax, but through entrepreneurial options which will help to
complement the revenue from statutory account.
Kiabel and
Nwokah (2009) in their investigation on what could help states and local
government generate more IGR argued that the use of External Tax Consultant
provides the solution since states could collect more tax through the
consultant’s efforts and initiatives. With the persistent economic situation
globally and locally, there have been urgent needs for Nigerian government to
diversify the economy and stop concentrating on oil and gas. Regrettably,
Nigeria’s reliance on the oil sector is too critical and the adverse effect of
Nigeria’s declining oil revenue has had such negative impacts that the Federal
Government can no longer handle. Local governments who solely depend on the allocations
from the federation account are finding it difficult to meet with their
obligations such as payment of salaries, provision of public goods and
services, provision of affordable and qualitative education and healthcare
services.
1.2 Statement
of the problem
The problem facing the revenue collection by Lavun local
government is a serious one that affects internally generated revenue sources
as a tool for economic development. The basic issue is that, many Local
government areas fail to consider or ignore the roles, importance and
usefulness of taxes within the areas. The research observed the engagement of
incompetence inexperienced staff, poor understanding between the tax payers and
tax collectors or officials, lack of mobility, unmemorable roads leading to
villages.
One of the
major challenges the present administration encountered on assumption of office
was the non-payment of salaries by some local governments to their workforce.
The federal government managed the situation through granting of bailout funds
to the affected states to settle payroll costs and other recurrent expenditure
(Delloite, 2016); But despite this intervention by the federal government, many
states are still in arrears of salaries to their workers. It is only Rivers and
Lagos States that possess the capacity to pay salaries if there are no federal
allocations. Balogun (2015) stated that Nigeria’s revenue in the 1970s was
majorly from Agricultural sector. The four regions that made up Nigeria (North,
East, West and the Mid-West) were giants in exporting agricultural products.
The North was known for its groundnuts, cotton, hides and skin; the East for
its palm produce and coal; the West for its Cocoa and the Mid-West for its
rubber and timber. The individual regions made use of the revenues to develop
their areas while revenue balance is remitted to the Federal Government.
Unfortunately,
this rich source of IGR in the Nigerian regions providing unlimited economic
development has been sacrificed at the dwindling ‘altar of oil’. The undue
dependence on statutory allocations has become a major constraint why most
Nigeria States cannot perform basic functions (Balogun, 2015). Nnanseh and
Akpan (2013) stated that IGR is capable of providing adequate basic
infrastructures in the local areas citing Lavun Local governmenr areas in Niger
State as case where IGR contributed so much in the provision of water, roads
and electricity. Oseni (2013) posit that IGR is mainly used to offset the high
cost of governance by the second and third tiers of government. Therefore,
mismanagement of IGR by political leaders and local government officials
remains a serious challenge as it affects the economic development in local
government areas.
It is the intention of this research work to investigate the
shortcomings and recommend that which will increase the quality, value or
extent of impact of revenue generation on development in Lavun Government Area
of Niger State at large.
1.3. Objectives of the Study
The
principal objective of this research is to examine the impact of revenue
generation on development of Lavun Government in Niger State. The following
specific objective will be achieved;
1. To identify potential sources of revenue
to the local government.
2. To assess the existing machinery for
revenue collection and identify
additional sources of revenue.
3. To identify the factor militating
against effective and efficient internal revenue generation.
1.4. Research Questions
1. Are there available
sources of revenue to lavun local Government?
2. Has the estimated
internal revenue target of the government been met over the years?
3. Are there
machineries in place for the collection of in ternal revenue? 4. What are the major factors miitating against
effective and efficient internally
reveune generation?
A
hypothesis is a theoretical conceptualization or an idea or guest regarding how
researcher thinks the result of his study will look. It consists of a set of
assumptions accepted previously as a basis of investigation. It is a
proposition that is yet to be tested for its validity. For the purpose of the research work the
following hypothesis were formulated:
H0: There is no significant relationship
between internally generated revenue and economic development in Lavun Local
Government Area.
H1: There is significant relationship between internally generated revenue and economic development in Lavun Local Government Area.
1.6
Significance of the Study
From the
outlook, there is need for the local government to improve their performance.
However, the research is significantly considering the closeness of local
government to the grassroots’ people and the need to utilize substantial
revenue for its various sources in addition to federal and state statutory
allocation for developmental purpose.
The study
will help to identifying some means of generating revenue that has been
neglected over years. It will also be beneficial to the grassroots because
improved revenue generation means improved standard of living in form of
provision of social amenities such as road, hospital, park, drinkable water,
rural electrification etc.
Finding and recommendations of this
study will be of immense benefit to the tax payers by informing them on the
importance and grave consequences of tax on economic development in Niger
State. Again, findings and recommendations of this study will be of immense
important to the revenue collectors by devising other means of generating
revenues aside from taxes, and also making tax payer aware of when, how and the
rate that they will pay to the state.
Finally,
the study will be educative as it will be a reference point for researchers.
1.7
Scope of the Study
This study
will centre on the impact of revenue generation on development of Lavun Local
Government. The study would appraise the revenue generation and its impact for
the period of six years (2013-2018)