Comparative Analysis Of Value Added Tax Revenue Among Different Sector In Nigeria

The research provides a conceptual and analytical study in comparative analysis of value added tax Revenue among different sector in Nigeria; focusing on the care study of federal Inland Revenue Lagos state. The study assesses the performance of the different sectors in the Nigeria economy in contributing to VAT revenue with a view to showcase their effect in economic growth.

Introduction

1.1 Background of the Study

Tax can be defined as a compulsory contribution to support a government levied on personal, property income, commodities, transactions etc. now at a fixed rate mostly proportionate to the amount in which the contribution is levied (Crowder 1998) as it can equally be confirmed in (Tilley 1981) Oyebangi(2006) identified two major forms of taxes, these are;

1. Direct Taxes:

These are taxes imposed by the government on the income of individuals and companies which are usually paid by the person or persons or whom it is legally imposed. Examples are Personal Income Tax(PIT), Company Income Tax(CIT), Capital Gains Tax(CGT), Withholding Tax, Petroleum Profit Tax(PPT),Educational Tax and Capital Transfer Tax(CTT). The PIT is imposed on individual earnings, CIT on profit of organizations/corporate bodies, PPT on oil purchasing/ exploration Companies, CGT on profit from sale of capital assets and CTT on the transfer of property inter-Viro and transfer on death. However CTT on profit was abrogated in 1996.

2. Indirect Taxes:

These are taxes by the government on goods and services. Indirect Taxes can be avoided because it is payable only if one buys the commodities or enjoys the services in which the tax is imposed and it involves little administrative cost compared to direct taxes. It does not create dis-incentive to efforts used in the case of direct taxes and hence does not affect the economic functions of the tax payers. Examples of indirect taxes in Nigeria according to Oyebanji(2006) are;

Import Duties/Tariffs: levied on goods imported into the country.

Export Duties: levied on goods produced for export.

Excise Duties: imposed on specific goods produced in the country.

Consumption Tax: levied on the purchase any commodity or employment of a service. Examples are sales Taxes and value added Tax (VAT). The characteristics of effect of consumption tax is that it is not included in the price tag by the affected commodity rather it is added as a percentage of the total of invoice in the goods or services rendered.

However this research aims to provide a comparative analysis of value added Tax Revenue among different sector in Nigeria. a case study of federal Inland Revenue of Lagos state.

1.1 Background of the Study

According to Oseregho and Associates as quoted by Aderdi, Sannid Adesina(2011),VAT is a consumption tax levied at each stage of the consumption chain and borne by the final consumer of the product or service. Each person is required to change and collect VAT at a flat rate of 5% on all invoiced amounts on all goods and services not exempted from paying VAT, under the value added Tax Act 1993 as amended. Where the VAT collected on behalf of the government (output VAT) in a particular month is more than the VAT paid to other persons (input VAT) in the same month, the difference is required to be remitted to government on a monthly basis by the taxable person. Where the reverse is the case, the tax payer is entitled to a refined of the excess VAT, i.e., no VAT is payable on exports. Also VAT is payable in the currency of the transaction under individual goods or services are exchanged. The precedence for the introduction of VAT in Nigeria was based on the fact that taxation as an instrument of fiscal policy is vital in generating revenue to finance the activities of the government, redistribute income, stabilize the economy as well as stimulate growth and development. The research intends to investigate the performance of different sectors in the Nigerian economy in contributing to VAT revenue using Lagos state Federal Inland Revenue as a case study.

1.2 Statement of the Problem

VAT was introduced to contribute to the economic growth of the nation by providing revenue to government to accelerate developments. However this goal is still far from being achieved sector contributions to VAT revenue is pivotal to providing the needed revenue to government to impact on economic growth. Hence the problem confronting this research is to provide a comparative analysis of VALUE Added TAX REVENUE among different sectors in Nigeria with a case study of Federal Inland Revenue Service of Lagos state.

1.3 Objective of the Study

To determine the nature and significance of TAX

To appraise the nature of Value added Tax and the significance

To determine the sectorial contributions of value added Tax revenue in Lagos state

1.6 Statement of Hypothesis

Hypothesis One

Hi: The impact of VAT on government revenue is high

Ho: The impact of VAT on government revenue is Low

Hypothesis Two

Hi: Sectorial contributions to VAT in Lagos is low

Ho: Sectorial contributions to VAT in Lagos is high

1.5 Significance of the Study

The study shall provide sectorial analysis of contributions of value added tax with a view to providing measures and policies to maximize value added tax and revenue in Nigeria

The study shall serve as reference point of informative for economist, Accountants, managers and government on issues regards Value Added Revenue in Nigeria

1.6 The Scope of the Study

The study focuses on the comparative analysis of Value added Tax revenue among different sectors in Nigeria with a case study of Federal Inland Revenue of Lagos state.

The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following.

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

1.7 Definition Of Terms

Definition of VAT

VAT is a consumption Tax levied at each stage of the consumption chain and borne by the final consumer of product or service. Oserogho& Associates (2011)

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concerned with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.

Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.

Chapter three deals on the research design and methodology adopted in the study.

Chapter four concentrate on the data collection and analysis and presentation of finding.

Chapter five gives summary, conclusion, and recommendations made of the study.

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to reiterate that the objective of this study was the comparative analysis of value added tax revenue among different sector in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in comparative analysis of value added tax revenue among different sector in Nigeria.

5.2 Summary

This study was undertaken to comparative analysis of value added tax revenue among different sector in Nigeria. The study opened with chapter one where the statement of the problem was clearly defined. The study objectives and research questions were defined and formulated respectively. The study reviewed related and relevant literatures. The chapter two gave the conceptual framework, empirical and theoretical studies. The third chapter described the methodology employed by the researcher in collecting both the primary and the secondary data. The research method employed here is the descriptive survey method. The study analyzed and presented the data collected in tables, the fifth chapter gives the study summary and conclusion.

5.3 Conclusion and Recommendations

Revenue is regarded as the principle purpose why Government imposes tax on her subjects. Revenue from taxation is required to cover a widening field of government expenditure. According to Adesoji and Chike (2013), revenue generation is the nucleus and the path to modern development. Taxes wereimposed to cover the cost of administration, defense and maintenance of law and order, these being services which individuals could not adequately render. The range of service provided by the state has increased very tremendously in the recent time.

The health service and education are both very costly but large sums are also required for housing, pension, supplementary allowances, a portion of this expenditure been the form of grant to local authorities to supplement expenditure financed out of local rates.

In conclusion, the study generally revealed that: The impact of VAT on government revenue is high the sectorial contribution of VAT in Lagos is high.

• Cost Of Doing Business In Nigeria And Ghana: A Comparative Analysis
• Comparative Analysis Of Technical Efficiency In Rice Production Under Small-Scale Farmer Managed Irrigation System And Rain-Fed System
• Comparative Analysis Of Agricultural And Industrial Development In Nigeria
• Comparative Analysis Of Federalism And Natural Resource Management In Nigeria And South Africa
• Comparative Analysis Of Monetary And Exchange Rate Policy On Nigeria Economic Growth
• Child Rights Protection In Ethiopia And Kenya: A Comparative Analysis
• Comparative Analysis Of Chinua Achebes Early And Contemporary Literary Works

• Accounting Project Topics and Materials