IMPACT OF TAX EVASION ON NIGERIA’S HIGHER INSTITUTIONS

IMPACT OF TAX EVASION ON NIGERIA’S HIGHER INSTITUTIONS

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The Nigerian educational system is structured as follows: 9 years of kindergarten/primary school, 3 years of junior secondary school, 3 years of senior secondary school, and 4 years of university first degree. The tertiary education subset of every nation’s educational system consists of universities, polytechnics, and colleges of education (Peters, 2022). Universities are established to fulfill the three functions of teaching, research, and community service, thereby significantly contributing to the nation’s social and economic growth. They are tasked with imparting high-level skills to a significant portion of the labor force, developing individuals’ intellectual capacities, and educating competent and accountable professionals needed in nearly every aspect of human endeavor. Polytechnics, according to Okoh (2022), are critical to Nigeria’s educational, scientific, and technological development.

They are designed to train and produce the technical workforce needed to carry out the nation’s development plans, objectives, and strategies. Colleges of education are “train-the-trainers” institutions that prepare and equip teachers for prestigious positions (Okoh, 2022).

Education is a process of systematic training and instruction designed to transmit knowledge and facilitate the acquisition of skills, potentials, and abilities that enable an individual to effectively contribute to the growth and development of his society and country. Education includes a person’s physical, social, moral, intellectual, and mental development (Osakwe, 2022). Education is the process of promoting or facilitating the acquisition of knowledge, skills, values, attitudes, and behaviors.

A tax is a governmental contribution imposed on citizens.

its subjects (individuals and corporations) to meet its social, economic, and political obligations to ensure public welfare (Kiable & Nwankwo, 2022).

Every Nigerian corporation must pay a 2% education levy on their profits. This tax is regarded as a civic duty imposed on all businesses in order to ensure that they contribute their fair share to the development of educational institutions throughout the country. The intention when the federal government of Nigeria announced the establishment of the Education Trust Fund (E.T.F) through the Education Tax, decree no 7 of 1993, before it later morphed into Tertiary Education Trust Fund (TETFUND) because Universal Basic Education (UBE) already takes care of basic education, was to create an intermediary agency to manage the two percent of the education budget.

as a special fund, all assessable profit of companies registered in Nigeria (Peters, 2022).

According to reports, a number of obstacles impeded proper tax administration in Nigeria. Tax evasion, on the other hand, is a significant impediment. Tax evasion is defined as the intentional, criminal act of directly violating tax regulations in order to avoid payment of taxes. Tax evasion is a common occurrence in all countries. Indeed, despite the measures put in place, some Nigerian corporations continue to skirt government regulations and avoid paying taxes. Circumventing educational tax regulations is considered illegal and must thus be handled by tax officials.

Tax evasion occurs when a taxpayer or business entity conducts its financial affairs in contravention of the law in order to avoid paying taxes.

to pay as little tax as possible (Foe & Lawrence 2022). It can be committed through deliberate acts of omission or commission, such as understating income, recording false transactions, overstating costs, or failing to file tax returns.

1.2 THE PROBLEM’S STATEMENT

Tax evasion, according to Peters (2022), has resulted in the loss of money owed to the government, resulting in insufficient Tertiary Education Trust Fund revenue (TETFUND). Due to a lack of available funds, the government is unable to meet its expenditure obligations, which include the provision of facilities and the enhancement of the quality of education at Nigeria’s higher institutions. As a result, the government is entirely reliant on the proceeds from the sale of crude petroleum oil to meet its obligations.

Its financial obligations to Nigerian universities. However, university education in Nigeria currently faces issues such as insufficient funding, brain drain, a lack of critical physical infrastructure for teaching and learning, and so on, which will result in quality educational output in Nigerian higher education institutions (Bell, 2022).

This public outcry over the various challenges confronting university education in Nigeria, such as insufficient funding, brain drain, a lack of provision and maintenance of essential physical infrastructure for teaching and learning, and so on, can be traced back to the government’s revenue loss due to tax evasion by Nigerian businesses. As a result, the researcher wants to look into the impact of tax evasion on Nigeria’s higher education system (Peters, 2022).

1.3 THE STUDY’S OBJECTIVES

The primary goal of this

The purpose of this research is to determine the impact of tax evasion on Nigeria’s higher education institutions. Other specific goals of this research include:

i. To ascertain the extent of tax evasion in Nigeria’s higher education institutions.

ii. To ascertain whether tax evasion has an impact on Nigeria’s higher education institutions.

iii. Determine whether the establishment of TETFUND has contributed to a reduction in tax evasion by Nigeria’s higher education institutions.

iv. To investigate ways to reduce tax evasion by Nigeria’s higher education institutions.

1.4 QUESTIONS FOR RESEARCH

This study will address the following research questions:

i. How widespread is tax evasion in Nigeria’s higher education institutions?

ii. Does tax evasion have an impact on Nigeria’s higher education institutions?

iii. Has the establishment of the TETFUND aided in the reduction of tax evasion by Nigeria’s higher education institutions?

iv. How can tax evasion by Nigeria’s higher education institutions be reduced?

1.5 THE STUDY’S IMPORTANCE

The findings of this study are expected to aid the government in developing policies that will aid in eradicating the problem of tax evasion in our tax collection system in order to efficiently support education in the country.

The findings of this study will also help the government understand why so many Nigerian businesses avoid paying educational taxes.

Finally, this research will help the tax authority assess, make decisions, and identify effective methods of collecting the necessary educational tax for the development and proper funding of our educational sector.

1.6 STUDY OBJECTIVES

The purpose of this research is to assess the impact of taxation.

Evasion at a Nigerian university. This study is specifically focused on determining the extent of tax evasion by Nigeria’s higher institutions, determining whether tax evasion has an impact on Nigeria’s higher institutions, determining whether the establishment of TETFUND has helped to reduce tax evasion by Nigeria’s higher institutions, and investigating ways tax evasion by Nigeria’s higher institutions can be reduced.

Respondents for this study will be staff from selected Nigerian higher education institutions.

1.7 THE STUDY’S LIMITATIONS

This research is limited to determining the impact of tax evasion on Nigeria’s higher education institutions. This study is specifically limited to determining the extent of tax evasion in Nigeria’s higher institutions, determining whether tax evasion has an impact on Nigeria’s higher institutions, and determining whether the

The establishment of the TETFUND has aided in the reduction of tax evasion by Nigeria’s higher institutions, and it is currently investigating ways to reduce tax evasion by Nigeria’s higher institutions.

The respondents for this study will be staff from selected higher institutions in Nigeria; thus, the sample size was limited because only a few respondents were chosen to answer the research instrument; thus, the results cannot be generalized to other secondary schools outside the state.

1.8 TERM DEFINITION

A significant effect or influence.

Tax evasion: Tax evasion is an illegal attempt by individuals, corporations, trusts, and others to avoid paying taxes.

Higher Education: Tertiary education that leads to the award of an academic degree is referred to as higher education. Higher education is also known as postsecondary education, third-level education, or tertiary education. is a final stage of formal learning that occurs after completing secondary school.