The Analysis Of The Impact Of Value Added Tax On Revenue Generation In Nigeria (2000 – 2009)

The Analysis Of The Impact Of Value Added Tax On Revenue Generation In Nigeria (2000 – 2009)

Abstract

This design work “ The Analysis of the Impact of Value Added Tax in Revenue Generation in Nigeria( 2000 – 2009) ” was needed by the need to assess the performance of Value Added Tax and ascertain it impact on profit generation in Nigeria.

It concentrated on the effect of Handbasket on vatable persons especially as it relates to the demand and deals of it product, its profitability, donation to the total profit generated by the Federal Government, the entire frugality and eventually a comparison of the observed effect relative to what the asked effect shouldbe.Chapter one of this study will serve as preface and other way the exploration has espoused in the cause of carrying her disquisition similar are background of the study, statement of problem, ideal of the study, exploration question, suppositions, compass, significance, limitation of the study and description ofterms.Chapter two reviewed some affiliated literatures; the need is for the experimenter to see the view of other pens on the content under study. It made up of theoretical and empirical review of affiliatedliterature.Chapter three deals on exploration design and methodology used in collecting data similar as design, area of study, population of study etcChapter four treated donation and analysis ofdata.Chapter five sees for summary of findings, conclusion and recommendation.

TABLE OF CONTENTS

CHAPTER ONE

preface

Background of the Study

Statement of Problem

ideal of the Study

exploration Questions

thesis

compass of the Study

Significance of the Study

Limitation of the Study

description of Terms

References

CHAPTER TWO

Review of Affiliated Literature

Theoretical Review of Affiliated Literature

History of Value Added Tax

Meaning and Reasons for Handbasket

Nature of Value Added Tax

Operation of Value Added Tax

Administration of Handbasket in Nigeria

Registration of Handbasket

Handbasket Registration Number

Handbasket Returns and Remittance

Assessment of Handbasket

Type, Rate and system of computation Handbasket

Types of Handbasket

Rates of Handbasket

styles of Calculating Handbasket

Handbasket and other Form of Tax

graces and Dereliction of Handbasket

Graces of Handbasket

Faults of Handbasket

Detailed List of particulars and Services Exempted from Handbasket

Empirical Review Affiliated Literature

References

CHAPTER THREE

Design and system

Research Design

Area of Study

Population of Study

Sources of Data

Slice system

Exploration Instrumentation

Validity and trustability of Research Instrument

Styles of Investigation

References

CHAPTER FOUR

Donation and Analysis of Data

Donation and Analysis of Result

Test of suppositions

CHAPTER FIVE

Summary of Chancing, Conclusion and Recommendation

Summary of Findings

Conclusion

Recommendation

Bibliography

Excursus I

Excursus II

Chapter One

Preface

Background Of The Study

previous to 1993, only veritably little was known of Value Added Tax( Handbasket) in Nigeria. The idea of Handbasket started with the acceptance of the recommendation of Dr Sylvester Ugoh led study group on Indirect Taxation in November 1991. The decision to accept the recommendation was made public in the 1992 Budget speech.( Okpe, 2001). In addition, according to Obianwuna( 2005), the Federal Government set up two study groups in 1991, one was set up by the Federal Ministry of Finance and Economic Development to study and recommendation on the reform demanded in direct levies in Nigeria. The Federal Ministry of Budget and Planning set up the other group on circular taxation. As the group recommended the preface of Handbasket in Nigeria, this made the Federal Government to set up a commission who’ll carry out a feasibility study on its recrimination in Nigeria. This commission gave the general guideline for the establishment of a Value Added Tax in Nigeria and its administration was given to the Federal Inland Revenue Services, which was formerly charged with the responsibility of administering most other levies in Nigeria.

The preface of Handbasket in Nigeria through Decree 102 of 1993 makes the phasing out of the Deals duty DecreeNo. 7 of 1986. The decree took effect from 1st December 1993 but by administration arrangement invoicing for the purpose didn’t commence until 1st January 1994,( Okpe 2004).

Value Added Tax( Handbasket) was introduced in Nigeria in 1993 at a flat rate of 5 on all the vatable goods and services. The rate was increased to 10 by the Federal Ministry of Finance with effect from May 2007. still, following a series of meeting between representatives of the Federal Government of Nigeria( FGW) and the Nigeria Labour Congress( NCE) Trade Union Congress( TUC), the FGW abandoned the increase in the Handbasket rate. The do of the Handbasket system are to be share in the following proportions 20 and 80 for the Federal Government and State Government independently. In the same tone, the state share from Handbasket proceeds was distributed according to the following; State of Origin 30, Consumption/ Destination 30 and Equality of State 40.( FIRS 2008).

According to Okpe 2001, the preface of Handbasket came necessary because government expenditure was steadilyover-shooting profit, performing in the wide deficiency backing. In addition, records show that between 1960 – 1971, income from circular levies in Nigeria constituted the single most important of government profit. still, with the oil painting smash of the 1970’s, it benefactions declined. It came down from 85 in 1970 to 12 and 13 in 1980 and 1990 independently. The share of direct levies rose from 23 in 1970 to 60 in 1980 but came to 45 in 1990.

also, the profit variable from oil painting and presentnon-oil source substantially levies aren’t sufficient to meet public requirements as expenditure nonstop to rise because to pressing and profitable requirements.

thus, if government must have fresh profit to meet up with growing public expenditures, it can only come from levies by adding both individual and company levies, which under the present circumstance is neither doable nor judicious. Unfortunately, in Nigeria only a small proportion of the population substantially civil retainers pay income duty because of duty elusion and the avoidance by a lesser proportion of business class. So adding it isn’t likely to increase government profit significantly.

thus, a duty increase on a broad grounded consumption rather than income duty will be suitable as further people will be suitable to pay. Handbasket is a consumption duty, which is the broad grounded. All the essential goods and services were exempted to reduce its burden on the poor and it’s fairly easier to pay because it’s included in the selling price.

The government believes that the propensity to consume is advanced than the propensity save and duty is thus meant to impact the consumption habit of people and it’s directed especially to high income earners.

Statement Of The Problem

Value Added Tax has been administered in Nigeria for numerous times now. The public( vatable persons and organisations) have expressed their dissatisfaction for the system. Indeed the issue of cost of administration has been seriously questioned. The experimenter embarks on an in- depth study of its administration, assessment and perpetration with particular reference to the cost of administration vis-a-vise the yield. This is meant to help the policy makers and government estimate mainly and ascertain how effective it’s for the profit generation. The experimenter established the general impact of the duty on the overall frugality especially as it affects the poor or low- income group. This will enable government to make some adaptations in policy phrasings. Also, the experimenter will find out how Value Added Tax( Handbasket) will achieve those effects other affiliated forms of taxation couldn’t achieve.

Objects Of The Study

The objects of the study are

To ascertain the effectiveness of the Handbasket labor force and ministry for assessment, administration and perpetration of Handbasket in Nigeria.

ii. To find out the nature of the effect of Handbasket on vatable goods and services.

iii. To ascertain whether Handbasket is really burned to the Nigerian frugality.

iv. To find out whether Handbasket contributes significantly to the total profit generated by the Federal Government for profitable development.

Exploration Questions

The following exploration questions were formulated by the experimenter for the conduct of this design.

i. How effective are Handbasket labor force and ministry for assessment, administration and perpetration of Handbasket in Nigeria?

ii. What are the nature of the effect of Handbasket on vatable goods and services?

v. How is nature of the effect of Handbasket on vatable goods and services?

iii. How is Handbasket a burden to the Nigerian frugality?

iv. How significantly does Handbasket contribute to the total profit generated by the Federal Government for profitable development?

Suppositions

These suppositions are formulated to enable the exploration test if Handbasket has any impact on profit generation in Nigeria.

Ho. The labor force and ministry for Handbasket aren’t prompt in assessment, administration and perpetration of Handbasket in Nigeria.

Hi The labor force and ministry for Handbasket is effect in assessment, administration and perpetration of Handbasket in Nigeria.

ii. Ho Handbasket doesn’t negatively affect the deals of company’s goods and services.

Hi Handbasket negatively affects the deals of company’s goods and services.

iii. Ho Handbasket isn’t really a burden to the Nigerian frugality.

Hi Handbasket is really a burden to the Nigerian frugality.

iv. Ho Handbasket doesn’t contribute significantly to the total profit generated by the Federal Government for profitable development.

Hi Handbasket contributes significantly to the total profit generated by the Federal Government for profitable development.

Compass Of The Study

The study was carried out to study the analysis of the impact of Value Added duty on profit generation in Nigeria for the period of 2000 to 2009. The experimenter inquired in the factors related to the success of Handbasket in Nigeria. The experimenter in addition review other affiliated duty systems and their impact in profitable development, entered mainly applicable literatures that related to the exploration.

Significance Of The Study

The significance of this study can be viewed from two major slants;

Practical Significance

This kind of study will help in broadening understanding of the following groups with the following reasons.

To Government The result from this study is anticipated to enable the government of Nigeria to know the loophole7s that live in the administration Value Added duty( Handbasket) and to determine how effective and effective the profit generation ministry of Handbasket is and make applicable adaptation where necessary.

b. Also to the government, the study will go them the occasion to assess people’s feeling about the duty system and its perpetration.

To the taxpayer and directors; the study is anticipated to be empirical material aimed at enlightening both the taxpayer and directors on the objects of Value Added Tax.

To the citizens of Nigeria; it’ll reveal to them the impact of Handbasket has had on the profit generation in this country.

e. The study will reveal to the taxpayer the vatable goods and services and their rate.

f. The study will reveal to the taxpayer the introductory types of Handbasket in Nigeria and how they’re administered and the system of calculating Handbasket

Academic Significance

In the academic arena, this study will prove to be significant in the following ways.

It’ll contribute to the enrichment of the literature on Value Added Tax.

It’ll make the scholars and lectures to know the origin of Handbasket in Nigeria.

It’ll throw further light on how to assay Handbasket and to relate Handbasket with other forms of Taxations.

It’ll serve as a resource material for farther work on Value Added Tax or Taxation generally.

e. The study will serve as a body of reticent knowledge to relate to by experimenters.

Delineations Of Terms

For the purpose of this exploration, the following terms should be understood as define then under.

Value Added Tax

A duty on force of goods and service, which is ultimately borne by the final consumer, but collected at each stage of product and distribution.

ii. Vatable Goods and Services

Any goods and service that’s subject to Handbasket. There are 17 goods and 23 services are vatable.

iii. Vatable Persons

Any person/ business and association that’s authorized to collect Handbasket and trades in vatable goods and services. The associations collect Handbasket from guests and remit to Handbasket office.

iv. Taxable Period

This is the period within which Handbasket is collected and remitted. The taxable period in Nigeria is made before the 21st day of the following the month of collection.

duty tab

The duty tab is the authority to make claims on Handbasket. It’s the tab or damage given to the purchaser of vatable goods or services.

vi. Chi- Square

This is statistical system used in testing the thesis concerning the divagation or difference between frequentness of a sample.

vii. position of Confidence

The position or limit within which we’re confident that the population mean tries is true.

viii. Degree of Freedom

This is the range within, which the thesis is to be tested.

ix FIRS – Federal Inland Revenue Services.