The Impact Of Value Added Tax On The Productivity Of Manufacturing Organisations In The Nigerian Economy

The Impact Of Value Added Tax On The Productivity Of Manufacturing Organisations In The Nigerian Economy

Chapter One

Preface

Background Of The Study

The civil government in 1991 set up a study group to look into and give recommendation of the administration and reform of circular taxation. This was as a result of the shy profit yield fromnon-oil levies in Nigeria and the overdependence of the government on oil painting profit. This group was to review the circular taxation system in Nigeria, study the feasibility of the preface of Value Added Tax and make recommendation.

According to Ajakaiye( 2000) the recommendation accepted by the government included the following

Detailed action programme for the introductory work on Handbasket

When introduced, Handbasket should

Pay special attention to the government’s financial relationship because it’ll replace deals duty which is a stage duty.

Have a single rate.

Cover manufacturing assiduity importers in form of goods.

Cover professional services banning croakers and druggists.

Deals duty was the introductory consumption duty by numerous countries. At the dawn of the 20th century, numerous countries embrace Handbasket as a relief deals duty. The cover of Handbasket for deals duty paid off extensively however at varying degrees to colorful countries. The relinquishment of Handbasket was so pervasive that the relinquishment of it by European Economic Community( EEC) was made obligatory under the convention of Rome inked in 1957. In malignancy of the wide acceptance, some countries like Japan, Australia and Canada have been reticent of introducing the Handbasket.

The Standard Statement of Accounting Practice( SSAP) NO 5( 1993) defined Handbasket as a duty on the force of goods and services which is ultimately borne by the final consumer but collected at each stage of product and distribution.

Professor Aluko( 1993) in his paper ‘ Classical Value Added duty( CVAT) ’ defined Handbasket as a duty on the increase in the value of goods and services in the process of product and distribution.

Ayodele( 2007) argued that Handbasket has come a major source of profit for utmost developing countries like Nigeria. In view of this, there’s partiality to increase the duty rate to get advanced profit.

First Tax Guide( 2005) stated that the profit from Handbasket was participated 20- 80 percent between the state and civil government. presently, it’s participated 155035 among the civil, state and original government. The state collection was to be allocated as 30 for state of origin, 30 for consumption/ destination and 40 for equivalency of the state. Handbasket is levied at a single duty rate of 5 which makes it easier to administer. When paid by business on purchase, it becomes an input duty which is recoverable from Handbasket charge on company’s deals known as affair duty.

In Nigeria, all goods and service are vatable with limited aid specific immunity. All significances are vatable with imported raw accoutrements or finished goods and Handbasket on significances are calculated on total profit value at the total cost, insurance and freight. Exports are zero rated, inferring that exporters don’t put Handbasket on exports, but they can claim credit for Handbasket paid on their inputs.

According to Ajaikaiye( 2002) Nigerian Handbasket has a veritably wide base with fairly many immunity, also Handbasket doesn’t replace any of the usual circular or income levies. Deals duty profit accrues simply to the state government, but participated by all situations of government. therefore, it can be assumed that Handbasket profit is participated by all the situations of government. Though Handbasket profit isn’t castrated, it’s fitted into the frugality through government final consumption expenditures.

Statement Ot The Problem

Resistance to Handbasket in Nigeria at the early stage was veritably ferocious and prolonged, in the sense that some manufacturing associations don’t want the duty, they felt that its perpetration shouldn’t be given to any profit agency. In the thrust of this it was argued that the Handbasket perpetration would nearly clearly be grounded on regulatory red- tapism( Ogundele, 1996).

Naiyeju( 1996) linked a diapason of fear essential in the preface of Handbasket in Nigerian frugality;

Anticipated high administration cost, especially the cost of covering the Handbasket perpetration bearing in mind the Nigerian factor.

The established culture of duty elusion by some manufacturing associations.

goods on prices of goods.

Fear of incapability to administer Handbasket efficiently.

Compliance cost.

Objects Of The Study

The following are the objects of the study;

To examine how Handbasket has influence the productivity of manufacturing associations in the Nigerian frugality.

To dissect the goods of Handbasket profit in the GDP of the Nigerian frugality.

To determine how the productivity of manufacturing associations in Nigeria has enhance the GDP of the Nigerian frugality.

To enumerate goods and services covered by Handbasket and those exempted from Handbasket.

Exploration Questions

How has Handbasket influence the productivity of manufacturing associations in the Nigerian frugality?

Is there any significant relationship between Handbasket profit and the GDP of the Nigerian frugality?

Does the productivity of manufacturing associations in Nigerian enhance the GDP of the Nigerian frugality?

Exploration Hypothese