The research work examined the impact of taxation on investment, social and economicdevelopment in Nigeria. The objective of the study was to examine how tax revenue affects investment, social and economicdevelopment in Nigeria. This Study is predicated on the social political theory of taxation, expectancy theory, benefits-received theory and ability to pay theory. Secondary data source was explored in presenting the facts of the situation. The secondary data were obtained from relevant literatures, Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics publications among other. Data were tested using the Ordinary Least Square Linear Regression model. From the Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics, information concerning Gross Domestic Product, Gross Fixed Capital Formation, ValueAddedTax, Company Income Tax and Personal Income Tax in Nigeria were extracted. The findings show that all the coefficients of the explanatory variables in model 1 and 2 are all statistically significant to gross domestic product and Gross Fixed Capital Formation (GFCF) except company income tax. The study concluded that, tax revenues are tools of both capital formation and economic growth to enhance investment, social and economicdevelopment of the country. The study then recommends among others, that to ensure sustainable investment, social and economicdevelopment, generation of tax revenue must be sufficient, efficiently and judiciously utilized. The government should pay attention to encouraging her citizens to build trust in it by tax accountability, ensuring that the promises made to the citizens are delivered.
ValueAddedTax (VAT) is a consumption tax that is being charged and embraced by many developed and developing countries, which is relatively easy to administer and very difficult to evade. The economicdevelopment and growth of any nation depends on government ability to generate adequate revenue in order to effectively provide various infrastructural facilities to satisfy the needs of the population and takes its position among the nations in the global village. The global oil glut has adversely affected the revenue position of Nigeria. The over 60% drop in oil price to below $40per barrel was unanticipated by the government. This has resulted to over 80% fall in the yield(spread) per barrel of oil produced in Nigeria, steep decline in the country’s revenue,2016 budget deficit of over N2trillion,continuing devaluation of the Naira, slowing Gross Domestic Product( GDP) growth, reduced inflow of foreign direct investment, rising inflation and growing unemployment. The government at the federal level has put a stop on capital projects, while allocation to the states of the federation has reduced resulting in the inability of many states provide relevant infrastructural facilities and pay workers’ salaries ranging from five months to eight months. It is therefore very clear that there is the need to diversify the revenue base of the nation, and ValueAddedTax (VAT) is a major revenue source of advanced nations of the world, which much attention is not focused on this area by the federal government of Nigeria. The main focus of this work was to evaluate the impact of VAT on Nigerian economy between its introduction to date to discover the imperativeness of its reform. Ex-post-factor, descriptive and analytical research approach were adopted for the work. Data of VAT and GDP were obtained from 1994-2015, and analyzed to determine the relationship that has been existing between them. It was discovered that VAT has a positive relationship with GDP. The coefficient of the model indicate that a 1% increase in VAT will lead to a 0.88% increase in GDP . This shows a perfect positive correlation between VAT and GDP.It therefore becomes imperative
Governments have at their disposal many tax instruments that can be used singularly or jointly to finance their activities. These tax alternatives include personal and corporate income taxes, sales taxes, valueadded taxes, capital gains taxes and numerous others. In choosing what tax instruments to use and what rates to impose, governments are typically influenced by their expectations of the effects of taxation on investment and economic activities (Desai, Foley and Hines 2004). According to Joseph and Mathew (2013), there has been a growing recognition among developing and emerging economies of the vital role of VAT revenue in stimulating economicdevelopment. VAT revenues are increasingly accounting for significant proportion of government revenue to finance the required level of expenditure at the three tiers of government viz; federal, state and local government. Most researchers exhibited that VAT and investment has inverse relationship, in another opinion, VAT geared up the level of investment in any country. With the d1fferences in the assertion of the previous researchers, the study will examine the effect of VAT on private investment in Nigeria from 1994 to 2015.
and it is statistically signifi cant at a 1% level for both developed and developing countries. This fi nding implies that high political stability enables the government to focus on devising and implementing development and economic programs to narrow income inequality. We fi nd that the interaction term of VAT revenue and the political risk rating reduces income inequality at 10% signifi cance level. This result suggests that higher VAT revenue weakens the positive effect of low political risk on income inequality in all our samples. This may due stable political environment enables the government to operate with greater latitude to implement economic and development programs with certainty, the impact is minimal if the government has strong political power and stability to focus on charting and steering the nations’ economic and development strategies uninterrupted by political and social noise. Political and social tensions can derail a government’s ability to perform its duty to the people even when the fi scal position is strong. This is supported by Aizenman and Jinjarak (2008), who highlighted that greater political stability increases the effi ciency of tax collection and, hence, increases the resources devoted to tax enforcement for the benefi t of social well-being.
Furthermore, the rise in prices leading to the decline in purchasing power reflected negatively on the expected revenues from raising the tax and estimated at 320 billion pounds . Also, a study by the United Nations Development Program showed that the 11% VAT will increase the percentage of people living below the extreme poverty line (those living below 2.4 dollars a day) from eight to ten percent. (Poverty, Growth and Income Distribution in Lebanon, 2015). It is also expected to increase the level of citizens living below the upper poverty line (which is 4 dollars per person) to 35 percent up from 28 percent (Poverty, Growth and Income Distribution in Lebanon, 2015). Furthermore, it should be noted that the valueaddedtax law, in its articles 16 and 17, exempted certain services and products, for example: education, medical services, raw agriculture, newspapers, papers and books, food products for children of all kinds, bread and flour. Under these exemptions, TVA will not have a negative impact on the living conditions of the population, especially as the products and services not included in the luxuries are exempted (Central Administration of Statistics, 2017). However, if we go back to Article 17, which exempts gas (for domestic consumption) and is exempted from VAT, and does not mention gasoline, which means that the increase of one percent goes up. According to previous studies, this is the main point: it is clear that the process of production and transfer of goods will be directly affected by higher fuel prices (especially with the addition of 4 percent tax on diesel) and thus will be reflected in the prices of all goods and services even those exempted from valueaddedtax (Central Administration of Statistics, 2017).
Premised on the findings of the study, the following conclusions were drawn: if government can maintain a good tax structure in the economy, it has the potential of engendering increase in the revenue generated and as such curb the influence of deficit budgeting and the dependence on external sources of budget financing. Government should provide effective anti-inflationary policy to cushion the inflationary tendencies of valueaddedtax in the country. Government should regulate the rise in the level of interest rate in the country in order not provoke price instability in the country. The ValueAddedTax rate of 5% should be increased by 50%, it will double the total revenue contributed to the nation. In order to be more effective in the administration of VAT, all the VAT Agencies should be connected with Information Communication Technology and the Federal Board of Inland Revenue. VAT in Nigeria is positively influence revenue generation.
Defining zero-rated and VAT-exempt sectors by FTA provides guidelines on businesses not affected by the directive. Most of the zero-rated sectors touch on international trade, whereby FTA chooses to exempt them from the five percent VAT tax (Conn & Prabhu, 2019). They include export of services and goods outside the GCC, and international supplies and transportation, supplies to certain air, sea and land transportation means, and certain precious metals such as silver and gold. Goods pertaining to education and health services are under the bracket as they provide basic elements in the society. FTA categorized different suppliers under the VAT-exempt sectors such as residential properties, bare land, local passenger transport, and financial services (Conn & Prabhu, 2019). In regards to a partial exemption, businesses have to use input tax as a basis for apportionment though there will be other methods that provide fair terms under FTA. The partial exemption will be a critical docket for FTA as information gathered needs to illustrate whether an individual or business will be taxable or not.
Further, majority 82.4 percent of the respondents agreed that VAT rate is very high. VAT is increasingly being used throughout the world, including many African countries to raise government revenue with less administrative and economic costs. It is believed to be a good means to raise government revenue when relatively poor administered. Keen and Lockwood (2007) also strengthen this idea empirically. They found that in the countries that have adopted VAT, revenue from this source accounted on average 27% of the total tax revenue or 5% of the GDP and about 70% of the world’s population now lived in countries with a VAT. This implies that VAT is a key source of most government revenues in the world.
Abstract: When looking for economic policy instruments in the times of economic crisis, even tax instruments are consid- ered, particularly the changes (increases) of the valueaddedtax rates. Most of the EU member states have two VAT rates, while foodstuﬀ s and non-alcoholic beverages are included under a reduced rate. If increasing the reduced VAT rate, the signiﬁ cance of the foodstuﬀ or non-alcoholic beverages in the consumer basket, the regression of the VAT in these com- modities and the signiﬁ cance of the impact on households should be considered. Th is article tries to point out this issue by analyzing the impacts of changes in the VAT rates, or the actual VAT paid by the average households in the Czech Republic in the period from 2005 to 2010.
Since the 1960s, VAT systems have been progressively adopted around the world. The majority of VAT regimes are characterized by a consumption tax base with mul- tiple tax rates, multiple exemptions, and the credit method of tax liability calculation. These VAT characteristics have been incorporated in a number of studies on the in- cidence and economic eﬀects of VAT. However, three important VAT characteristics have yet to be formalized in applied VAT research: multi production, legislated dif- ferences in exemption status, and industry-specific diﬀerences in the refund ability of VAT paid on inputs to production and investment. The need for careful and detailed treatment of these VAT characteristics is particularly important in disaggregated gen- eral equilibrium models. These models are recognized as well suited for the analysis of the eﬃciency eﬀects of tax policies. The modeling of VAT within a general equi- librium framework raises a fourth issue not yet addressed in the VAT modeling lit- erature. Even in highly disaggregated models, commodity and industrial definitions are, by necessity, aggregates of hundreds of commodities and industries, each with the possibility of distinct tax rates and exemptions under the relevant VAT statutes. Previous studies have assumed that a commodity is either exempt or taxed.
We begin by offering a theoretical overview highlighting key strengths and limitations of eco- nomic impact modeling. We highlight a core insight that drives modeling: that local economic actors are linked. Expanding upon this understand- ing, we identify ways of making these community linkages more discernable to community members through visible representations, and we show there is an economicvalue to these connections. We report on the results of using this approach in partnership with economic developers. Finally, we offer an introduction to social network analysis (SNA), a methodology we are using to help com- munity foods practitioners understand how to strengthen community multipliers. We give exam- ples of this approach by summarizing research commissioned by a county food systems initiative, and we suggest that tools from SNA, including network mapping and showing how commercial networks are constructed, may prove increasingly useful in enhancing and in some instances reframing the food systems discussion.
Thirdly, taxes are the most effective tool for transferring the resources into the governmental sectors and directing them towards the productive plans. Governmental investments should increase to break the vicious circle of poverty and less savings and investments. In most of the less developed countries, private entities are very small and a limited number of the biggest entities involve in the production of the goods. Lack of the capital is the main reason for the limited economic activity of the private sector which is derived from low savings. Based on the low efficiency of the capital in the long run, most of the capital is invested in the nonproductive sections such as speculation. In this state, the government might capture the additional revenues from direct property taxes and invest it in the productive projects. Therefore, taxes are an effective tool for transferring the resources
The study uses a firm-level survey of a private sector collected by the World Bank through the Enterprise Surveys (ES) in various developing and emerging markets. The dataset is publicly available at the World Bank Enterprise Surveys website. 4 Businesses surveyed include manufacturing, retail, construction, transport, communication, and other services. The Enterprise Surveys contain information necessary to calculate firm-level productivity, or TFP indices. These include annual sales, employment (total hours worked per year), labor costs, and net book value of capital stock. The database provides the nominal values of the variables due to the lack of price indices (see Table 1.5). From a range of available datasets, the study uses the “panel” dataset, which covers the time period of 2005 and 2009. The study uses the manufacturing firm TFP data for the year of 2009 as the benchmark to gauge the effect of targeted trade-related policies. The study excludes all the services industries; thus, it focuses on industries with the ISIC codes 15-37. Table 1.6 provides a snapshot of a sample of manufacturing firms used in this study. 5
Relationship between the disclosure of financial statements and financial coefficients may cause, that companies that reduce taxes through tax avoidance or tax evasion are looking to make their financial decisions in hostile and report it selectively that will lead to tax cuts than the actual state. They also found that from the perspective of managers, tax relief can be a powerful incentive for managers to achieve the company's financial goals as cost-effective manner. Assenmacher.schh and Villach (2014), in an article are analyzed responses in property prices, inflation and economic activity to monetary policy shocks in 17 countries during years (1986-2011). For this, PVAR and VAR models have been used for the distinction between these groups of
Unlike RAS, time series and other techniques simply evaluating their models by using a number of preceding year data, an evaluation of the input-output model has not successfully been achieved and most researchers have neglected to delve deep into this point. This may be due to the fact that the input-output model fundamentally simulates the flow of commodities and services between each sector in economic transactions in an economic system during a certain period, generally a year. As a result, it is very hard to evaluate the model while the real economic data have not yet happened. Therefore, further research may iron out the problems by performing the input-output model on a small part of the economy and afterwards enlarging it to a national scale.
1). Radical version (V1, a): Reduce the standard VAT rate from 24% to 19% for consumers and the optional use of the reduced rate of 9% on the chain producer-processor-retailer only on economic contract directly and without right of refund of VAT from the budget. It eliminates the reverse charge.
Comprehensive tax reform is needed for several reasons. First, while the tax structure has undergone some changes over the years there are changes needed both in its revenue raising capacity and towards simplifying it. Bird (1991) observed that the key to successful tax reform is a tax structure that can be administered adequately with the available resources while at the same time making the best possible use o f those resources from a long-term perspective. Second, the modifications which have been introduced during the last two decades, as discussed earlier, have been o f an a d hoc nature and have, despite their usefulness, created a superstructure which lacks cohesion. The tax policy changes brought about in the wake o f relatively increased economic activity, particularly during the 1980s were, however, not part o f a well- considered tax reform program but ad hoc changes addressed to the specific issues. Therefore, changes in tax policy were not accompanied by appropriate improvements in the taxation structure. Third, present fiscal legislation is best viewed more as an historical growth than as a system in the sense o f a deliberately conceived and integrated structure in which every part has a defined role to play. Finally, for sustainable growth in the long-run, Pakistan has to accelerate investment in physical and human capital, especially in the areas o f rural development, power generation, irrigation, transportation, education and basic health facilities.