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Inequality And Taxation In Nigeria(1980-2010)
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Generally taxes can cause inequality as well as being used to reduce
inequality. According to Black et al., 1999 Taxation are considered as
the dominant way of reducing inequality. Taxes are imposed for a variety
of purpose, they can be used to correct distortion in the market, they
can raise revenue for the government, taxes can also be used for
redistribution of income, thus in this work we will concentrate on taxes
as a tool for income distribution in the country. In Nigeria federal
income tax is administered by the federal inland revenue service (FIRS).
In Nigeria inequality which exist in arrange of dimension like
mortality rate, poverty rate, life expectancy and so on has been on the
increase. In fact, inequality in Nigeria is multifaceted and has
manifested inform of inadequate shelter, lack of access to other basic
needs of life, such as good food, water, good health etc. Argbokhan
(1999) found that income inequality worsened after structural adjustment
programme
(SAP) of 1986. Also a high level of inequality exist
between Nigeria's rural and urban areas. This is because most
communities depend on Agriculture while urban engage mostly in paid
jobs. The Nigerian government in a way to reduce income inequality has
introduced policies like (PAP) poverty alleviation programme, NEEDs –
National economic empowerment and development programme etc also
taxation policies like PAYE (pay as you earn) and all forms of
progressive tax system like inheritance tax, property tax etc. All these
policies and programmers have not yet achieved its main objective.
Using the head count index the study found that an increasing number of
Nigerians were living or absolute poverty over the study periods: 38% in
1985, 43% in 1992, 47% in 1996, 35% and 37% in urban areas, and 41%,
49% and 51% in rural areas. The depth and security of poverty generally
increased over the study period, but the trend was not uniform over
geopolitical zones. During the 1990s the depth of poverty increased in
the middle belt, Northeast and northwest while it declined in other
areas. The increase was more pronounced in rural areas than in the urban
areas.
1.2 Statement of the Problem
A tax reduces inequality if
it lightens the tax burden on the poor and ensures a greater burden on
the better-off. The relationship between a country's income distribution
and taxation is not far from consensus that is to a large extent; the
method of income distribution in a country can enhance or reduce
inequality. In Nigeria, inequality which exists in a range of dimension
like mortality rate, poverty, life expectancy and so on has been on the
increase. In fact, inequality in Nigeria is multifaceted and has
manifested inform of outbreak of diseases such as Aids, measles, small
pox, chicken pox and so on. Inequality has also manifested inform of
inadequate shelter (poor home) lack of access to other basics needs of
life, such as food, water etc. The Nigerian government in a view to
solve or reduce this inequality had adopted a lot of policies like
SAP-structural adjustment programme of 1986, poverty alleviation
programme (PAP), Needs-National Economic Improvement and development
Strategy etc. Also some taxation policies that the government adopted
include PAYE (pay as you Earn) property and inheritance taxes as well as
other progressive tax systems. All these programmes and policies has
not yet achieve its desired objective which is to curb inequality, maybe
due to implementation problem thus leading to high rate of inequality.
The
aim of this research work is as follows: - To determine the nature of
relationship between taxation and Inequality - To test whether there is a
causal relationship between inequality and Taxation in Nigeria.
- To determine the extent in which taxes affects inequality.
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ABSRACT - [ Total Page(s): 1 ]This research work evaluates the Impact of Taxation on Inequality in Nigeria from (1980-2010). From our finding, we found out that taxation does not have a statistical significant effect on inequality in Nigeria. Taxation is one of the most important and easy source of revenue to any government as the government possesses inherent power to impose taxes and levies. Inequality can be reduces in Nigeria if the government will take a special look at the rural areas than in the urban areas and help t ... Continue reading---
