Taxation is the process by which the government imposes charge son citizens and cooperate businesses. The charges collected by the government are used to fund different government projects that would in the end benefit the citizens of a country as a whole.
Tax administration is the development and formulation of federal tax policy relating to existing or proposed internal revenue laws, related statutes and tax convention.
Tax administration includes assessment collection, enforcement, litigation, publication and statistical gathering functions under such law, statutes or conventions. Tax administration also benefits both society and businesses.
Tax system has been considered to mean the process of taxation involving sets of rules, regulations and procedures with the organs of administration interacting with one another to generate fund for the government.
More often than not, the development of any nation depends solely on the taxation system; that is the compulsory payment levied on a subject or upon his property by the government in order to aid a suitable condition for the economic well being of the society at large.
Prospects Of Tax Administration In Nigeria
1. Social Benefit
Tax administration is important to society because the money realized is used by the government to fund projects related to health care systems, educational system and public transport.
It can also be used to create more employment opportunities, pensions and improve other areas that that can benefit the society. Without tax, the government will not be able to fund the essential projects and services that people need.
2. Promotes Equal Avenue For Development
The government allocates the money collected from the tax payers to different areas of the country. Some areas picked are rural areas.
Considering the fact that urban areas are more developed than rural areas, money realized from tax administration can be allocated to rural areas in order to create resources that will be beneficial for both the country and its economy.
This gives room for the provision of essential services required and also leads to the improvement of the standards of such places.
3. Economic Growth
Although taxation may discourage investors from carrying out investments, recent study shows that both the positive and negative effects would be offset and as a result only a very small result would be noticed.
Since tax contributes to almost 10% of the gross domestic product of the economy, it promotes economic growth. Tax administration helps in the development of the economy as a whole. The more developed a country is, the more prospects for businesses as it increases the well being of the country.
4. Discourages Undesirable Activities
Tax administration on some harmful goods and services such as liquor, tobacco etc discourages such goods form thriving. In this case, the government imposes excise tax thereby discouraging individuals from selling such commodity.
5. Promotes Business Activities
The concept of taxation is vital to businesses in the economy. Tax administration helps in promoting business activities as some of the money generated from tax is being given back to the economy as long term loans which business men and women can loan to promote and improve their businesses.
The money can also pumped back into the economy by the government in the event of an economic recession or turmoil.
6. Proper Channeling of Resources
Through taxation, the government is able to ensure that resources are channeled towards important projects in the society.
Other important role of tax administration in Nigeria as a country other than the funding of government expenditure is that it provides basic information about the total price for projects to be carried out by the government
Problems Of Tax Administration In Nigeria
The Nigerian tax system has undergone significant changes in recent times. The laws are being reviewed in order to meet up with the ever increasing economic advancement so as not to render it obsolete.
Tax administration in Nigeria is being enforced by the three tiers of government ( the federal, state and local government).
Despite these improvements, there are still some challenges being faced by the tax administration system in Nigeria some of which include:
1. Poor Administration
The role of taxation in promoting economic activity and growth is not felt primarily because of poor administration. There is limitation in man power, money, tools and machinery to keep up with the increasing challenges.
2. Lack of Public Awareness
A challenge facing tax administration in Nigeria is inadequate public awareness on the imperatives and benefits of taxation in our personal and business lives and also in the advancement of the economy as a whole.
3. Problem Multiple Taxes
Another problem of tax administration in the country is the issue of multiple tax administered by the three tiers of government which sometimes imposes welfare cost.
4. Unavailable Tax Statistics
Considering the fact that taxation has come a long way in Nigeria, it is expected that by now, there will be an improvement in its record keeping system and statistics but this is still a problem to be dealt with. Tax statistics in Nigeria is not readily available. Several states in the country are still lagging behind in the aspect of data management.
5. Inexperienced Staff
Staff involved in tax administration in Nigeria are not provided with the regular training they need in order to meet up with the development trend in the economy. This makes tax administration weak and inefficient..
The corruption level in the country has led to poor tax administration. Corruption in the case of citizens themselves; most tax payers bribe officials rather than pay taxes and some government officials and others misappropriate funds.
7. Complexity of Tax Laws
The laws governing tax administration in Nigeria is quite difficult for the tax payers to understand. Considering the fact that the country is a mixed one comprising of both literates and illiterates, the laws ought to be simple enough for the understanding of even the lay man. Also, most tax payers are unaware of the existence of some laws.
8. Uncooperative Tax Payers
Tax administration in Nigeria can only never be successful without cooperation of the tax payers who in this case are the citizens. this poses a huge challenge to tax administration in the country.Click here to see the latest work from home jobs
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