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Inequality and Taxation in Nigeria (1980-2010)

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Description

– Inequality and Taxation in Nigeria (1980-2010) –

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Abstract

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 to bridge the gap between the have and the have not (rich and the poor).

Finally, a tax reduce inequality if it lightens the tax burden on the poor and ensures a greater burden on the better – off.

Introduction

1.1 Background of the Study

Taxation is a form of compulsory levy imposed by government on individuals, corporate bodies, goods and services in order to finance its expenditure and create condition for the economic well being of the society.

Taxation is a compulsory levy imposed on a subject or upon his property by the government to provide security, social amenities and create condition for the economic well being of the people (Appah and Oyandonghan, 2011).

Anyanwu (1997) stated that tax are imposed to regulate the production of certain goods and services, protection of infant industries, control business and curb inflation, reduce income inequalities etc.

According to Anyanfo (1996), the principle of taxation means the appropriate criteria to be applied in the development and evaluation of the tax structure. Such principles are essentially on application of some concepts derived from welfare economists, in order to achieve the broader objectives  of  social justice.

The tax system of a country should be based on sound principle. Ihingan (2004), and Osiegbu et al., (2010) listed the principles of taxation as equality, certainty, convenience etc. Anyanfo (1996) convenience principle of taxation states that the time and manner should be convenience to the tax payer.

Nevertheless, principle of taxation provides the rationale for pay-as-you earn (PAYE) system of tax payable system of tax collection certainty principle of taxation states that a tax which each individual is bound to pay ought to be certain, and not arbitrary (Bhartia, 2009).

Jhingan (2004) equity principles of taxation states that every tax payers should pay the taxing proportion to his income. The rich should pay more and at a higher rate than the other person whose income is less.

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