Administration of tax is the nucleus and the path to modern development. Thus, this study assessed the effect of tax administration on infrastructural development. The research methodology entailed the use of survey research design and purposive sampling method to select respondents from Ogun state Inland Revenue Office. Questionnaires and statistical data were instruments used for the study. Descriptive and inferential statistics were the statistical tool used for the analysis. The descriptive statistics involves the use of simple percentages while the inferential statistics involved the use of Spearman’s Rank, which is to show the direction of relationship between variables in the study and to show the scale for the data that is interval. Two hypotheses were formulated and the Spearman’s rank correlation analysis was used to test the relationship between income tax and infrastructural development. The result showed that there is a positive relationship between income tax and infrastructural development. The study also revealed the various methods of generating internal revenue, which are the enforcement of tax personnel, contribution, and creating awareness to the public. The findings of the study however show that revenue administration agencies need to be reviewed to generate more revenue in the country.
Keywords: Infrastructure, Revenue, development, administration, Ogun state
The increasing cost of running government coupled with dwindling revenue has led various State governments in Nigeria with formulating strategies to improve the revenue base. More so, the near collapse of the National Economy has created serious financial stress for all tiers of government. Despite the numerous sources of revenue available to the various tiers of government as specified in the Nigeria 1999 constitution, since the 1970s till now, over 80% of the annual revenue of the three tiers of government come from petroleum. However, the serious decline in the price of oil in recent years has led to a decrease in the funds available for distribution to the states. The need for state and local government to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance. This need underscores the eagerness on the part of state and local governments and even the federal government to look for new sources of revenue or to become aggressive and innovative in the mode of collecting revenue from existing sources.
Development is a sine qua non for modern civilization. In order to carryout development at all nooks and crannies of the society, it is the responsibility of the Ogun state Government to provide direct development to people to a certain level. Development is associated with funds and much revenue is needed to plan, execute and maintain infrastructures at the state level. The needed revenue generated for such developmental projects, like construction of accessible roads, building of public schools, health care centres, construction of bridges are generated from taxes, royalties, haulages ,fines, and grants from the states, national and international governments. These funds could either be obtained internally or externally. Thus, the Ogun state Government cannot embark, execute and possibly carryout the maintenance of these projects without adequate administration of tax.
The Ogun state government announced its decision to spend N390b ($3 billion) on infrastructural development in the state over the next couple of years. Speaking during the town hall meeting of the Ogun state Internal Revenue Service (LIRS) for market associations, general merchants, skilled technicians among others, the Governor of Ogun state, Mr Babatunde Raji Fashola disclosed that huge funds are required to put in place the necessary infrastructure that will make life easier in the state.
He said, “The project on the agenda of the state government requires huge funding. Over the next two decades, Ogun state needs to spend at least N390 billion ($3 billion) annually to expand and improve its water supply network. N2.6 trillion ($20 billion) to provide qualitative and efficient network of roads and drainage; N1.3 trillion ($10 billion) for power supply; N650 billion ($5 billion) for information and computer technology; and N1.2 trillion ($9.3 billion) for inter-modal transportation system.”
To this end, he called on the artisan and other professionals in the state to ensure they pay their tax so that the government can meet up with plans to develop and improving on social amenities in the state.
He disclosed that the state government has put in place measures that will check tax evasion and ensure that individuals and corporate organizations pay the right tax. He noted that the new revenue administration law of the state provides for tax clearance check before any individual or corporate body is allowed to do business with, obtain any license or enjoy other benefits from the state government.
Administration of tax in Nigeria’s local government is principally derived from TAX. Therefore, taxation is an internal source of government revenue within the domestic economy. Its collection and service to the government depends largely on the government itself. Taxation has been described in many ways and for the purpose of this study it will be seen as compulsory levy imposed on a subject or upon his property by the government having authority over his property through its agencies with the aim of providing, maintaining and improving social facilities in the communities at large and for which the tax payer has no quid pro que. This study will examine the effects of administration of tax on infrastructural development in Ogun state by providing answers to the following research questions: