1.1 BACKGROUND OF THE STUDY
The tax system is one of the most powerful levies available to any government to stimulate and guide its economic and social development. The serious decline in price of oil in recent years has led to a decrease in the funds available for distribution to the Federal and State Governments. The need for state and local governments 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 source (Afuberoh, D. and Okoye, E., 2014).
Aguolu (2004), states that though taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derivable from taxation, however, taxation is the most important source of revenue to the government, from the point of view of certainty, and consistency of taxation.
Aguolu (2004) further mentioned that taxation is the most important source of revenue to the government. Owing to the inherent power of the government to impose taxes, the government is assured at all times of its tax revenue no matter the circumstances.
This study focuses on identifying the means taxation has been utilized to promote fiscal redistribution of income, identify problems that militate against the use of taxation as revenue generation in Osun State and to identify the use of taxation to promote economic growth and development in Nigeria.
1.2 STATEMENT OF THE PROBLEM
It has been observed over the years that income tax revenue has generally been grossly understated due to improper tax administration arising from under assessment and inefficient machinery for collection. In Nigeria revenue derived from income taxes has been grossly understated due to improper tax administration, assessment and collection (Ola, 2001; Oluba, 2008; Adegbie and Fakile, 2011). Persons and companies are known to routinely evade and avoid taxes due to corrupt practices and the existence of various loopholes in the tax laws.
Therefore, the success or failure of any tax system depends on the extent to which it is properly managed; the extent to which the tax law is properly interpreted and implemented. This study tries to examine the impact of taxation on revenue generation in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The main aim of this study is to examine the impact of internally generated revenue in Osun State.
i) To examine the impact of taxation on revenue generation of Nigeria.
ii) To find out whether revenue generation enhance growth and development of Osun State.
iii) To assess whether taxation is a major tools for revenue generation in Osun State.
iv) To find out the problems hindering Board of Internal Revenue in Osun State in collection of tax.
v) To give possible solutions to the identified problems in Board of Internal Revenue, Osun State.
vi) To make useful recommendations based on the findings of this study.
1.4 RESEARCH QUESTIONS
i) Has taxation impacted on revenue generation of Nigeria?
ii) Does revenue generation enhance growth and development of Osun State?
iii) Is taxation a major tool for revenue generation in Osun State?
iv) Are there any problems hindering Board of Internal Revenue in Osun State in collection of tax?
1.5 SIGNIFICANCE OF THE STUDY
The essence of this research work is to examine the impact of taxation on revenue generation of government. Thus, this study will at a wide-range be of benefit to the society at large, as it will highlight the importance of taxation in the society.
This study would also be of benefit to employers and employees of Board of Internal Revenue Service Osun State, who has been causing cases of tax evasion and non-disbursement of tax income as to the consequences of their acts and those that boom the burden.
It would also be of immense benefits to students of higher learning who may wish to carry out research on the similar topic.
1.6 SCOPE OF THE STUDY
The study is Board on Internal Revenue Service, Osun State and upon the research topic which is the impact of internally generated revenue in Osun State.
1.7 LIMITATION OF THE STUDY
The limitation major to this study was inability of management to divulge certain information which they consider sensitive and fear of publication which might be detrimental to their operation.
Another limitation to the study is time constraint. The period within which the study is conducted is short for a thorough research work, hence gathering adequate information becomes very difficult.
Also, finance is one of the limitations to the study. They researcher facing financial constraints to meet all the needed educational requirements including this research work. This caused the researcher to restrict his research work to one State for possible completion of the study.
Also, distance and traffic congestion is one of the limitations of the study. The researcher faced challenges of meeting up the respondents in their offices due long distance from Osun State to obtained information as well as traffics congestions.
Finally, lack of materials on the topic, therefore the researcher resolved to seek friendly approach in order to obtain the needed materials or information from the establishment or organization under study through the administration of questionnaire.
1.8 DEFINITION OF TERMS
a) TAXATION: This is the process of levying and collection of tax from taxable persons (Soyode & Kayola 2006).
b) TAX: This is a compulsory contribution imposed by the government on the citizens to pay as a source of income.
c) TAX EVASION: This is the deliberate and willful practice of not disclosing full taxable income so as to pay less tax or it is a contravention of the tax laws whereby a taxable person neglect to pay the tax due or reduces tax liability by making fraudulent or untrue claims on the income tax form (Soyode & Kayola 2006).
d) TAX AVOIDANCE: Tax avoidance has been defined as the arrangement of tax payer’s affairs using the tax shelters in the laws, and avoiding tax traps in the laws, so as to pay less tax than he or she would otherwise pay (Soyode & Kayola 2006).