This document discusses the impact of taxation on revenue generation in an emerging economy. It begins by defining taxation and the various concepts and types of taxation. It then discusses the relationship between taxation and revenue generation, noting that taxation is a central tool for economy growth and sustainability in developing countries. The document provides data on tax revenue collection in Nigeria from 2000 to 2018, showing that the Federal Inland Revenue Service has generally been able to increase actual tax revenue collected annually to meet or exceed targets.

1. IMPACT OF TAXATION ON REVENUE
GENERATION IN AN EMERGING
ECONOMY
Prof. Godwin Emmanuel, Oyedokun
HND (Acct.), BSc. (Acct. Ed), BSc (Acc & Fin), MBA (Acct. & Fin.),
MSc. (Acct.), MSc. (Bus & Econs.), MTP (SA), PhD (Acct), PhD
(Fin), ACA, FCTI, ACIB, MNIM, CNA, FCFIP, FCE, FERP, CICA,
CFA, CFE, CIPFA, CPFA, ABR, CertIFR, FFAR
godwinoye@yahoo.com
+2348033737184, +2348055863944 & 08095491026
CITN Council Member/Chairman Education Committee,
Chief Technical Consultant/President, OGE Group
Being a Paper Presented
at 2019 Tax Week Organized By Chartered Institute Of Taxation of
Nigeria, Abuja and District Society On 14th November 2019.

2. CONTENTS
This Presentation will cover the following:
 Introduction
 Concept and Scope of Taxation
 Concepts of Revenue
 Nexus between Taxation and Revenue Generation
 Tax Revenue in Nigeria
 Impact of Taxation on Revenue generation
 Conclusion
 Recommendations

3. INTRODUCTION
I believe 95% of participants here are professionals and we do
not need a soothsayer to tell us that taxation over years in
developing countries has been considered as a central tool that
contributed immensely to economy growth and sustainability.
Taxation is one of the viable sources of revenue generation to
provide vital services for the generality of people living in a
particular geographical area in terms of infrastructural
amenities.
A tax system is a veritable tool that mobilizes a Nation's
internal resources that create enabling environment to grow
economy. When taxes are efficiently and effectively
administered, there will be an increased revenue generation and
citizens will expect deployment of such revenue to ensure
provision of infrastructural amenities such as motor-able roads,
Electricity and Job opportunities which guarantees good
standard of living.

4. CONCEPT AND SCOPE OF TAXATION
Taxation is the concept and science of
imposing tax on taxable income of tax
payers within a particular jurisdiction.
Through taxation, government ensures that
resources are channeled towards important
projects in the society, while giving relief to
the weak.

5. CONCEPT AND SCOPE OF TAXATION
(Cont)
HISTORY OF TAXATION
 Biblical History
Tax levies origination can be traced to the
ancient cities of Greek and Rome in
modern literature; but from the Bible
account, it has been as old as the world. In
these so called cities of Greek and Rome,
taxes were levied on consumption, saving,
investment and properties.

6. CONCEPT AND SCOPE OF TAXATION
(Cont)
 History ofTaxation in Nigeria
 According to Adeola (1998), the economic history of
Nigeria has shown that Nigeria citizens paid taxes
before the British administration, especially in the
Northern part of Nigeria.
 During the Lord Luggard’s Administration as the
British High Commissioner for Northern Nigeria, He
passed some laws to enable him collect taxes:
 The laws include:
 Land Revenue Proclamation (1904)
 Native Revenue Proclamation (1906)
 Native Revenue Ordinance (1917)

7. CONCEPT AND SCOPE OF TAXATION
(Cont)
Definitions of Tax
 According to Australian court a tax is defined as: “a
compulsory exaction of money by a public authority for
public purposes or taxation is raising money for the purpose
of government by means of contributions from individual
persons”.
 Hugh Dalton in his own word define A tax as a compulsory
charge imposed by a public authority irrespective of the
exact amount of service rendered to the tax payer in return
and not imposed as a penalty for legal offence
 Jom Bouvier defined a tax as "A pecuniary burden imposed
for support of the government, the enforced proportional
contribution of persons and property of the government and
for all public needs".

8. CONCEPT AND SCOPE OF TAXATION
(Cont)
 Anyanwu (1993) stated that, tax is more or less
compulsory, non-returnable contribution of
money used occasionally for goods and services
and flows from private individuals, institutions or
groups to the government.
 According to Gyani (1990), tax is a compulsory
contribution imposed by the government on
citizens in accordance with legislative provisions
and paid by them through agents to defray the
cost of administration.

9. CONCEPT AND SCOPE OF TAXATION
(Cont)
 Tax is:
 any compulsory payment to government
imposed by law without direct benefit or
return of value or a service whether it is
called a tax or not (NTP, 2017)

10. CONCEPT AND SCOPE OF TAXATION
(Cont)
Characteristics of Tax
According to Sani (2015), the following are
characteristics of a tax:
 Tax is usually the payment of money particularly cash
or cheques.
 Tax is usually imposed by a sovereign within his
jurisdiction.
 Tax is an imposition by a public authority that is
federal, state and local government.
 Tax is mandatory and not conditional.

11. CONCEPT AND SCOPE OF TAXATION
(Cont)
Classes ofTax
• Companies IncomeTax,
• EducationTax,
• Petroleum ProfitTax,
• WithholdingTax,
• Personal IncomeTax (PITA), and
• Capital GainsTax.
DIRECT
TAX
• Sales tax;
• Value added tax;
• Excise duties;
• Custom duties;
• Stamp duties and
• Royalties.
INDIRECT
TAX

12. CONCEPT AND SCOPE OF TAXATION
(Cont)
DirectTax is defined as the tax which is
directly levied on the citizens of a country.
Merits of direct taxation
Equity
Elasticity and productivity
Certainty
Reduce Inequality
Good instrument in the case of
inflation
Simplicity

13. CONCEPT AND SCOPE OF TAXATION
(Cont)
Demerits of direct taxation
Evasion
Uneconomical
Unpopular
Little incentive to work and save
Not suitable to undeveloped
countries
Arbitrary

14. CONCEPT AND SCOPE OF TAXATION
(Cont)
IndirectTax is the tax that is levied on goods and
services.
Merits of IndirectTaxation
The following are the merits of indirect taxation:
 High revenue production
 No evasion
 Convenient
 Economical
 Wide coverage
 Elasticity

15. CONCEPT AND SCOPE OF TAXATION
(Cont)
Demerits of indirect taxation
Regressive in Nature and Effect
Uncertainty in Collection
Indirect taxes discourage savings
Rise in inflation

16. CONCEPT AND SCOPE OF TAXATION
(Cont)
Objectives ofTaxation
 Revenue generation
 Social Objectives
 Economic Significance
 Economic Growth
 Enforcing Government Policies
 Economic Stability

17. CONCEPT AND SCOPE OF TAXATION
(Cont)
 Tax Administration in Nigeria
 Every System or nation opts for an
efficient and effective system of tax
Administration, free from all
encumbrances, yet challenges militating
against the creation and maintenance of
such an efficient system cannot be ruled
out.
 Hence the establishment of the following
various organs of tax administration:

18. CONCEPT AND SCOPE OF TAXATION
(Cont)
JTB
SBIR
JSRCLGRC
FIRS

19. CONCEPT AND SCOPE OF TAXATION
(Cont)
JointTax Board (JTB)
The Joint Tax Board was established under
Section 85(1) of the Personal Income Tax
Decree 1993 as amended.

20. CONCEPT AND SCOPE OF TAXATION
(Cont)
Duties of JTB
 To settle disputes between the States as regards tax matters
especially disputes as to residence and remittance.
 To promote uniformity both in the application and incidence
of the provisions of tax laws on individuals throughout the
country.
 To advise the government on request in respect of double
taxation arrangements, rates of capital allowances and other
tax matters.
 To impose its decisions on matters of procedure and
interpretation of the Act, on any state, for purposes of
conforming with agreed procedure or interpretations.

21. CONCEPT AND SCOPE OF TAXATION
(Cont)
Federal Inland Revenue Service Board
The Board was first established under
Section 3 of the repealed Income Tax
Administration Ordinance 1958 and
amended by subsequent Acts and Decrees.

22. CONCEPT AND SCOPE OF TAXATION
(Cont)
DUTIES OF FIRS
 Advising the Federal Government through the Minister of
Finance on tax matters which include any amendment to the
existing law.
 Assessment and collection of Companies Income tax.
 Issuing instructions on the financial aspects of assessment
including interpretation on income tax Acts.
 Reviewing and approving the strategic plans of the service.
 Employ and determine the terms and conditions of service
including disciplinary measures of the employees of the
service.

23. CONCEPT AND SCOPE OF TAXATION
(Cont)
State Board of Internal Revenue
The Finance (Miscellaneous Taxation
Provisions) Amendment Decree No. 3 of
1993 made provisions for the establishment
of an operational arm known as the State
Internal Revenue Service (SIRS).

24. CONCEPT AND SCOPE OF TAXATION
(Cont)
Duties of SBIR
 Ensuring the effectiveness and optimum collection of all taxes and penalties due
to the Government under the relevant tax laws;
 Doing all such things as may be deemed necessary and expedient for the
assessment and collection of the tax, accounting for all amounts so collected in
a manner to be prescribed by the Commissioner;
 Issuing instructions or directives on technical aspects of assessment including
interpretation of Income Tax Act to their various officers;
 Advising the government, through the Commissioner for Finance, on tax
matters which include amendments to tax laws; and
 Appointing, promoting, transferring and imposing disciplinary measures on
employees of the State Service.

25. CONCEPT AND SCOPE OF TAXATION
(Cont)
Local Government Revenue
Committee
The LGRC compose of The Supervisor for
Finance as chairman, Three Local
Government Councilors as members, Two
other persons experienced in revenue
matters to be nominated by the Chairman
of the Local Government on their personal
merits.

26. CONCEPT AND SCOPE OF TAXATION
(Cont)
Functions of LGRC
 It shall be responsible for the assessment
and collection of all taxes, fines and rates
under its jurisdiction and account for such in
a manner to be prescribed by the chairman
of the Local Government.
 It shall be autonomous of the Local
Government Treasury and shall be
responsible for the day to day administration
of the Department, which forms its
operational arm.

27. CONCEPT AND SCOPE OF TAXATION
(Cont)
Joint State Revenue Committee
The Joint State Revenue Committee was
established by section 92 of the Personal
Income Tax Act 1993 (as amended) for each
State of the federation.

28. CONCEPT AND SCOPE OF TAXATION
(Cont)
Duties of JSRC
 Advises the Joint Tax Board and the State and Local
Government on revenue matters;
 Implement the decisions of the Joint Tax Board;
 Harmonize tax administration in the state;
 Enlighten members of the public generally on State
and Local Government revenue matters; and
 Carries out such other functions as may be
prescribed from time to time by the Joint Tax Board.

29. CONCEPT AND SCOPE OF TAXATION
(Cont)
Challenges of Tax Administration in Nigeria
According to Eze Judith (2012), in
discussing an efficient and effective system
of tax administration, there must always be
consideration of the challenges which
militate against the creation and
maintenance of such a system.

30. CONCEPT AND SCOPE OF TAXATION
(Cont)
The challenges highlighted by Eze Judith are as follows:
 Lack of accountability for tax revenue.
 Lack of inter-governmental collaboration, co-operation and co-
ordination between tiers and agencies of government.
 Lack of sufficient government impact on citizens.
 Issue within the tax administration set up which include capacity
issues, quality and quantity of human resources, technology issues,
manual system of tax operatives, lack of records, law level of tax
payer education and finding challenges.
 Lack of an overall understanding of the role of taxation in National
development.

31. CONCEPT AND SCOPE OF TAXATION
(Cont)
 Dependence on oil revenue leading to a neglect
of taxation as a source of revenue.
 Lack of sufficient political support for the tax
administration
 Level of business activity in the economy.
 Large informal sector outside the tax net
 Poor attitude to taxation, lack of tax culture low
awareness amongst tax payers.

32. CONCEPTS OF REVENUE
Revenue is the gross inflow of cash,
receivables or other consideration arising
in the course of the ordinary activities of an
enterprise from the sale of goods, from the
rendering of services, and from the use by
others of enterprise resources yielding
interest, royalties and dividends.

33. CONCEPTS OF REVENUE
(Cont)
Government Revenue
This is the money received by
a government from taxes and non-tax sources
to enable it to undertake government
expenditures.
Government revenue as well as government
spending are components of the government
budget and important tools of the
government's fiscal policy.

34. CONCEPTS OF REVENUE
(Cont)
Classes of Government revenue
Tax revenue:
• These are taxes on the incomes and wealth accumulation of
individuals and corporations and on the goods and services
produced, exported and imported.
Non-tax revenue
• This includes but not limited to the following:
• Rates
• Fees
• License fee
• Fine and penalties
• Gifts and grants
• Borrowings

35. CONCEPTS OF REVENUE (Cont)
 Distinction between Taxation and other components of
Revenue
 According to National Tax Policy, there is
a distinction between taxes and other
internal revenue items such as charges,
levies and penalties.
 Some other sources of revenue to the
government are highlighted below:

36. CONCEPTS OF REVENUE
(Cont)
 Charge: A Charge is an amount paid for the use of goods, services or
infrastructure provided by the government.
 Fee: A Fee is a payment for the labour or services provided by a public
body, such as a government entity or agency
 Fines: These are sums of money imposed by the government as penalties
for an offence or indiscretion by a person within the jurisdiction of the
government.
 Penalty: This is similar to a fine and is usually an amount paid or forfeited
for not meeting a particular condition or fulfilling an undertaking.
 Rates: These are usually imposed on property or other assets and are
usually determined with reference to the value of the property or in
relation to some other things.

37. Nexus Between Taxation and
Revenue
In developing countries, tax system is a major
determinant of other macroeconomic indexes
as taxation is regarded as the driving force.
Undeniably, it has been argued that the level of
economic development has a very strong
impact on a country‘s tax base and tax policy
objective varies with stages of development
(Kiabel, 2009).

38. Nexus Between Taxation and
Revenue (Cont)
Jarkir (2011) espoused that, at the early
stage of economic development, the rate of
growth in public expenditure will be very
high because government provides basic
infrastructural facilities and most of these
projects are capital intensive which are to
be catered for from revenue generated
from taxation.

39. Nexus Between Taxation and
Revenue (Cont)
Therefore, government’s spending and
investment in education, health, roads,
electricity, and water are necessities that
launch the economy from developing stage to
take off stage of economic development to
develop an egalitarian society.
Tax Revenue and tax administration are vital
components of any attempt to nation building,
and this is particularly the case of any
developing or transitional nation like Nigeria.

40. TAX REVENUE IN NIGERIA
Over the years, Federal Inland Revenue
Service has been able to harness different
measures in ensuring that tax revenue
increased yearly.
This is evident in the line graphs below which
shows the target amount and actual amount
realized by FIRS as revenue contribution to
the government fromYear 2000-2018.

41. ANNUAL SUMMARY OF TAX REVENUE
COLLECTION FROM YEAR 2000
YEAR COLLECTION
TARGET (=N= Billion) ACTUAL (=N= Billion)
2000 380.5 455.3
2001 500.7 586.6
2002 396.2 433.9
2003 572.9 703.1
2004 800 1,194.80
2005 1,304.4 1,741.80
2006 3,054.10 1,866.20
2007 1,753.30 1,846.90
2008 2,274.40 2,972.20
2009 1,909.00 2,197.60
2010 2,2557.30 2,839.30
2011 3,639.10 4,628.50
2012 3,635.50 5,007.70
2013 4,468.90 4,805.6
2014 4,048.10 4,714.6
2015 4,572.20 3,741.8
2016 4,200.20 3,307.5
2017 4,889.70 4,027.94
2018 6,747.00 5,320.52

42. TAX REVENUE IN
NIGERIA (Cont)
0
5000
10000
15000
20000
25000
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
TARGETTAX REVENUE

43. TAX REVENUE IN NIGERIA
(Cont)
-
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
NAIRA(BILLION)
YEAR
ACTUALTAX REVENUE

44. IMPACT OF TAXATION ON
REVENUE GENERATION
It is undisputable that taxation in
emerging countries has contributed
immensely to revenue generation so
as to meet government expenditure
and as well redistribute wealth and
manage the economy.
The taxation impact on revenue
generation for government of
emerging countries has overtime
facilitated the following:

45. IMPACT OF TAXATION ON REVENUE
GENERATION (Cont)
 Optimum Allocation of Available
Resources
 Control Mechanism
 Acceleration of Economic Growth and
Price Stability
 Encouraging Savings and Investment
 Reduction of Inequalities in Income and
Wealth

46. IMPACT OF TAXATION ON REVENUE
GENERATION (Cont)
Negative Effect ofTaxation
The effects of taxation in the verge of generating
revenue can have effect on social or economic life
of citizen.
According to Orji (2001), economic and social
effects of taxation are:
 supply of resources
 retained profits
 corporate profit
 inflation
 dividends

47. Challenges of Taxation as
Revenue Generation Tool
Despite the potentials of taxation as a dynamic tool
for sustainable national development, taxation has
been unable to achieve its main objectives of
generating revenue due to the following challenges:
 The need to grow internally generated revenue
which has led to the arbitrary exercise of taxing
powers;
 Lack of clarity on taxation powers of each level of
government and encroachment on the powers of
one level of government by another;

48. Challenges of Taxation as
Revenue Generation Tool (Cont)
Insufficient information available to taxpayers
on tax compliance requirements thus
creating uncertainty and non-compliance;
Poor accountability for tax revenue;
Insufficient capacity which has led to the
delegation of powers of revenue officials to
third parties, thereby creating complications
in the tax system.

49. CONCLUSION
In conclusion, since tax is a principal source of
government revenue that its impact cannot be
under estimated in emerging countries, if
citizens are able to escape by legal or illegal
means, the theoretical equity of the tax to a
large extent is lost, and so, ineffective tax
administration to a large extent subdue the
effectiveness of the government in generating
more revenue to enhance economic growth
and development.

50. RECOMMENDATIONS
Government should ensure that tax revenue
is prudently used in the provision of basic
Education, Agriculture development, Primary
Health Care, adequate Power Supply,
Construction of Roads and National security.
The regulatory authorities/organs of tax
administration charged with the sole
responsibility of collecting tax should further
be strengthened to enforce compliance by
taxpayers, so that rural and urban areas of
the nation will benefit dividend of tax paid

51. RECOMMENDATIONS (Cont)
 Government should enhance the collection
of tax revenue processes and ensure that
any deviations from compliance with the laid
down rules and regulations of revenue
collection is severally dealt with and
punished accordingly.
 There should be accountability and
transparency from government officials on
the management of revenue derived from
taxes and also citizens should be able to
benefit from the payment of taxes in Nigeria.

52. ALWAYS PAY YOUR