Generation of Tax Revenue in the Nigeria Private Sector

Abstract

Generation of tax revenue from the private sector, especially from the self-employed people has always posed a problem. Millions of Naira have been lost due to prevalence of .tax evasion and avoidance among the .self-employed people. Consequently, taxation cannot be used as a. major instrument for revenue generation and as a key to sustainable economic development. The study was aimed at finding the causes of tax evasion and avoidance by the self-employed people with a view to exploring ways of encouraging them to comply with tax matters. Questionnaires were distributed to some self-employed people in the Federal Capital Territory, Abuja and to the staff of the Federal Board of Inland Revenue, Abuja. The field survey revealed startling information. Majority of the self-employed people indicated that they evade and avoid tax. Several factors are responsible for this and they include the following: high personal income tax rates; complexity of the assessment and collection procedures; lack of adequate tax incentives; lack of taxpayer education, high cost of compliance and so on. All these show that the Nigerian tax system is ineffective and inefficient. To revive the system, the tax laws, the tax policies and the tax administration should be reviewed. Tax evasion should be made a criminal offence in Nigeria. The tax policies should be well focused and the administrative machinery should be strengthened and this involves simplifying the assessment and collection procedures and reviving the enforcement machinery. If the recommendations of the study are implemented, the self-employed people will be tax complaint and this will increase the tax revenue and also taxation can then be used as a key to sustainable economic development.