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ABSTRACT
There is no gainsaying the facts that for any nation to develop economically, it needs to generate revenue. Revenue is a significant issue in the economic development of any nation as its importance cannot be over emphasized be it at the federal, state or local government level. It is also the case that local government revenue is principally derived from tax. Taxation plays a significant role in a nation’s development and the classical function of the tax system is the raising of revenue to meet government expenditure. The aim of this work is to critically examine the role that tax plays in revenue generation and economic development in Nigeria.
It is the case in Nigeria that the bulk of revenue generated is from the oil sector. As of February 2019 the oil sector alone accounts for about 15% of Nigerian’s GDP, but it makes up about 80% of government revenue. While the revenue generated from tax falls below 15% of the total government revenue as at the same period. Also according to the Organisation for Economic Co-operation and Development as at 2017, Nigeria Tax to GDP ratio is 4.8%. Meanwhile South Africa which has a relatively smaller economy than Nigeria with lesser population generates far more revenue from tax with a tax to GDP ratio of 29% this is according to the Organisation for Economic Co-operation and Development (OECD) Data for 2016.
This work therefore examines the role of tax in the generation of revenue and consequently, how this revenue generated from tax aid in the economy development of Nigeria. Its concludes that in other to promotes a good tax culture, what Nigeria needs is not more legislation rather, a while structure implementation mechanisms of the legislation already in place so as to improve her income generation through effective but equitable taxation.
