Relationship between taxes and revenue services

relationship between taxes and revenue services

causal relationship between taxes and growth be investigated. In South Africa, tax policy is set by the National Treasury (Department of Finance) and tax. Data Source: International Centre for Tax and set to expand to 90 countries by the end of ; Link. One strategy is to strengthen the implicit and explicit connections between property tax revenue and specific goods and services. Such links appear to be most.

The implementation of E-taxation has significant effect on tax revenue in Nigeria. The implementation of E-taxation has significant effect on federally collected revenue in Nigeria. The remaining part of this work is divided into four sections: Section three shows the research methods applied. Data presentation, analysis and discussion of results were done in section four.

Section five concluded the study and offered some recommendations.

Tax Revenue and Deadweight Loss

Review of Related Literature 2. Conceptual Framework Concept of Taxation: Taxation refers to compulsory or coercive money collection by a levying authority, usually a government. The term "taxation" applies to all types of involuntary levies, from income to capital gains to estate taxes. According to McLure [8] taxation is a mandatory financial charge or some other type of levy imposed upon a taxpayer an individual or other legal entity by a governmental organization in order to fund various public expenditures.

Taxation is seen by Aguolu [9], as a compulsory levy by the government through its agencies on the income, consumption and capital of its subjects. These levies are made on personal income, such as salaries, business profits, interests, dividends, discounts and royalties.

According to Adams [10] taxation is the most important source of revenue for modern governments, typically accounting for ninety percent or more of their income. Tax is a common source of income generation for financing government activities. Individuals and organizations are expected to fulfill their obligations on tax payments as required by law to give the government the financial power, amongst other purpose of taxation.

Effective taxation therefore becomes important as it is a source of required financial power for a government to rule its territory. E-Taxation E-taxation is the process of assessing, collecting and administering the taxation process through an electronic media. Wasao [12], describes electronic tax system as an online platform whereby the taxpayer is able to access through internet all the services offered by a financial authority such as the registration for a personal identification number, filing of returns and application for compliance certificate, a perfect example of such system is the Electronic taxation system that was rolled out by FIRS in Nigeria.

According to Australian National Audit Office [13] e-taxation was first introduced in in the U. In Australia electronic tax-filling was introduced in through its modernization programme. In MarchEgypt launched electronic payment of tax for its taxpayers, to keep pace with the international trades towards automated payments systems, especially for government services. Electronic tax system was introduced by Nigeria Tax Authority to increase financial collection, administration, render services to the tax payers all the time from anywhere, reduce costs of compliance and improve tax compliance.

Tax Revenue

It is rapidly replacing paper-based tax reporting systems. Promising many advantages over the traditional method of hard copy tax filing, these systems promise faster process, lower costs and increased efficiency.

FIRS has a centralized Information Communication Technology ICT department that provides support services in terms of electronic systems to the entire organization all these to try and achieve its goals for achieving increased revenue collection and facilitating voluntary compliance by taxpayers.

Taxpayers can pay their taxes online from their bank accounts effective March Taxpayers can apply for a TCC online and get electronic tax clearance certificates via the platform. Companies can verify the TIN of their vendors on the platform. This would solve the stress encountered when filing Withholding Tax monthly.

The online platform automatically compute and impose interest and penalties for late submission of tax returns or late payment of taxes.

Tax revenue - Wikipedia

Government revenue Government revenue is money received by a government. It is the amount of money that a company actually receives during a specific period. Revenues earned by the government are received from sources such as taxes levied on the incomes and wealth accumulation of individuals and corporations and on the goods and services produced, exports and imports, non-taxable sources such as government-owned corporations' incomes, central bank revenue and capital receipts in the form of external loans and debts from international financial institutions.

Government revenue is an important tool of the fiscal policy of the government. Governments use revenue for the development of the country, such as: The money that government collects pays for the services that is provided for the people.

The sources of finance used by the central government are mainly taxes paid by the public. In Nigeria, federally collected revenue is divided into oil revenue and non-oil revenue.

While oil revenue covers all revenue generated from oil and gas activities in the country, non-oil revenue looks at any revenue earned from sources other than oil and gas activities. While other countries within and outside Africa segment their revenues into tax and non-tax revenue, Nigeria preferred oil and non-oil due to the fact that oil is the major revenue driver of the economy. Gross Domestic Product Gross domestic product GDP is a monetary measure of the market value of all final goods and services produced in a period.

Nominal GDP estimates are commonly used to determine the economic performance of a whole country or region, and to make international comparisons. The OECD [1] defines GDP as "an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production plus any taxes, and minus any subsidies, on products not included in the value of their outputs.

Coyle [16] states that "GDP measures the monetary value of final goods and services - that is, those that are bought by the final user - produced in a country in a given period of time. GDP is considered the "world's most powerful statistical indicator of national development and progress. Total GDP can also be broken down into the contribution of each industry or sector of the economy. In most developed and developing countries, Tax revenue accounts for a significant portion of their revenue.

The "economic effect" assumes that the tax rate will affect the tax base itself. Similarly, the curve is often presented as a parabolic shape, but there is no reason that this is necessarily the case.

The effect of changes in tax can be cased in terms of elasticities, where the revenue-maximizing elasticity of the tax base with respect to the tax is equal to 1.

This is done by differentiating R with respect to t and grouping terms to reveal that the rate of change of R with respect to t is equal to the sum of elasticity of the tax base plus one all multiplied by the tax base.

relationship between taxes and revenue services

Thus as elasticity surpasses one absolute value, revenues begin to fall. The problem is similar to that of the monopolist who must never increase prices beyond the point at which the elasticity of demand exceeds one in absolute value. In practice, the shape of a hypothetical Laffer curve for a given economy can only be estimated.

The relationship between tax rate and tax revenue is likely to vary from one economy to another and depends on the elasticity of supply for labor, as well as various other factors. Even in the same economy, the characteristics of the curve could vary over time.

relationship between taxes and revenue services

Complexities such as progressive taxes and possible differences in the incentive to work for different income groups complicate the task of estimation. The structure of the curve may also be changed by policy decisions. For example, if tax loopholes and tax shelters are made more readily available by legislation, the point at which revenue begins to decrease with increased taxation is likely to become lower.

Laffer presented the curve as a pedagogical device to show that in some circumstances, a reduction in tax rates will actually increase government revenue and not need to be offset by decreased government spending or increased borrowing.

For a reduction in tax rates to increase revenue, the current tax rate would need to be higher than the revenue maximizing rate.

Impact of E–Taxation on Nigeria’s Revenue and Economic Growth: A Pre – Post Analysis

InLaffer said that the curve should not be the sole basis for raising or lowering taxes. Supply side Supply-siders argue that in a high tax rate environment, lowering tax rates would result in either increased revenues or smaller revenue losses than one would expect relying on only static estimates of the previous tax base. Jude Wanniski and many others advocate a zero capital gains rate.

Criticisms[ edit ] Laffer assumes that the government's revenue is a continuous function of the tax rate.

Tax revenue

However, in some theoretical models, the Laffer curve can be discontinuous, leading to an inability to devise a revenue-maximizing tax rate solution. Actual systems of public finance are more complex, and there is serious doubt about the relevance of considering a single marginal tax rate. Laffer curve[ edit ] The Laffer curve theorises that, even for price-inelastic goods such as addictive necessary itemsthere will be a tax revenue maximising point, beyond which total tax revenue will fall as taxes increase.

A cost limit on what can actually be afforded The existence of expensive substitutes which become less expensive An increase in tax evasion e. Per capita income PCI is the most often used measure of relative fiscal capacity. A representative tax system should assess the level of personal income, the value of retail sales and the value of property to compute fiscal capacity.

To do so the average tax rate for each base is computed by dividing the total revenue derived by the total value of the base.

Thus, as an example, income taxes collected would be divided by total income to yield a rate of taxation. Personal Income Tax Sales Tax Property Tax Corporate Tax total revenue total revenue total revenue total revenue The averages of each tax base can be used in comparison to other states or communities, that is, the average of other states or communities, to determine whether or not a government compares favorably regionally or nationally.

A state or community's standing on these various bases may affect its ability to attract new industry.

  • Laffer curve