EVALUATION ON TAXATION AS A MOTIVATION FOR GROWTH AND DEVELOPMENT IN NIGERIA
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Background of the study
Responsible governments worldwide, whether at the federal, state, or local levels, are concerned with providing social goods and services to their populations. They are responsible for the upkeep of laws and orders within their countries, as well as the defense of their territorial integrity against foreign assault. A large sum of money is required to carry out these social obligations. Imposition of taxes is one of the key sources of funds available to the government to carry out its varied projects. Governments at various levels establish legislation to levy taxes and compel their payment in order to earn enough income to cover their spending.
According to Omoigui (2004), despite the fact that there are numerous strict penalties and fines in the tax rules, it appears that many people and business organizations do not understand why they should pay right taxes or pay taxes at all. As a result, they strive to avoid paying taxes in certain circumstances and evade taxes in others.
The role of economic life in the growth of current history has been one of the outstanding trends in contemporary history. Any serious debate of government must address the issue of revenue and spending. The government seeks to achieve specified goals through proper tax, spending, and regulatory policies. Given the sensitivity of macroeconomic variables to fluctuations in the economy, achieving macroeconomic goals such as full employment, price stability, high and sustainable economic growth, and external balance has been a policy priority of every economy, developed or developing, since time immemorial. These objectives are not self-evident; they require governmental direction. Economic policy objectives are represented through policy advice (Olawunmi & Ayinla 2017). Fiscal policy is one of the regulatory strategies employed by the government to achieve its goals of economic growth. Fiscal policy is an offshoot of Keynesian economics; logical analysis implies that it is a sure-fire way to stabilize the economy. Modern fiscal policy seeks to improve economic efficiency and stability. In a contemporary economy, the government touches every aspect of economic life. Government uses two key instruments or techniques to affect private economic activity: taxation and spending. The effect of taxes encompasses all changes in the economy caused by the implementation of a tax system. One may argue that a market economy would not achieve particular output, consumption, investment, employment, and other comparable patterns if taxation did not exist. The existence of taxation affects these patterns, for better or worse, and these alterations are referred to as the effect of taxation. Expenditure, on the other hand, was intended to directly contribute to market effective demand and build a high-value multiplier by allocating money to those segments of the population with a high marginal propensity to consume. The government is responsible for averting catastrophic business depressions by prudent fiscal and monetary policies, as well as strict financial system oversight. Furthermore, the government attempts to smooth out the ups and downs of business cycles in order to avoid either large-scale unemployment at the bottom of the cycle or flaming price inflation at the top. Government has increasingly grown concerned with supporting economic programs that promote long-term economic growth. Because of the growing relevance of government behavior in a country's development process, fiscal policy deals with resource allocation concerns and is concerned with topics such as economic growth, economic stability, employment, pricing, income distribution, and social welfare. Fiscal policy has evolved a slew of tools to address various aspects of public-sector economy. However, because of the multitude of purposes, it is sometimes plagued by intrinsic conflict of objectives; between long-term growth and short-term stability, between social welfare and economic growth, and between income redistribution and production incentives (Samuelson & Nordhaus 2015). Rapid economic growth has been one of the most significant goals of macroeconomic policy in recent years. Economic growth is described as "the process through which a country's actual per capita income grows over time." The increase in the number of products and services produced in a country is used to quantify economic growth. A expanding economy creates more products and services with each passing year. Thus, growth happens when an economy's productive capacity expands, allowing it to generate more commodities and services. In a broader sense, economic growth entails boosting people's living standards and decreasing income disparity (Jhingan, 2018). The link between government spending and economic development has sparked a flurry of academic discussion. Some academics believe that increasing government socioeconomic and physical infrastructure promotes economic growth. Government spending on health and education, for example, increases labor productivity and national production growth. Similarly, spending on infrastructure such as roads, communications, and power decreases production costs while increasing private sector investment and company profitability, so promoting economic growth. Some academics who accept this viewpoint determined that increasing government spending boosts economic growth. Fiscal policy's primary goal is to foster economic and social growth by following a policy stance that provides a feeling of balance between taxation, expenditure, and borrowing that is consistent with economic and social progress.
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