EXPLORATION ON THE IMPACT TAX AVOIDANCE AND EVASION TO THE ECONOMIC DEVELOPMENT OF A NATION, ABIA STATE AS THE CASE STUDY
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- NGN 3000
Background of the study
Taxation is a financial concern, and paying it is a civil responsibility. It is the imposition of a financial burden on individual firms and corporations by the government. In general, the term tax refers to any contribution levied by the government on individuals and businesses in exchange for the use of government facilities or services. It is not a voluntary payment or donation, but rather an imposed contribution given in response to a legislative authority's statement or direction.
According to Osita (2019), taxes is the compelled leave taken by the government through its numerous agencies on the income, capital, or consumption of its subjects such as wages, business earnings, interest, dividends, commission regularities, rent, and so on.
It might be argued that there are three basic techniques of financial economic expedition available to meet emerging nations there are:-
(a)LOANS
(b)GRANT
(c)TAX AND CURRENT RECEIPT
Taxation is likely the most crucial of these sources, because the amount of government expenditure is heavily reliant on the tax system's capacity to collect the necessary money.
Despite this tax benefit, most people engage in tax evasion and avoidance. Attempting to escape any amount of obligation or failing to pay tax would harm the government's revenue, which is why the government frowns on tax evasion and avoidance and employs its authority to enforce compliance.
Tax avoidance is defined by Onyenyironwu (2016) as lawful methods through which a taxpayer decreases his or her tax payments. Tax evasion is a deliberate attempt by taxpayers to decrease their tax responsibilities by unlawful means or to avoid paying tax owed. The difference between tax avoidance and tax evasion is that tax avoidance is not considered a criminal offence, but tax evasion is.
ANYAELE (1990) defines a tax as a mandatory payment imposed by a government authority on products, individuals, and cooperative bodies, regardless of the exact quantity of services delivered to the tax payer in return, and not levied as a penalty for a legal offence. Income tax, exercise duty, import and export tariffs are all examples of direct and indirect taxes collected by the government. Purchase and sales taxes, for example, assist the government produce a lot of income for the country's smooth administration.
Every type of taxes has two components: the BASE and the RATE. The tax base is the taxable item or a measure of private sector income or wealth that may be taxed, whereas the tax rate is the proportion of the measured amount deducted from the tax base. In this situation, the proceeds are utilised to offer social goods and services to all people, rich and poor alike, so that everyone has an equal opportunity to benefit from them. They include piped water, power, excellent roads, hospitals, and schools, among other things. The majority of Nigerians have a propensity of dodging or avoiding tax payment, i.e. they always avoid paying their taxes. In most cases, the various tiers of government in the country do not produce enough income to adequately implement all of the development initiatives listed in their budgets.
It should be noted that successive Nigerian administrations have not made appropriate and honest attempts to educate tax evaders and dodgers on the importance of paying taxes. All emphasis has been focused on the money generated by the oil industry, while taxes and agriculture, which are intended to provide significant cash for the government, have been purposefully ignored.
Also the researcher intends to look into the problems of paying tax by the public, such problem are as follows
Tax evasion and tax avoidance by the public
Poor system of tax collection
Inability of the government to prosecute tax avoidance
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