THE IMPACT OF TAX REFORMS ON GOVERNMENT REVENUE GENERATION IN NIGERIA

1. IntroductionNigeria is a nation with federal political structure that adheres strictly to the same principles of fiscal regime and this system has serious implications on how the tax system is managed. It is characterized by unnecessary complex, distortion and largely inequitable taxation laws that have limited application in the formal sector that dominates the economy. Tax is an essential source of government revenue that defrays the expenditures incurred by government by making it mandatory on tax payers. Tax is a valuable instrument of public finance whose magnitude affects the level of economic activity of an economy and is utilized not only for raising revenue of government to finance its programmes but also regulates the direction of economic performance of the economy. A system of tax vary from one country to the other and because it is a socio/political and economic model representing society's social, political and economic needs and aspiration at any given time, the Nigerian Tax System is dynamic and is continually changing to meet the needs of the constituents of the society.Tax is a system of raising money from individual person or corporate body for the purposes of government developmental programmes. It is rather a compulsory contribution imposed by the government on tax payers in return to identifiable benefit of living in a relatively educated, healthy and safe society. Though tax are imposed to regulate the production of certain goods and services, protection of infant or certain key industries as well as means of curbing inflation and meeting up the operational costs of governance. Taxes in Nigeria are imposed to regulate certain economic activities such as to influence economic activities in the country, bridge the inequality gap between the rich and the poor, to curtail consumption of undesirable goods and services, to correct a country's balance of payment and tax is used to attract investors.In an attempt to realize these and other tax objectives, government encompasses the different types of taxes such as Pay As You Earn, (PAYE), Value added tax (VAT), Excise duties etc and this paper is on tax Reform policy Objectives of the Federal Government of Nigeria (FGN) and its Impact on Tax Revenues generated.Statement of the ProblemMany years after the major tax reforms in Nigeria, there has been mounting criticisms over its inability to realize the objectives towards which it was focused. Serious concern has been expressed over the increasing cost of tax administration of the Federal Government of Nigeria in relation to the tax revenue collections as evidenced scholars. This is an indication of high level of inefficiency in the tax operations of the country, which is contrary to the principles of taxation enunciated by Adam Smith. Besides, in contention is whether the objectives of equity, promotion of a viable industrial climate, the reduced tax rate structure, widening of the tax base have resulted in an increase in the tax revenue and it is designed to realize economic stabilization and development and the prevailing distortions in the tax system have jeopardized some of the purpose of the Nigerian tax reform agenda resulting into acrimony within the system.Objectives of the StudyThe main objective of this paper is to assess the impact of tax reforms on revenue generation of the Federal Government of Nigeria. Specific objectives are to;- identify the tax reform policy instrument objectives of the federal government of Nigeria.- evaluate with the use of model characterizing the behavior of tax revenue generated from tax reform instrument objectives for the purpose of determining their viability.- examine the impact of the reforms of the federal government of Nigeria on tax revenues from direct and indirect taxes.HypothesesHo1: There is no significant difference in the impact which the pursuit of tax reform policy instrument of enhancement of the principles of a good tax system exert on revenues collected by the federal government of Nigeria. …