Taxation an Effective Tool for Income Re-Distribution in Nigeria

Abstract

This paper focused on taxation as a tool for effective income re-distribution in Nigeria. To achieve this data for the study were gathered from secondary source which include the Office of the Federal Inland Revenue Service and the World Bank Data Bank for the relevant years 1981 to 2014 (34 years) and this period is consider long enough to eliminate any effect of short run fluctuation on the dynamic on taxation and income redistribution in Nigeria. However, the ordinary least square statistical tool was used in analysing the time series data gathered. From the analyses the paper concluded that all tax variants do not exert significant impact on income disparity as observed by GINI at 5% level. The result suggests the taxation as not be able to fulfil its role as a standard tool of income re-distribution in Nigeria. Premised on the conclusion the paper recommended that the there is the need for effective, and equitable utilization of tax revenue and this recommendation suffices because of the insignificant influence of taxes on the level of income inequality as measured Gini-coefficient. Thus, the paper proposes that that there is the need to examine properly the distributional impact of the Nigerian tax system to (or “intending to”) ensuring that taxes create a more income-inclusive society by bridging the income disparity gap between the poor people and the rich.