The Impact of Taxation and the Quest for Good Governance: Evidence from Nigeria

Abstract

Taxation affords governments everywhere an avenue for the strategic generation of revenue required for the development of societies. This is particularly true for developing societies that have historically relied on natural resources and foreign aid for state resources. This paper explores avenues through which emerging economies and the Nigerian state in particular can utilize taxation both as a channel for revenue generation and as a medium for the enhancement of state-society relations with a view to promoting good governance. Deploying secondary evidence, the paper argues that there is a palpable disconnect between the government and society in Nigeria owing to the historical fact that revenue generation from the natural resources domain and its utilization has been without accountability and transparency. It insists that governance in Africa's most populous enclave is conducted without the requisite tactical taxation nous. On the basis of this evidence the paper suggests that Nigeria embrace a transparent and accountable tax regime which can aid economic development, strengthen economic institutions and policies, move beyond natural resources exploitation, and redistribute resources in favour of investments that require little skills and less capital with a view to bridging the gap between the rich and poor while simultaneously bringing a lot of people out of poverty.