Internal Generated Revenue and Economic Development: A Study of Akwa Ibom State

INTERNAL GENERATED REVENUE AND ECONOMIC
DEVELOPMENT: A STUDY OF AKWA IBOM STATE
BY
BLESSING CLEMENT BENSON
U2017/0606178
DEPARTMENT OF ACCOUNTING
FACULTY OF MANAGEMENT SCIENCES
UNIIVERSITY OF PORT HARCOURT
SUPERVISOR: DR. JOSEPH BENVOLIO
APRIL, 2023
i
INTERNAL GENERATED REVENUE AND ECONOMIC
DEVELOPMENT: A STUDY OF AKWA IBOM STATE
BY
U2017/0606178
BEING A B.Sc. PROJECT SUBMITTED TO THE
DEPARTMENT OF ACCOUNTING, FACULTY OF MANAGEMENT SCIENCE
UNIIVERSITY OF PORT HARCOURT
IN PARTIAL FULFILMENT OF THE REQUIREMENT OF THE AWARD OF
BACHELORS DEGREE IN ACCOUNTING
SUPERVISOR: DR. JOSEPH BENVOLIO
APRIL, 2023
ii
CERTIFICATION
UNIVERSITY OF PORTHARCOURT
FACULTY OF MANAGEMENT SCIENCE
DEPARTMENT OF ACCOUNTING
INTERNAL GENERATED REVENUE AND ECONOMIC DEVELOPMENT: A STUDY
OF AKWA IBOM STATE
BY
U2017/0606178
The board examiner certifies as follows
That to the best of my knowledge, this is the original work of the candidate
DR. JOSEPH BENVOLIO
Supervisor Signature Date
PROF. J. N. NWAIWU
Head of Department Signature Date
PROF. G. I. UMOH
DEAN, Faculty of Signature Date
Management sciences.
EXTERNAL EXAMINER Signature Date

iii
DECLARATION
I hereby declare that this project titled: INTERNAL GENERATED REVENUE
AND ECONOMIC DEVELOPMENT: A STUDY OF AKWA IBOM STATE
was carried out by me under the supervision of DR. JOSEPH BENVOLIO. that this
work is done in partial fulfilment for the award of (B.Sc.) Degree in the department
of accounting, management science, University of port Harcourt, Choba, Rivers
State, Nigeria.
U2017/0606178 SIGNATURE/DATE
iv
DEDICATION
This project work is dedicated to God almighty who gave me the wisdom,
knowledge, understanding, guidance and protection throughout my stay in the
university.
v
ACKNOWLEDGEMENT
I give thanks to God Almighty for his grace and providence without which I
wouldn’t have made it this far. To my family, the family of Late JUSTICE NTIA,
Mr. JOSEPH AKPAN. Thank you for all your financial support coupled with
prayers.
To my Best Friend, my mother, my number 1 supporter, the backbone of my
existence. Thank you for all the prayers and financial support. God bless you and
keep you.
To Mr. Uche Wike thank you for all the support you give. God bless you.
I also want to thank my supervisor, Dr. JOSEPH BENVOLIO for his guidance on
my project journey. And to my beloved department of accounting lecturers, friends
and colleagues who made my education journey a memorable one, I say THANK
YOU
vi
Abstract
Revenue generation is one of the core drivers of modern development and is a key to developing
modern economy. Hence, this study assesses the impact of internally generated revenue on
economic development in Akwa Ibom state. The inability of States and Local governments in
Nigeria to generate enough revenue to cope with their expenditure responsibilities has been a
serious challenge. The improper use of IGR and corruption have remained a setback to economic
development in Nigeria, hence the clamour from the citizens. This study made use of ex-post facto
research design to specifically examine the impact of internally generated revenue on economic
development in Akwa Ibom state.
The time series data employed covered for a period between 2013 to 2022 and were gathered from
the Central Bank of Nigeria (CBN), IGR summary of state boards of internal revenue service,
Nigeria Bureau of Statistic (NBS). The statistical tool used for the data analysis was the multi-
regression and t-test for test of hypotheses.
The result showed that there is a significant positive relationship between internally generated
revenue and economic development. However, pay as you earn, stamp duties and development
levy which are major components of internally generated revenue, have significant impact on the
GDP and per capital income which are the major component of economic development of Akwa
Ibom state.
The study recommends that government should enhance revenue collection agency in the
following ways: computerization of their processes, regular training and motivation of staff
members, State governments should put in place policies for sustainable growth in IGR and that
IGR should be invested in financing capital expenditure required for infrastructure development
needed for economic growth. State government official with corruption history should not be
allowed to continue to handle responsibilities rather; people with outstanding integrity should be
given
opportunity to occupy government positions that are sensitive and could help achieve economic
development objectives.
vii
TABLE OF CONTENT
Cover page - - - - - - - - - - - - - - - - - - - - - - - - - --- i
Certification - - - - - - - - - - - - - - - - - - - - - - - - - - - ii
Declaration - - - - - - - - - - - - - - - - - - - - - - - - - - - iii
Dedication - - - - - - - - - - - - - - - - - - - - - - - - - - - - iv
Acknowledgement - - - - - - - - - - - - - - - - - - - - - - - -- v
Abstract- - - - - - - - - - - - - - - - - - - - - - - - - - - - - vi
Table of content - - - - - - - - - - - - - - - - - - - - - - - - - - vii
CHAPTER ONE: INTRODUCTION
1.1 Background of the study - - - - - - - - - - - - - - - - - - - - ---- 1
1.2 Statement of the Research problem- - - - - - - - - - - - - - - - - - - - -5
1.3 Aims and Objectives of the study- - - - - - - - - - - - - - - - - ---- 6
1.4 Research Questions- - - - - - - - - - - - - - - - - - - - - -- ----7
1.5 Research Hypothesis - - - - - - - - - - - - - - - - - - - - - ---- 8
1.6 Significance of the study - - - - - - - - - - - - - - - - - - -- - - --9
1.7 Biography of the Author of the work being studied - - - - - - - - - - -- - - - - - 9
1.8 Scope of the study - - - - - - - - - - - - - - - - - - - - - - - - - - - - -9
viii
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Introduction - - -- -- - -- - - - -- - - - - - -- -- -- -- -- ---- - - - -- -- - -- - - - -- --- - -- -- --- --11
2.2 Theoretical Framework - - - - - - - - - - - -- - - ---- -- --- - 11
2.2.1 Theory of fiscal federalism - - - - - - - - - --- - - - - - - - - - - - - - 11
2.2.2 The Linear Stage of Growth Theory- - - - - - - - - - - - - - - - - - - - - 15
2.3 Conceptual Literature Review - - - - - - - - - - - -- - - - - - - - 17
2.3.1 The concept of Revenue- - - - - - - - - - - - -- - --------- - - - - 17
2.3.2 sources of revenue - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 18
2.4 importance of revenue - - - - - - - - - - - - - - - - - - - - - - - - - - - 24
2.5 problem of internally generated revenue in Akwa Ibom State - - -- - - -- - - - - - 24
2.6 an overview of akwa ibom state board of internal revenue -- - - - - - - - - - - - 29
2.7 Measures of internally generated revenue - - - - - - - - - - - - - - - - - - - 30
2.7.1 Pay as You Earn - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -30
2.7.2 Stamp Duty - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - -- - - - - - - - - - - - - - - - 31
2.7.3 Development Levy - - - - - - - - - - - -- - - - - - - - -- - - - - - - - - - - - - - - - - -- - - - - - - - - - 32
2.8 Concept of Economic Development- - - - - - - - -- - - - -- - - - - - -- - -- - - - - - - - - - - - - - - -33
2.8.1 Per Capital Income - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -33
2.8.2 economic growth - - - - - - ------------------- -- - - - -- - - - 33
2.9 effect of internally generated revenue on economic development - - - - - - - - 34
2.10 Empirical Review - - - - - - - - - - - - - - - - -- - - - - - - - 35
2.11 periodization of existing literature -- - - - -- - -- -- - - -- - -- - - - - - - - - -- - - - - - - - - 37
ix
CHAPTER THREE: METHODOLOGY
3.0 Introduction - - - - - - - - - - - - - - - - - - - - - - - - - - - - 38
3.1 Research design - - - - - - - - - - - - - - - - - - - - - - - - - - - 38
3.2 Study Area - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 39
3.3 Nature and Sources of Data - - - - - - - - - - - - - - - - - - - - - - 41
3.4 Methods of data collection - - - - - - - - - - - - - - - - - - - - - 41
3.5 Methods of data Analysis - - - - - - - - - - - - - - - - - - - - - - -- - 41
CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION
4.1 Introduction - - - - - - - - - - - - - - - - - - - - - - - - - - - - 43
4.2 Data presentation - - - - - - - - - - - - - - - - - - - - - - - - - - 43
4.3 Data analysis - - - - - - - - - - - - - - - - - - - - - - - - - - - 45
4.4 hypothesis testing - - - - - - - - - - - - - - - - - - - - - - - - - 48
4.5 Discussion of findings - - - - - - - - - - - - - - - - - - - - - - - - 57
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Introduction - - - - - - - - - - - - - - - - - - - - - - - - - - - - 60
5.1 Summary of findings - - - - - - - - - - - - - - - - - - - - - - - - 60
5.2 Conclusion- - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 61
5.3 Recommendations - - - - - - - - - - - - - - - - - - - - - - - - - 62
REFERENCES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 64
APPENDIX - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 68
x
CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
Internally Generated Revenue (IGR) denotes the revenue that the federal, state and
local governments generate within their respective areas of jurisdiction (Abiola &
Ehigiamusoe, 2014). IGR for State governments has also been described as revenues
that are derived within the state from various sources such as taxes (pay as you earn,
direct assessment, capital gain taxes, etc.) and motor vehicle license, among others
(Adenugba & Chike, 2013). According to Asimiyu and Kizito (2014), economic
development and sustainability of states in Nigeria depend on the ability of such
states to generate revenue internally to supplement the revenue allocation from
federation account. In other words, federal allocations are not sufficient to guarantee
economic development of states and local governments, hence the emphasis on local
generation of revenues to sustain the economy of the nation locally and at the federal
level.
Internally generated revenue (IGR) serves as the major tool for social contract and
infrastructural development within a state. It helps the government to be responsible
and required decisions needed to satisfy the basic needs of the people. IGR is majorly
derived from taxation in Lagos state. It is important for budgeting and it is a powerful
1
fiscal tool to direct and boost the economy. It goes a long way by providing the state
with continuous growth and development to keep the society moving. As the state
government raises more revenue internally, it results in more commissioned projects,
more money in circulation, more job opportunities, more business opportunities and
the standard of living improves. Most importantly it serves as tool for infrastructural
development within the state. There are two main expenditures that every state
usually incurs namely, recurrent expenditures and capital expenditure. (Jimoh, 2007)
states that recurrent expenditure is the kind of expenditure that occurs frequently on a
periodic basis, includes: wages and salaries of government workers, administrative
overhead, and maintenance of state properties. Capital expenditure is amount of
money spent on capital projects such as, railways, roads, ports, refineries, health
infrastructures, energy infrastructures, land and buildings. Capital expenditure mainly
has to do with government paying for acquisition of fixed capital assets that are
expected to increase productivity in a state for a long period of time and therefore
improve the standard of living. There are also two main sources of state government
revenue namely, re-current revenue and capital receipts. The recurrent revenue
sources include; licenses, fines and fees: such as; vehicle license, drivers‟ license,
registration of land, and survey fees. Taxes: include personal income tax (PAYE)as
well as, statutory allocation which is the distributed from the federation account to
the three tiers of government namely federal government, state government and local
2
government. On the other hand the capital receipts includes; Loans: this can be in two
forms internal or external loans. The internal loans symbolize state government
borrowing from various sources within the country while external loans are sourced
from the World Bank, foreign organizations or countries. Nevertheless, the loan must
be approved by the federal government within certain established units. The financial
aid could be from charitable universal establishments such as UNICEF to perform in
the states some altruistic programs like children immunization. Federal Government
Grant could also be released to finance Federal Government programs within a state,
or to assist in particular projects.
The development of infrastructure falls under capital expenditure of a state.
According to (Oteh, 2010), infrastructure is the physical assets and services that are
fundamental to the growth and development of an economy. Based on this
statement, infrastructure is considered an enabler of economic growth and aid to
development of industrial transformation in a country. There are various types of
infrastructures needed in order to maintain economic growth in a state such as,
transport infrastructures which involves, the development of roads, airport, railways,
and ports. Health infrastructure which includes, hospitals with a substantial amount
of medical equipment. Also energy infrastructure which involves, natural gas
pipelines, electric transmission lines, transformers, etc. Infrastructures are large
physical networks essential for the establishment and running of modern industrial
3
countries. In many states infrastructural development is highly expected and
demanded for by people in the state. Continuous infrastructural development can be
used as a tool by a political party in power to remain the ruling party in a state for a
long period of time. Therefore, for a state that wants to grow and develop,
infrastructural development must be its priority and policy concern. But for
development of infrastructure revenue is a necessity.
Most state governments in Nigeria do no longer perform their responsibilities simply
because of poor finances arises from internally generated revenue. The bad financial
situation is further aggravated by the prevailing inflationary situation in this country
which erodes the value of funds available to render essential social services to the
people. Economic growth is highly associated with fund, much revenue is needed to
plan, execute and maintain infrastructures and facilities at the state government
level. They need revenue generated for such developmental projects like
construction of accessible roads, building of public schools, health care centers,
construction of bridges among others are sources generated from taxes, royalties,
haulages, fines and grants from states, national and international governments. Thus,
state government cannot embark, execute and possibly carryout the maintenance of
these projects and other responsibilities without adequate revenue generation.
4
5
1.2 STATEMENT OF THE PROBLEM
The state government is faced with myriads of problems ranging from corruption
and embezzlement, poor financing, mismanagement of funds to poor leadership.
This has deterred the development of state government in Nigeria. The major issues
are; what has contributed to the non-performance; is it because of total dependence
on federal statutory allocation? Is it as a result of poor internally generated revenue
drive? Is it because of ineffective utilization of available scarce resources or
mismanagement by public office holder? Among others, state government has
always been over dependent on the statutory allocation thereby causing the state
government to underperform which includes;
i. Dilapidated infrastructural facilities
ii. Unavailability of social services to rural populace.
iii. Underdevelopment of local communities.
National Population Commission of Nigeria in 2016, declared that Akwa Ibom state
is one of the most populated state in southern part in Nigeria with over 11 million
residents. The population of residents in Akwa Ibom state are made up of diverse
people of various culture due to migration of people from other states across Nigeria
and neighboring countries, this has resulted in more expenditure for Akwa Ibom
state government to incur on infrastructure. In line with the population growth,
6
Akwa Ibom state needs more fund or revenue to meet up its infrastructural
development. As stated by the Akwa Ibom state governor Emmanuel Udom on the
6th of March 2018, he explained that the reason why the state government decided
to increase the Land Use Charge is to increase the internally generated revenue in
order for the state to meet up with infrastructural gap of 10.47 trillion naira (Muritala
Ayinla, 2018). With the significant increase of 28.55% on internally generated
revenue between 2018 and 2022 in Akwa Ibom state as shown
in (National Bureau of Statistics, 2022) and continuous increase in 2022, the state
government is yet unable to sufficiently finance its infrastructural expenditures. Due
to the problem stated above, it has become necessary to conduct
a research to examine the impact of internally generated revenue on the
infrastructural development of Akwa Ibom State.
1.3 AIMS AND OBJECTIVES OF THE STUDY
The main objective of this research is to examine the relationship between internal
generated revenue on the economic development of Akwa Ibom State. other specific
objectives are;
a. to examine the relationship between Pay as you Earn (PAYE) and per capital
income in Akwa Ibom State.
7
b. to ascertain the extent which Pay as you Earn (PAYE) has contributed to
economic growth in Akwa Ibom State.
c. to find out the nature of relationship between stamp duty and per capital income
in Akwa Ibom State.
d. to evaluate the extent to which stamp duty has c
e. ontributed to the economic growth in Akwa Ibom State.
f. to investigate if there is any relationship between development levy and per
capital income in Akwa Ibom State.
g. to determine the extent to which development levy has contributed to the
1.4 RESEARCH QUESTION
I. To what extent of relationship does Pay as you Earn (PAYE) relate with
per capital income in Akwa Ibom State?
II. Does Allocation from Pay as you Earn (PAYE) significantly contribute to
the Economic Growth of Akwa Ibom State?
III. What is the extent of relationship between stamp duty and per capital
income in Akwa Ibom State?
8
IV. To what extent does stamp duty contribute to the Economic Growth of
Akwa Ibom State?
V. Is there any significant relationship between development levy and per
capital income in Akwa Ibom State?
VI. To what extent does development levy contribute to the Economic Growth
of Akwa Ibom State?
1.5 RESEARCH HYPOTHESIS
The study attempts to test the following null hypothesis generated from the problem
of study:
Ho1; There is no significant relationship between Pay as you Earn (PAYE) and per
Ho2; Pay as you Earn (PAYE) has no significant impact to the Economic Growth of
Akwa Ibom.
Ho3; There is no significant relationship between Stamp duty and per capital
Ho4; The Stamp duty has no significant impact to the Economic Growth of Akwa
Ibom.
Ho5; There is no significant relationship between development levy and per capital
9
Ho6; The development levy has no significant impact to the Economic Growth of
Akwa Ibom.
1.6 SIGNIFICANCE OF THE STUDY
From the outlook, there is need for the state government to improve their
performance. However, the research is significantly considering the closeness of
state government to the grassroots’ people and the need to utilize substantial revenue
for its various sources in addition to federal statutory allocation for developmental
purpose. The study will help to identifying some means of generating revenue that
has been neglected over years. It will also be beneficial to the grassroots because
improved revenue generation means improved standard of living in form of
provision of social amenities such as road, hospital, park, drinkable water, rural
electrification etc. The study will be educative as it will be a reference point for
researchers.
1.7 BIOGRAPHY OF THE AUTHOR OF THE WORK BEING STUDIED
My name is Blessing Benson, an indigene of Etinan in Akwa Ibom State. I’m the
only child of my parent. I’m a hard worker and an accomplisher. I enjoy getting
goals finished and exceeding my targets. I took a course in baking and affiliate
marketing
1.8 SCOPE OF THE STUDY/DELIMITATION
10
The study would appraise the revenue generation for the period of ten years (2013-
2022) in Akwa Ibom State. The research is intended to be carried out using
secondary data. Secondary data will be obtained from financial statements of Akwa
Ibom state, IGR summary of state boards of internal revenue service, FAAC records
and national GDP figures for a period between 2013 to 2022. Other relevant data
were extracted from the websites of Central Bank of Nigeria (CBN), Nigeria Bureau
of Statistic (NBS), Ministry of Finance, Akwa Ibom State Debt Management Office,
Joint Tax Board (JTB), journals and textbooks.
This study has some limitations most especially in the area of data collection which
is to be covered and has time duration of ten years (i.e. 2013–2022). Financial
constraints as well as time available for the completion of the study are among other
factors that would limit the scope of the study.
11
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter gives an insight into various studies conducted by outstanding
researchers, as well as explained terminologies with regards to the evaluation of
Internally Generated Revenue and Economic Development of Akwa Ibom State. The
chapter also gives a resume of the history and present status of the problem
delineated by a concise review of previous studies into closely related problems.
2.2 Theoretical Framework
2.2.1 Theory of fiscal federalism
This study adopted the fiscal federation theory as the basis for this work. The basic
foundations for the initial theory of Fiscal Federalism were laid by Kenneth Arrow,
Richard Musgrave and Paul Sadweh Samuelson's two important papers (1954, 1955)
on the theory of public goods, Arrow's discourse (1970) on the roles of the public
and private sectors and Musgrave's book (1959) on public finance provided the
framework for what became accepted as the proper role of the state in the economy.
Within is framework, three roles were identified for the government sector. These
were the roles of government in correcting various forms of market failure, ensuring
an equitable distribution of income and seeking to maintain stability in the macro-
12
economy at full employment and stable prices. The theoretical framework in
question was basically a Keynesian one which canvassed for an activist role of the
state in economic affairs. Thus, the government was expected to step in where the
market mechanism failed due to various types of public goods characteristics.
Economics teaches us that public goods will be underprovided if left to private
market mechanisms since the private provider would under invest in their provision
because the benefits accruable to her or him would be far lower than the total benefit
to society. Governments and their officials were seen as the custodians of public
interest who would seek to maximize social welfare based on their benevolence or
the need to ensure electoral success in democracies. Once we allow for a multi-level
government setting, this role of the state in maximizing social welfare then provides
the basic ingredients for the theory of fiscal federalism. Each tier of government is
then seen as seeking to maximize the social welfare of the citizens within its
jurisdiction. This multi-layered quest becomes very important where public goods
exist, the consumption of which is not national in character, but localized. In such
circumstances, local outputs targeted at local demands by respective local
jurisdictions clearly provide higher social welfare than central provision. This
principle, which Oats (1972) has formalized into the "Decentralization Theorem"
constitutes the basic foundation for what may be referred to as the first generation
theory of fiscal decentralization (Oats, 2004). The theory focused on situations
13
where different levels of government provided efficient levels of outputs of public
goods "for those goods whose special patterns of benefits were encompassed by the
geographical scope of their jurisdictions" (Oats, 2004: 5). Such situation came to be
known as "perfect mapping" or "fiscal equivalence" (Olson 1969).
Nevertheless, it was also recognized that, given the multiplicity of local public goods
with varying geographical patterns of consumption, there was hardly any level of
government that could produce a perfect mapping for all public goods. Thus, it was
recognized that there would be local public goods with inter-jurisdictional spill-
overs. For example, a road may confer public goods characteristics, the benefits of
which are enjoyed beyond the local jurisdiction. The local authority may then under-
provide for such a good. To avoid this, the theory then resorts to traditional
Pigouvian subsidies, requiring the central government to provide matching grants to
the lower level government so that it can internalize the full benefits. Based on the
following, the role of government in maximizing social welfare through public
goods provision came to be assigned to the lower tiers of government. The other two
roles of income distribution and stabilization were, however, regarded as suitable for
the central government. To understand the rationale for the assignment of the
redistribution function to the central government, we need to examine what the
implications of assigning this responsibility to the lower tier would imply. Given
that citizens are freely mobile across local or regional jurisdictions, a lower level
14
jurisdiction that embarks on a programme of redistribution from the rich to the poor
would be faced with the out-migration of the rich to non-redistributing jurisdictions
and in-migration of the poor from such jurisdictions to the redistributing one. If on
the other hand, the powers to redistribute were vested in the central government, a
redistribution policy would apply equally to citizen’s resident in all jurisdictions.
There would therefore be no induced migration. The central government is expected
to ensure equitable distribution of income, maintain macroeconomic stability and
provide public goods that are national in character. Decentralized levels of
government on the other hand are expected to concentrate on the provision of local
public goods with the central government providing targeted grants in cases where
there are jurisdictional spill-overs associated with local public goods. The next step
in the theoretical framework was to determine the appropriate taxing framework. In
addressing this tax assignment problem, attention was paid to the need to avoid
distortions resulting from decentralized taxation of mobile tax bases. Gordon (1983)
emphasized that the extensive application of non-benefit taxes on mobile factors at
decentralized levels of government could result in distortions in the location of
economic activity. The final element of this basic theory to note is the need for fiscal
equalization. This is in the form of lump sum transfers from the central government
to decentralized governments. The arguments for equalization were mainly two. The
first which is on efficiency grounds saw equalization as a way of correcting for
15
distorted migration patterns. The second is to provide assistance to poorer regions or
jurisdictions. Equalization has been important in a number of federations. For
example, Canada has an elaborate equalization scheme built into her inter-
governmental fiscal arrangements. It should be pointed out however, that recent
literature emphasizes the importance of reliance on own revenues for financing local
budgets. A number of authors (Weingast, 1995; McKinon, 1997) have drawn
attention to the dangers of decentralized levels of government relying too heavily on
intergovernmental transfers for financing their budgets.
2.2.2 The Linear-Stage-of-Growth Theory
The linear-stages-of-growth model was first formulated in the 1950s by W. W.
Rostow in The Stages of Growth: A Non-Communist Manifesto. The linear-stage-
of-growth model was primarily an economic theory of development in which the
right quantity and mixture of saving, investment, and foreign aid were all that was
necessary to enable developing nations to proceed along an economic growth path
that historically had been followed by the more developed countries.
This school of thought focused on the lack of domestic savings and investment. In
order to promote growth, policymakers had to induce higher savings and investment
rates in developing countries, a proposition that was easier said than done. This
economic model was postulated by Rostow’s Stages of Growth and Harrod Domar
16
Growth Model. The former model postulates that economic modernization occurs in
five basic stages of varying length, i.e. traditional society (when the society is
preoccupied with understanding and use of technology), preconditions for take-off
(education, capital mobilization, establishment of banks and currency,
entrepreneurial and manufacturing develops), take-off (which occurs when sector led
growth becomes common and society is driven more by economic processes than
traditions society),drive to maturity (this refers to the need for the economy itself to
diversify, i.e. from oil and gas to non-oil sector)and age of high mass consumption
(refers to the period of contemporary comfort afforded by many western nations,
wherein consumers concentrate on durable goods wherein consumers concentrate on
durable goods, and hardly, and hardly remember the subsistence concerns of
previous stages, however, the developing nations are still flooded with inferior
goods and materials). And the later model postulates that GDP growth is
proportional to the share of investment spending in GDP which means that, the
growth rate of GDP depends on the level of savings and the capital output ratio.
These theories have been criticized for not recognizing that, capital accumulation is
not a sufficient condition for development. The theory failed to account for political,
17
social and institutional obstacles to development, particularly, in the developing
countries, such as Nigeria.
2.3 CONCEPTUAL FRAMEWORK
2.3.1 Concept of Revenue
Revenue has been defined by various scholars at different time. It lacks universal
accepted definition. According to Dixon (2000) revenue is the total amount obtained
from the sale of a merchandise services to customers. Fayemi (2001) sees it as all
tolls, taxes, impress, rates, fees, duties, fine, penalties, fortunes and all other receipt
of government from whatever source arising over a period either one year or six
months. Flesher [2007] define revenues as an increase in owners’ equity resulting
from the performance of a service or sale of something‟ this definition is anchored
on the concept of equity which may increase due to sale of goods or provision of
services in other words there are two sides revenue ; something received and given.
Adam (2006) defined revenue as the fund required by the government to finance its
activities. These funds are generated from different sources such as taxes,
borrowing, fine, fees etc. It is also defined as the total amount of income that accrues
to an organization (public or private) within a specified period of time (Hamid,
2008). States revenue comprises of receipt from taxation as well as those which are
18
not the
proceeds of taxation, but of either the realization from the sale of government
properties or other interests and returns from loans and investment earning
According to financial memorandum volume 11 on page 152details revenue as a
normal income of government receivable during the period of financial year and or
any sum of money received by the government other than in the normal every day
operations such as loan, grants, subvention sale of prosperity, share capital, rent and
so Mr. Kanu in his paper presented in seminar in (1994) on the Local Government
revenue generation and utilization said “revenue collection and the mobilization of
all the accrued funds to the government through the appropriate machineries to settle
the liabilities and the cost of public expenditures. These find mostly the community
taxes, rates, license, fees, Market fees, motor parks, personal income tax.
Revenue is defined as a compulsory contribution imposed by a public authority
irrespective of the exist amount of service rendered to the tax payer in return and not
imposed as a penalty for legal offender.
2.3.2 Sources of Revenue to State Governments
The constitution of the federal Republic of Nigeria as stipulated in section 27 and 28
of State Government and Local Government (Basic Constitutional and Transitional
Provisions) Decree No.15 of 1989has spelt out the sources of revenue collectable by
the state government. The revenue income which is the sums of money provided for
19
the revenue expenditure comes into focus to find out the source which can broadly
be categorised into two, namely external sources and internally generated
sources. These sources can be further categorised into:
a. Fees and charges
b. Internal taxation
c. Federal government grants
1. The External Sources
The external sources of revenue are in two set-classes:
(A) Statutory allocation from the federation Account in accordance with section 160
sub-section 2 of the Constitution of the federal Republic of Nigeria
(promulgation)Decree 1989 which stipulates that any amount standing to the credit
of federation account shall be distributed among the federal and state Governments,
and the Local Governments in each state on such terms and in each manner as may
be prescribed by the National Assembly:
(B) Statutory allocation from each state Government to the Local Governments in
its area of jurisdiction; Each state shall pay to the Local Governments such
proportion of its revenue (excluding the sums received from the federation Account)
on such terms and such manner as may be prescribed by the National Assembly.
Section 160 of the Constitution of the federal Republic of Nigeria (promulgation)
Decree No.12 of 1989 Federal Grant-in-aid Section 162 of the Constitution of the
20
federal Republic of Nigeria(promulgation) Decree No.12 of 1989 stipulates that the
Federation may make grants to a Local Government to supplement the revenue of
that Local Government in such sum and subject to such terms and conditions as may
be prescribed by the National Assembly. Because of the irregularities and
unenforceability of this revenue sources, it is not advisable for any local
Government to rely on it.
The resource allocation systems in force at 1st June, 1992 are as follows; (a) 10%
(ten percent) of internally generated state revenue and the federal government which
stands at 20% (twenty percent) of distributable pool account. These make up the
statutory allocation to the local government finance. The total revenue accruing to
the Local Governments in state is allocated to them on the basis of the following
criteria;
(a) Equality 40%
(b) Population 30%
(c) Land Mass Terrain 10%
(d) Social Development as represented by school enrolment 10%
(e) Internal revenue effort 10%
2. Internally Generated Sources of Revenue
21
The functions and scope of services stipulated in section 27 and 28 of Local
Government (Basic Constitutional and Transitional Provisions) Decree No.15 of
1989 indicate clearly the sources of revenue to a Local Government.
Internally generated revenue are those revenues that are derived within the state
from various sources such as taxes (pay as you earn, direct assessment, capital gain
taxes, etc), and motor vehicle license, among others. While the statutory allocation
from Federation Account, Value Added Tax constitute the external source. Most
states of the federation get the bulk of their revenue in form of statutory allocation
from the
federation account to finance their expenditure programmes. (Mukhtar, 1996;
Isyaku, 1997; Abdulkadir, ; Ibrahim, 2002; Ishaq, 2002 and Hamid, 2008).
State government as the second tier of government in Nigeria derive its revenue
from various sources.
22
However, it should be noted that sources of revenue are by no means uniform among
the states. States derive their revenue depending on the resources available to them;
(Anyafo, 1996; Daniel, 1999; and Adam, 2006). The share of federation account to
states constitutes 57.97% in 2002 of the total revenue plus grant and this rose to
65.82% in 2006; While the internally generated revenue declined from 13.38% in
2002 to 8.11% in 2006 (CBN,2006). The average percentages of internally generated
revenue in relation to the federal allocation were between 5-9 percent for most non-
23
oil producing states in the recent past. Kano was able to slightly exceed 10% in 2004
to date due to aggressive revenue generation efforts, with Lagos state as the only
exception.
Recurrent expenditure according to Jimoh (2007) is the type of expenditure that
happens repeatedly on daily, weekly or even monthly basis. The amount involved is
charged to some operating account (e.g. profit and loss account or income and
expenditure account).This includes for example payment of pensions and salaries,
administrative overhead, maintenance of official vehicles, payment of electricity and
telephone bills, water rate and insurance premium, etc. Internally Generated
Revenues (IGR) are those sources of government finance generated majorly by the
federal, states and local councils, which help in broadening and widening the overall
non-oil revenue structure of the state. The current challenges of the three tiers of
government in Nigeria is the dwindling level of revenue generation, mostly by the
state governments and the absolute dependence on federal allocation which is tilted
more in favour of the Federal Government, hence giving rise to annual budget
deficits in the states and inadequate financial resources for meaningful growth and
viable projects development (Adewoye & Fasina, 2008). Udeh (2002) asserts that
the poor financial status of states in Nigeria has escalated due to the non-provision of
grants by the federal government which under the constitution are needed to be
made available annually during budgetary disbursement to leverage sub-national
24
governments in crisis to address challenges of inadequate financial resources needed
to cope with their ever increasing areas of assigned services which include; shelter,
health services, water supply, food, as well as qualitative education at primary and
post - primary schools level which usually engulf huge sums of money. An
observation of the income profile of Akwa Ibom State from 2007 to 2014 showed
that the internally generated revenue is less than one fourth of the total inflows
accruing to the state. Internally Generated Revenue (IGR) is revenues generated
internally apart from subventions, allocation, and grants from Governments. Every
organization has various ways of enhancing her internal sources of revenue. Internal
revenue generations are the exclusive sources of revenue accrued to the local
government system in Nigeria. They are that revenue which the local government
alone is in charge. They are the sources of revenue which has been sustaining local
government before the 1976 local government reform. They are the sources of
revenue in which local government fall back on if the external ones fail. In fact, they
are the traditional sources of revenue due for local government system in Nigeria.
2.4 Importance of Revenue
Revenue in whatever form is meant for any organization for the purpose of fulfilling
its obligation to the masses under its jurisdiction, such obligation includes:
1. To provide protection to lives and properties of the masses.
25
2. To improve the standard of living of the masses through the provision of access
road, education, health center and employment etc.
3. To provide social amenities like parking and recreational facilities.
2.5 Problem of Internally Generated Revenue in Akwa Ibom State
The problems of revenue generation in Akwa Ibom State government in Nigeria
enjoyed an improved revenue from the 1970’s till date due to reforms introduced by
different regimes all aimed at making the state government effective and efficient in
discharging statutory responsibilities to the people. Mohammed (2015) pointed out
some challenges of Internally Revenue Generation in Akwa Ibom, According
to him the increased sources of revenue generation in the state; this problem is
multifarious ranging from low borrowing capacity, corruption, mismanagement and
misappropriation of state government funds, ineffective strategies for enhancing
internally generally generated revenue, lack of skilled and technical personnel, etc.
2.5.1 Mismanagement and misappropriation of state government funds
This is one of the major problems of revenue generation in Akwa Ibom State; in
most cases the state government funds have been mismanaged. Tax collectors that
are charged with the responsibility to collect all the revenue sources do not
adequately use their freedom to collect them and exploit other sources of revenue
available to the state government. Many state government officials embezzle local
government funds through all sorts of manner like inflating contracts or embarking
26
on white elephant projects or outright siphoning of funds which has affected the
developmental process of Akwa Ibom State (Abdullahi, 2016).
2.5.2 Corruption
Aboh (2009) posited that internally generated revenue which was hoped to
accelerate the finance of the state government is bedeviled by corrupt practices on
the part of revenue collectors. It has been observed that these revenue collectors
have in the possession unofficial receipts; this enables them to divert state
government funds into private use. Corruption is the locust that has eaten state
government revenue, this manifested in the distorting of revenue return receipts,
embezzlement and misappropriation of funds.
2.5.3 Poor Financial Management
This arises from poor attitude to work as well as lack of integrity of revenue
collectors. Ineffective Strategies for Enhancing Internally Generated Revenue in the
state government, was also contributed to poor revenue generation. These human
related factors no doubt negatively affected development at the state government
level which is the bedrock for genuine national development (Abou, 2009). The
greatest obstacles of effective tax administration in Nigeria today are: Tax avoidance
and evasion. The twin evils have for years posed insurmountable obstacles to
increased tax revenue. According to the information by the Akwa Ibom State Board
27
of Internal Revenue the major problem of Tax Administration in Akwa Ibom State
includes;
(1) Tax Evasion: Tax evasion is a deliberate and willful practice of not disclosing
full taxable income so as to pay less tax. In other words, it is a contravention of tax
laws whereby a taxable person neglects to pay the tax due or reduces tax liability by
making fraudulent or untrue claims on the income tax form. Tax is evaded through
different methods some of which include the following:
• Refusing to register with the relevant tax authority.
• Failure to furnish a return, statement or information or keep records required.
• Overstating of expenses so as to reduce taxable profit or income, which will also
lead to payment of less tax than otherwise have been paid.
• A taxpayer hides away totally without making any tax return at all.
• Entering into artificial transactions.
(2) Tax Avoidance: According to Okpe (1998) tax avoidance is a situation where
the tax payer arranges his affairs legally so that he pays less tax than he might
otherwise pay. He also describes tax evasion as a situation where the tax payer
adopts illegal means to pay less tax. Tax avoidance has been defined as the
arrangement of tax Payers’ affairs using the tax shelters in the tax law, and avoiding
tax traps in The tax laws, so as to pay less tax than he or she would otherwise pay.
That is, a
28
person pays less tax than he ought to pay by taking advantage of loopholes in a tax
levy.
Also, another factor that makes collection of tax difficult in the board is that so many
people in Akwa Ibom State do engage in subsistence production. It is therefore
difficult to estimate currently the tax of their production. This is because they do not
produce on a commercial basis. Such sectors are therefore exempted from paying tax
and this is a problem to the board.
However, according to Abubakar (2008), the reasons or causes of tax evasion and
tax avoidance are numerous but some relevant ones for Nigeria are:
1. Tax Rate: Even though the rates in Nigeria are not high compared to other
countries, tax payers will still complain of high rate of taxes.
2. Greed and Selfishness: - On the part of some tax payers even though many
Nigerian tax payers live from hand to mouth, there are those that by an international
standard they are rich. Those people who are rich in order to make themselves richer
and also to ensure that the wide gap between them and the poor is
not only maintained but further widened, so that they will continue to control and
manipulate the masses through the power of money.
3. Loopholes in Tax Law: - This also encourage the practice of tax avoidance (i.e.)
tax payers take the advantage of the loop holes in the tax laws to minimize their tax
liabilities in the belief that it is a law act.
29
4. Lack of Qualified Personal: - According to Rabiu (2003) rising of correct
assessment and prompt collection of tax largely depends on quality and efficiency of
the staff of the revenue departments. In most revenue department qualified and
competent staff are inadequate.
5. No Punishment for Evaders: - Though tax evasion is said to be a criminal act,
tax evaders are supposed to be punished when caught but it has not been the practice
in Nigeria. This situation does not only make tax evaders to continue in the act but
also encourage other tax payer to emulate themselves Adenale(1999)..
2.6 An Overview of Akwa Ibom State Board of Internal Revenue
Board of internal revenue service’s Akwa Ibom state, is one of the main organ of
government responsible in the state for assessing, enforcing tax laws and collecting
the due tax locally to the state. It was establishing statutorily by the state edict No. 6
of 1997 following the creating of the state on 1 October, 1996 by the then military
ruler General Sani Abacha. The edict was in-line with the Decree (Now Act) 104 of
(1993) as amended mainly to unify administration of the tax in the country.
The Act also, provides and empowered state board as the policy making organ for
the internally generated revenue to the various state government of the federation.
Currently, the Akwa Ibom state board of internal revenue services have five main
departments responsible for assessing, executing and collecting taxes due for the
state. The departments are: administration and finance department, collection and
30
accounting department, tax assessment department, tax audit department and other
taxes department. Administration compositions of the board are headed by chairman
and chief executive officer (permanent secretary of the board) and other three main
directors. The directors are; director administration and finance, director of
taxes and director of revenue. The board have 11 area offices/division within the
state that is responsible for collecting taxes in their areas.
2.7 Measures of Internally Generated Revenue
2.7.1 PAY AS YOU EARN (PAYE)
The PAYE system, first introduced in 1960, has been reformed and significant
changes have been made in respect of employer reporting obligations. With effect
from 1 January 2019, employers are obliged to report their employees’ pay and
statutory deductions to Revenue, on or before the date they pay their staff. This
makes it easier for employers to deduct, and pay at the right time, the correct
amounts of Income Tax, Pay Related Social Insurance, Universal Social Charge and
Local Property Tax. Forms P30, P45, P60 and P35 (end of year return) have been
abolished and replaced by new procedures.
The PAYE is an important and easy-to-collect revenue item. Its claim on the
resources of the tax administration is limited, particularly if return filing by
employees is restricted to those who earn substantial other income or are entitled to
significant special deductions, or both. A simple PAYE does not complicate the
31
employer's wage administration. Compliance control can focus on employers only,
rather than on individual employees. No consolidation with other income is more
acceptable when other income is also subject to withholding taxation.
The Pay as You Earn (PAYE) system The Pay as You Earn (PAYE) system is a
method of tax deduction under which an employer calculates and deducts any
income tax due each time a payment of wages, salary etc. is made to an employee. In
addition, employers are obliged to calculate and deduct any liability to Pay Related
Social Insurance (PRSI), Universal Social Charge (USC) and Local Property Tax
(LPT). Employers are obliged to operate the PAYE system where they make
payments in excess of certain levels.
2.7.2 STAMP DUTY
Under the Stamp Duty Act, stamp duty is payable on any agreement executed in
Nigeria or relating, whatsoever, to any property situated in or to any matter or thing
done in Nigeria. Instruments that are required to be stamped under the Stamp Duties
Act must be stamped within 40 days of first execution.
Stamp duty is a tax that is levied on single property purchases or documents
(including, historically, the majority of legal documents such as cheques, receipts,
military commissions, marriage licenses and land transactions). A physical revenue
stamp had to be attached to or impressed upon the document to show that stamp duty
32
had been paid before the document was legally effective. More modern versions of
the tax no longer require an actual stamp.
2.7.3 DEVELOPMENT LEVY
Development Levy means a levy imposed and provided for by this Bylaw pursuant
to the Act.
Development Levy means the fee paid by the parent as an agreed, non-refundable
contribution to the School’s developmental costs, payable on the Child’s enrolment
to the School as part of the School’s revenue for that year; If a Parent subsequently
chooses not to place their child in the School, the School will refund the Parent
the Development Levy. School Fees The amount, payment method and payment due
dates are set out in the Fee schedule which is provided at the start of the school year.
The Fee schedule is available free of charge on the School’s website or Engage
Parent Portal. Top Up Enrolment Fee Enrolment Top Up Fee– at the commencement
of Grade 4 and Grade 8, and for the conversion of a day scholar to a boarder, a “top-
up” payment shall be required to bring the enrolment fee into line with the termly
fee amounts of those grades. The refundable and non-refundable portions shall be re-
calculated on the topped up amount.
2.8 CONCEPT OF ECONOMIC DEVELOPMENT
The concepts “development” and “underdevelopment” are ambiguous, and for
decades they have been the subject of endless debates and discussions. There is no
33
clear picture or definition of what actually constitutes “economic
underdevelopment” or how to achieve it, as it is an evolving concept, and keeps
altering over time. Broadly, economic development is taken to be the structural
transformation of an economy by introducing more mechanized and updated
technologies to increase labor productivity, employment, incomes, and standard of
living of the population.
Economic development is defined as a sustained improvement in material well-being
of society. Economic development is a wider concept than economic growth. Apart
from growth of national income, it includes changes – social, cultural, political as
well as economic which contribute to material progress. It contains changes in
resource supplies, in the rate of capital formation, in size and composition of
population, in technology, skills and efficiency, in institutional and organizational
set-up. These changes fulfill the wider objectives of ensuring more equitable income
distribution, greater employment and poverty alleviation. In short, economic
development is a process consisting of a long chain of interrelated changes in
fundamental factors of supply and in the structure of demand, leading to a rise in the
net national product of a country in the long run.
2.8.1 PER CAPITAL INCOME
Per capita income is a measure of the amount of money earned per person in a
nation or geographic region. Per capita income is used to determine the average per-
34
person income for an area and to evaluate the standard of living and quality of
life of the population. Per capita income for a nation is calculated by dividing the
country's national income by its population.
Per capita income counts each man, woman, and child, even newborn babies, as a
member of the population. This stands in contrast to other common measurements
of an area's prosperity, such as household income, which counts all people residing
under one roof as a household, and family income, which counts as a family those
related by birth, marriage, or adoption who live under the same roof.
2.8.2 ECONOMIC GROWTH
Economic growth includes changes in material production and during a relative
short period of time, usually one year. In economic theory, under the concept of
economic growth implies an annual increase of material production expressed in
value, the rate of growth of GDP or national income. Growth can be achieved, for it
does not achieve the developmental course of the economy. The term economic
growth is defined as the process whereby the country’s real national and per capita
income increases over a long period of time.
Economic growth refers to an increase in the real output of goods and services in the
country. Growth relates to a gradual increase in one of the components of Gross
Domestic Product: consumption, government spending, investment, net exports.
Economic Growth is measured by quantitative factors such as increase in real GDP
35
or per capita income. Economic growth brings quantitative changes in the economy.
Economic growth reflects the growth of national or per capita income.
2.9 The Effect of Internally Generated Revenue on Economic Development
Internally Generated Revenue (IGR) denotes the revenue that the federal, state and
local governments generate within their respective areas of jurisdiction (Abiola &
Ehigiamusoe, 2014). IGR for State governments has also been described as revenues
that are derived within the state from various sources such as taxes (pay as you earn,
direct assessment, capital gain taxes, etc.) and motor vehicle license, among others
(Adenugba & Chike, 2013). According to Asimiyu and Kizito (2014), economic
development and sustainability of states in Nigeria depend on the ability of such
states to generate revenue internally to supplement the revenue allocation from
federation account. In other words, federal allocations are not sufficient to guarantee
economic development of states and local governments, hence the emphasis on local
generation of revenues to sustain the economy of the nation locally and at the federal
level.
2.10 Empirical Review
Empirical evidence on the impact of IGR on developing countries points to varying
experiences. For instance, IGR (i.e. taxation powers) among other two aspects of
decentralization namely expenditure assignments, and intergovernmental fiscal
transfers have been investigated in such countries as Argentina (Schwartz and
36
Liuksila,1997), Colombia (Ahmad and Baer, 1997), Ethiopia (Brosio and Gupta,
1997), South Korea (Chu and Norregaard, 1997) and Mexico (Amieva-Huerta,
1997). The outcome of these studies generally was that developing countries do not
reap the full benefits of IGR in terms of development. In nearly all cases, there were
concerns about the sub-national governments not having enough taxing powers in a
manner that balances their expenditure assignments to revenue sources available to
them. Often, the case is for the former to be larger than the latter, making them
largely dependent on intergovernmental fiscal transfers especially from the central
government.
Moreover, a number of studies have been conducted on Nigeria’s fiscal federalism.
These range from analyzing revenue and expenditure decentralization and financial
autonomy of the different tiers of government, (Agba andObi, 2006; Ekpo 2004;
Adesopo and Asaju, 2004; Jimoh 2003) to Local Government Financing. In Nigeria,
the term ‘resource control’ has almost come to assume a life of its own, defining the
contention between proponents of increased revenue devolution and federalists who
fear that accountability is still too weak at the sub national level to allow for such
high devolution. Agba and Obi (2006) for example analyzed data on the federation
account in relation to the unending contention about allocations to the different tiers
of government. They calculated indices of revenue and expenditure decentralization
and financial autonomy of the three tiers of government and concluded that
37
expenditure power is concentrated at the federal government. They identified the
usual non-correspondence between revenue and expenditure assignment especially
to other tiers apart from the federal government and recommended conscious effort
to allocate more revenues to the sub-national governments.
However, as per empirical studies on IGR and infrastructural development, a
number of authors have attempted to ascertain the relationship using different
approaches. A research group, The Initiatives (2008) listed several areas of national
development that revenue (i.e. IGR) can impact positively to include but not limited
to, social infrastructure such as in education and health with emphasis on continuing
education and constantly improving our health care; physical infrastructure to enable
private sector investment: that is energy, transportation, security of life and property;
access to Property, Capital, and Opportunity for Individual and Communal
Development; provision of social amenities for the young, the disadvantaged, the
physically challenged and the aged; security of Lives and Property. In their
submission, this research group concluded that “a steady flow of revenue (IGR)that
would enable Nigeria to lay the foundation for stability and relative self-sufficiency
would help the country’s quest for national development”.
2.11 PERIODIZATION OF EXISTING LITERATURE
According (Michael & Akpan, 2013) to who cited the following authors: Argentina
by (Schwartz, G. Liuksila, C., 1999), Colombia by (Ahmad, E. and Baer, K., 1999),
38
Ethiopia by (Brosio, G. and Gupta, S., 1999), South Korea by (Chu, Ke-Young &
John Norregaard, 1999) and Mexico by (Amieva-Huerta, J., 1997). From their
findings a common result was derived that most times developing countries do not
obtain the full benefits of internally generated revenue in terms of development.
Almost in all cases, there were concerns about the state governments or other tiers of
government not having sufficient internally generated revenue that equates to their
expenditure assignments. Which makes it difficult to develop infrastructure, usually,
the case is that the previous revenue is larger than the next, making them mainly
dependent on financial transfers from the central government. Therefore, it becomes
difficult for state government to provide and develop basic infrastructures.
39
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
The research design provided a rigorous research process for achieving the
objectives of this study. It also suggests a ‘road map’ that clarifies the action plan for
attaining the research objectives described above and a logical consequence that
connects the empirical data (materials and data collected) to initial research
questions in pursuit of the conclusion
3.1 Research Design
The study employed ex-post facto research design, which provides empirical
solution to research problems by using already existing data. It carried out critical
analysis of data extracted from financial statements of Akwa Ibom state, IGR
summary of state boards of internal revenue service, FAAC records and national
GDP figures for a period between 2013 to 2022. Other relevant data were extracted
from the websites of Central Bank of Nigeria (CBN), Nigeria Bureau of Statistic
(NBS), Ministry of Finance, Akwa Ibom State Debt Management Office, Joint Tax
Board (JTB), journals and textbooks.
40
This period was selected to permit the use of the study’s findings for long term
prediction of the explanatory variables (IGR) on the explained variable (economic
development).
3.2 STUDY AREA
This study focuses on the internally generated revenue in Akwa Ibom State and how
it contributed to the economic development of the state.
This study adopts the model used by (Michael & Akpan, 2013) in their research
work on Internally Generated Revenue (IGR) and economic development in Akwa
Ibom State. The data were collected on Real Gross Domestic Product (RGDP) which
depict economic growth being proxy for economic development and as well as per
capita income, and on the independent variables which are Pay as You Earn
(PAYE), Stamp Duties and Development Levy. The model was modified to capture
all the three independent variables. Where internally generated revenue is the
independent
variable X and economic development represents the dependent variable Y
The model is specified of the functional form:
Y= a0 + b1 X+ e;
Thus ED= f (IGR),
41
where ED is Economic Development and IGR stands for internally generated
revenue
IGR is further broken into three as follows:
Thus, ED= f (PAYE, SD, DL)
EDit = α0 + b1 PAYEit + b2 SDit + b3 DLit +εit
Where dependent variable is EDit = Economic Development and measured by (PCI)
and (RGDP). The researcher classified this general model to test two hypotheses of
the study as the following:
PCIit = α0 + b1 PAYEit + b2 SDit + b3 DLit +εit (1)
RGDPit = α0 + b1 PAYEit + b2 SDit + b3 DLit +εit (2)
Where;
PCI= Per Capita Income
RGDP= Real Gross Domestic Product
PAYE= Pay As You Earn
SD= Stamp Duties
DL= Development Levy
a0 = the estimate of true intercept of the dependent variables or regression constant
42
b1 to b3 = the estimate of parameters of independent variables or regeression
coeffiecent.
εit = error term
3.3 NATURE AND SOURCES OF DATA
The data for this study was collected using secondary source: The data collected
through secondary sources were analyzed to generate information required to
achieve the objectives of this study. The results and findings from data analysis were
presented using descriptive answers and this helped the researcher to explain the
physical attributes of data collected.
3.4 METHOD OF DATA COLLECTION
The secondary method of data collection used in conducting this research was based
extensively on documentary sources which are financial statements of Akwa Ibom
state, IGR summary of state boards of internal revenue service, FAAC records and
national GDP figures for a period between 2013 to 2022. Other relevant data were
extracted from the websites of Central Bank of Nigeria (CBN), Nigeria Bureau of
43
Statistic (NBS), Ministry of Finance, Akwa Ibom State Debt Management Office,
Joint Tax Board (JTB), textbooks, journals, articles, newspaper articles, paper
presentations etc.
3.5 METHOD OF DATA ANALYSIS
This study employs the multiple linear regression model Technique in the analysis of
the secondary data obtained from the internal revenue service and published annual
reports of the government of Akwa Ibom state. Various econometric and statistical
measures are employed in the analysis of the data. These include the t – ratio, the
coefficient of determination (R2), the adjusted coefficient of determination (R 2). The
coefficient of Determination (R2) is used to measure the explained variation in the
dependent variable. The adjusted coefficient of Determination (R 2) is also used to
measure the explained variation in the dependent variable taking into cognizance the
degree of freedom.
44
CHAPTER FOUR
DATA ANALYSIS, RESULT AND DISCUSION
This chapter is devoted to the presentation, analysis and interpretation of the data
gathered in the course of this study. The data used for this study is secondary data
from the central bank of Nigeria 2012 statistical bulletin. The data are being
analyzed using regression.
4.1 DATA PRESENTATION AND ANALYSIS
The data analysis is based on multiple linear regression model to test the hypothesis
stated for the impact of internally generated revenue on economic development in
Akwa Ibom state and examine the relationship among variables. The tables
presented below reflect the result from the secondary data gotten from Akwa Ibom
State Ministry of Planning and Budgeting website after data analysis using the
model stated in the previous section. From the linear model, the relationship between
Internally Generated Revenue and economic Development in Akwa Ibom State was
studied for a 10-year period spanning 2013 - 2022. The correlation analysis is
reported first, after which the multiple linear regression result was presented and
discussed.
45
Table 1: Presentation of Data
Data amount in million Naira
Year PAYE SD DL PCI RGDP
2013 4,844 951 570 368 2,626
2014 9,815 214 136 19 5,924
2015 5,796 835 296 553 5,694
2016 10,715 2,968 378 558 3,257
2017 8,427 1,284 667 453 8,093
2018 10,905 1,936 655 2,514 3,918
2019 13,991 2,547 299 1,195 6,072
2020 18,181 3,610 510 3,893 8,518
2021 13,378 7,652 725 3,108 10,416
2022 101,436 9,921 1,596 4,329 12,422
Source: compiled by the author from Akwa Ibom state Ministry of planning and budgeting website
4.2 Descriptive Analysis
Various description statistics are calculated from the variables under study in order
to describe the basic characteristics of these variables. p-values accept the normality
assumption at 5% level of significant for all the variables.
Table 2: Descriptive Statistics

Std.
N Minimum Maximum Mean Skewness Kurtosis
Deviation
Statisti Std. Std.
Statistic Statistic Statistic Statistic Statistic Statistic
c Error Error
PAYE 10 54.23 198 27 69.55 66.451 .656 .512 -1.119 .992
SD 10 15.34 273.44 3.714 1.992 .512 4.040 .992
DL 10 36.37 427.87 1.40 1.281 1.024 .536 .281 1.038
PCI 10 32.58 511.53 2.315 .877 .512 .033 .992
RGDP 10 37.86 196.42 46.47 72.669 1.525 .512 .523 .992
Valid N
10
(list wise)
Source: Compiled by the Author.
46
4.3 REGRESSION ANALYSIS
Table 3.1: Regression Analysis

Variables Dependent Variable: PER CAPITA INCOME
p-
Β BETA t-value Remark
value
(CONSTANT
4.832 . 672 .461 .075 Insignificant
)
PAYE .145 .872 3.123 .056 Insignificant
SD -5.422 -.334 -9.123 .042 Significant
DL 31.553 . 224 -2.674 .055 Significant
Goodness of Fit of the Model
R2 = .953 Adjusted R2 = .856
F-Statistic = 13.453*** DW Statistic = 3.437
Average Tolerance = Average Variance
0.248 Inflation Factor = 3.429
*p-value of t-value of coefficient and F-statistic <
0.05
**p-value of t-value of coefficient and F-statistic <
0.01
47
Table 3.2: Regression Analysis
Variables Dependent Variable: REAL GROSS DOMESTIC PRODUCT
Β BETA t-value p-value Remark
(CONSTANT) 7.304 .238 .461 .653 Insignificant
PAYE .406 .367 1.818 .092 Significant
SD -6.677 -.334 -2.674 .019 Significant
DL 39.804 .672 3.123 .008 Significant
R2 = .815 Adjusted R2 = .759
Average Tolerance = Average Variance Inflation
0.568 Factor = 2.161
0.05
0.01
Table 4: Model Summary
Change Statistics
Std. R
Adjusted
R Error Square F Sig. F Durbin
Model R R df1 df2
Square of the Chang Change Change Watson
Square
Estimate e
.903
1 .815 .759 37.307 .815 14.354 4 13 .000 2.149
a
a. Predictors: (Constant), PAY AS YOU EARN, STAMP DUTIES, DEVELOPMENT LEVY
b. Dependent Variable: PER CAPITA INCOME, REAL GROSS DOMESTIC PRODUCT
48
INTERPRETATION
As analyzed above in table 3.1, Pay as You Earn (PAYE) and Development Levy
(DL) variables were signed positive as expected while Stamp Duties (SD) were
negative as against expectation. However, only the impact of Pay As You Earn
(PAYE)) and Stamp Duties (SD) to the Per Capita Income (PCI) were statistically
significant.
Thus, a unit increase in both Pay As You Earn (PAYE)) and Stamp Duties (SD) will
increase Per Capita Income (PCI).
Similarly, as analyzed above in table 3.2, Pay as You Earn (PAYE) and
Development Levy (DL) variables were signed positive as expected while Stamp
Duties (SD) were negative as against expectation. However, the impact of Pay as
You Earn (PAYE), Development Levy (DL) and Stamp Duties (SD) were
statistically significant to the Real Gross Domestic Product (RGDP)
Thus, a unit increase in both Pay as You Earn (PAYE)) and Stamp Duties (SD) will
increase Per Capita Income (PCI).
The overall performance of the model in table above is satisfactory, given the R 2 and
adjusted R2 values of 0.815 and 0.759 respectively. Thus, the average variations in
the impact of internally generated revenue on economic development is substantially
explained by pay as you earn, stamp duties and development levy variables, who
49
jointly account for 81.5% of the variations in Akwa Ibom state real GDP and per
capita income. Moreover, the equally high adjusted R2 attests to the good predictive
value of the adopted model, as the error terms have little variance. This is further
corroborated by the very high F-value of 14.354 significant at both the 0.05 and 0.01
levels of significance. Durbin Watson statistic of 2.149 is close to 2, pointing to the
absence of autocorrelation. The average tolerance value is not less than 0.10 and the
average variance inflation factor is less than 2.5 indicating the absence of
collinearity. Thus, the empirical results obtained are meaningful and not spurious
regression results.
4.4 TESTING OF HYPOTHESES
When data are collected, the essence is to examine the relationship that exist
between the data collected and the hypotheses that were stated for the test to see
whether the perceived notion about the population before the research work holds or
not.
In testing each hypothesis that had been stated on this study, we use the available
and relevant table of responses generated from the study.
The research statistics used for this study is the Pearson correlation analysis, while
the t- test was used to test the level of significance. This will be tested at a
50
significance level of 5% or 0.05 with the aid of Statistical Package for Social
Sciences (SPSS).
Rejection Rule:
p-value approach: Reject H0 if p-value ≤ α
Accept H0 if p-value ≥ α
The tested hypotheses were interpreted through the Dana’s (2001) correlation
decision framework. Where
± 00– 0.19 (Very weak)
± 0.20- 0.39 (Weak)
± 0.40- 0.59 (Moderate)
± 0.60- 0.79 (Strong)
± 0.80- 0.99 (Very strong)
± 1 (Perfect)
While testing the hypothesis 2-tailed test was used and the significance level was
5% (0.05).
Hypothesis 1
Ho1; There is no significant relationship between Pay as you Earn (PAYE) and per
capita income in Akwa Ibom State.
51
Decision rule:
If p-value is greater than alpha value, accept the null hypothesis and reject the
alternate.
If p-value is less than alpha value, reject the null hypothesis and accept the alternate.
Below is the SPSS output result:
Correlations
Pay as you earn Per capita

income
Spearman’s rho Pearson Correlation 1 .897
Pay as you earn Sig. (2-tailed) .000
N 70 70
Pearson Correlation .897 1
Per capita income Sig. (2-tailed) .000
N 70 70
Decision:
From the result above, the correlation coefficient (r = 0.897) between pay as you
earn and per capita income has a strong positive linear relationship. The coefficient
of determination (r2 = 0.80) indicates that 80% of per capita income can be explained
by pay as you earn. The significant value of 0.000 (p< 0.05) reveals a significant
relationship. Based on that, the null hypothesis was rejected. This implies that, there
is a significant relationship between pay as you earn and per capita income.
Hypothesis 2
52
Ho2; Pay as you Earn (PAYE) has no significant impact to the Economic Growth of
Akwa Ibom.
53
Decision rule:
alternate.
Correlations
Pay as you earn Gross domestic

product
Pearson Correlation 1 .915
Pay as you earn Sig. (2-tailed) .000
N 70 70
Gross domestic
Sig. (2-tailed) .000
product
N 70 70
Decision:
From the result above, the correlation coefficient (r = 0.915) between pay as you
earn and gross domestic product has a strong positive linear relationship. The
coefficient of determination (r2 = 0.84) indicates that 84% of gross domestic product
can be explained by pay as you earn. The significant value of 0.000 (p< 0.05) reveals
a significant relationship. Based on that, the null hypothesis was rejected. This
implies that, pay as you earn has significant impact with gross domestic product.
54
Hypothesis 3
Ho3; There is no significant relationship between Stamp duty and per capita income
in Akwa Ibom State.
Decision rule:
alternate.
Correlations
Stamp Duties Per capita

income
Stamp duties Sig. (2-tailed) .000
N 70 70
N 70 70
Decision:
From the result above, the correlation coefficient (r = 0.911) between Stamp duty
and per capita income has a strong positive linear relationship. The coefficient of
determination (r2 = 0.83) indicates that 83% of per capita income can be explained
by Stamp duty. The significant value of 0.000 (p< 0.05) reveals a significant
55
relationship. Based on that, the null hypothesis was rejected. This implies that, there
is a significant relationship between Stamp duty and per capita income.
Hypothesis 4
Ho4; The Stamp duty has no significant impact to the Economic Growth of Akwa
Ibom.
Decision rule:
alternate.
Correlations
Stamp Duties Gross domestic

product
Stamp Duties Sig. (2-tailed) .000
N 70 70
Gross domestic
product
N 70 70
Decision:
From the result above, the correlation coefficient (r = 0.899) between Stamp duty
and gross domestic product has a strong positive linear relationship. The coefficient
56
of determination (r2 = 0.81) indicates that 81% of gross domestic product can be
explained by Stamp duty. The significant value of 0.000 (p< 0.05) reveals a
significant relationship. Based on that, the null hypothesis was rejected. This implies
that, Stamp duty has significant impact with gross domestic product.
Hypothesis 5
Ho5; There is no significant relationship between development levy and per capital
Decision rule:
alternate.
Correlations
Development Per capita

Levy income
Development Levy Sig. (2-tailed) .000
N 70 70
N 70 70
57
Decision:
From the result above, the correlation coefficient (r = 0.963) between development
levy and per capital income has a strong positive linear relationship. The coefficient
of determination (r2 = 0.93) indicates that 93% of per capital income can be
explained by development levy The significant value of 0.000 (p< 0.05) reveals a
significant relationship. Based on that, the null hypothesis was rejected. This implies
that, there is a significant relationship between development levy and per capital
income.
Hypothesis 6
Ho6; The development levy has no significant impact to the Economic Growth of
Akwa Ibom.
Decision rule:
alternate.
58
Correlations
Development Gross domestic

Levy product
Development Levy Pearson Correlation 1 .926
N 70 70
Gross domestic Pearson Correlation .926 1
product Sig. (2-tailed) .000
N 70 70
Decision:
From the result above, the correlation coefficient (r = 0.926) between development
levy and gross domestic product has a strong positive linear relationship. The
coefficient of determination (r2 = 0.86) indicates that 86% of gross domestic product
can be explained by development levy. The significant value of 0.000 (p< 0.05)
reveals a significant relationship. Based on that, the null hypothesis was rejected.
This implies that, the development levy has significant impact with gross domestic
product.
59
4.5: DISCUSSION OF FINDINGS
The first hypothesis (Ho1) stated that there is no significant relationship between Pay
as you Earn (PAYE) and per capita income in Akwa Ibom State.
This was tested at 5% significance level using Pearson correlation coefficient. The
result from our analysis showed a p-value of 0.000 while the alpha value was 0.05,
therefore, following the decision rule the null hypothesis was rejected and the
alternate hypothesis accepted which state that there is a significant relationship
between Pay as you Earn (PAYE) and per capita income. Our analysis also showed
correlation coefficient of 0.897 and coefficient of determination of 80%. This
implies that there is a strong positive relationship between Pay as you Earn (PAYE)
and per capita income.
The second hypothesis (Ho2) stated that Pay as you Earn (PAYE) has no significant
impact to the Economic Growth. This was tested at 5% significance level using
Pearson correlation coefficient. The result from our analysis showed a p-value of
0.000 while the alpha value was 0.05, therefore, following the decision rule the null
hypothesis was rejected and the alternate hypothesis accepted which state that there
is a significant relationship between Pay as you Earn (PAYE) and Gross Domestic
Product (GDP). Our analysis also showed correlation coefficient of 0.915 and
coefficient of determination of 84%. This implies that the Pay as you Earn (PAYE)
has significant impact with Gross Domestic Product (GDP).

60
The third hypothesis (Ho3) stated that there is no significant relationship between
Stamp duty and per capita income. This was tested at 5% significance level using
Pearson correlation coefficient. The result from our analysis showed a p-value of
0.000 while the alpha value was 0.05, therefore, following the decision rule the null
is a significant relationship between Stamp duty and per capita income. My analysis
also showed correlation coefficient of 0.911 and coefficient of determination of
83%. This implies that there is a strong positive relationship between Stamp duty
and per capita income.
The fourth hypothesis (Ho4) stated that the Stamp duty has no significant impact to
the Economic Growth This was tested at 5% significance level using Pearson
correlation coefficient. The result from our analysis showed a p-value of 0.000 while
the alpha value was 0.05, therefore, following the decision rule the null hypothesis
was rejected and the alternate hypothesis accepted which state that there is a
significant relationship between Stamp duty and Gross Domestic Product (GDP).
My analysis also showed correlation coefficient of 0.899 and coefficient of
determination of 81%. This implies that the qualification of the Stamp duty and
Gross Domestic Product (GDP).
The Fifth hypothesis (Ho5) stated that there is no significant relationship between
development levy and per capital income. This was tested at 5% significance level
61
using Pearson correlation. The result from our analysis showed a p-value of 0.000
while the alpha value was 0.05, therefore, following the decision rule the null
is a significant relationship between development levy and per capital income. Our
analysis also showed Pearson correlation to be 0.963 and co-efficient of
determination of 93% which implies that there is a strong positive relationship
between development levy and per capital income.
The sixth hypothesis (Ho6) stated that the development levy has no significant
impact to the Economic Growth.
This was tested at 5% significance level using Pearson correlation. The result from
our analysis showed a p-value of 0.000 while the alpha value was 0.05, therefore,
following the decision rule the null hypothesis was rejected and the alternate
hypothesis accepted which state that there is a significant relationship between
development levy and Gross Domestic Product (GDP). Our analysis also showed
correlation co-efficient to be 0.926 and co-efficient of determination of 87%. This
implies that development levy has significant impact with Gross Domestic Product
(GDP).
62
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary of Findings
The objectives of the study were to;
a. To examine the relationship between Pay as you Earn (PAYE) and per capital
b. To ascertain the extent which Pay as you Earn (PAYE) has contributed to
c. To find out the nature of relationship between stamp duty and per capital
d. To evaluate the extent to which stamp duty has contributed to the economic
growth in Akwa Ibom State.
e. To investigate if there is any relationship between development levy and per
f. To determine the extent to which development levy has contributed to the
Findings from the study revealed the following
1. There is a positive significant relationship between Pay as you Earn (PAYE)
and per capita income in Akwa Ibom
63
2. There is a significant relationship between Pay as you Earn (PAYE) and Gross
Domestic Product (GDP).in Akwa Ibom state.
3. There is a significant relationship between Stamp duty and per capita income
in Akwa Ibom state.
4. There is a significant relationship between Stamp duty and Gross Domestic
Product (GDP) in Akwa Ibom state.
5. There is a significant relationship between development levy and per capita
income in Akwa Ibom state.
6. There is a significant relationship between development levy and Gross
Domestic Product (GDP) in Akwa Ibom state.
5.2 CONCLUSION
One of the IGR collection hindrances identified in the study is the inadequate
provision of goods and services that will benefit common people and also boost
economic development. Based on this challenge people do not see payment of
taxation and other levies as a civic responsibility (NGF, 2015). The study revealed
that the impact of IGR on economic development in Nigeria is robust and positively
significant. Everyone believes that government expenditure is high but lacks
physical evidence due to corruption. Targets of achievable projects from IGR should
be set and vigorously pursued.
64
5.3 Recommendations
Based on the finding of this study, it is recommended that:
• The state government should brainstorm on how to improve on its
internally generated revenue base and also enact the necessary law to
make such collections valid;
• All loopholes accounting for non or short remittance of government
revenue should be blocked, by improving on the internal control and
internal checks instituted on revenue collections;
• The government should train and re-train revenue collectors and
encourage them to come up with suggestions on how to improve
collection drives in the state;
• Since residents of citizen determine the tax payment and the fact that
some of cross rivers state residents that work in Lagos state are paying
income tax to Akwa Ibom state government, cross rivers State
government should carry out an enumeration exercise of such residents
and seek for reimbursement of those residents’ income tax that have
been remitted to Akwa Ibom State Internal Revenue Board. The state
should also do the same thing in the state, where such practice is in
vogue;
65
• Government should publicize the fact that social amenities being
provided are financed through the internally generated funds, to make
people to be eager to pay tax voluntarily.
• The various factors that lead to tax evasion should be discouraged and if
possible blocked. Such factors as imperfect tax administration; high tax
rate; complicated tax law; information gap and porous economic border
should be guided against.
• The process of paying taxes in designated banks should be more
effective and convenient for tax payers who willingly want to pay their
taxes in the banks;
• Self-assessment of tax should be encouraged by the state government;
• The tax system should satisfy the principle of economic justice so as to
discourage tax avoidance and evasions.
• Further research is recommended on investigation of the physical
application of IGR on government expenditure in comparison with the
IGR inflows in all the states and local governments in Nigeria.
66
REFERENCES
Abdulkadir, S. A, (1998), “High mobility group protein functions as a specific
cofactor for Oct-2A: mapping of interaction domains”, Journal of
LeukocBiol64(5), 681-91.
Adekanola, O., (1996). Legality of the appointment of consultants for revenue
generation. Paper delivered at a seminar organized by the CITN.
Adenugba, A. A. and Ogechi, C. F. (2013), “The Effect of Internal Revenue
Generation on Infrastructural Development. A study of Akwa Ibom State
Internal Revenue Service”, Journal of Educational and Social Research 3 (2),
419 – 436
Adesopo, A. A. and Asaju, A. S. (2004), “Natural Resource Distribution, Agitation
for Resource Control Rightand the Practice of Federalism in Nigeria”, Journal
of Human Ecology15(4), 277-289
Agba, A. V. and Obi, B. (2006), Oil Rent Management and Fiscal Federalism: the
Nigerian Experience Mimeo,Department of Economics, University of Abuja,
Nigeria, Constitution of Federal Republic of Nigeria(1999).
Ahmad, E. and Baer, K. (1999), “Colombia” in Ter-Minassian (ed) Fiscal
Federalism in Theory and Practice Washington D.C.: International Monetary
Fund.
67
Akpo, U. (2009), “The People as Government: Imperatives of Tax Payment”. Being
a paper presented at the 1stAkwa Ibom State Revenue Summit, April, 2009.
AKSEED (2012).Akwa Ibom State Economic Empowerment and Development
Programmes Booklet.
Amieva-Huerta, J. (1997), “Mexico” in Ter-Minassian (ed) Fiscal Federalism in
Theory and PracticeWashington D.C.: International Monetary Fund
Brosio, G. and Gupta, S. (1999), “Ethiopia” in Ter-Minassian (ed) Fiscal
Federalism in Theory and PracticeWashington D.C.: International Monetary
FundChu, Ke-Young and John Norregaard, (1999), “Korea” in Ter-Minassian
(ed) Fiscal Federalism in Theory and Practice Washington D.C.: International
Monetary Fund.
Ekpo, A. H. (2004), “Intergovernmental Fiscal Relations: The Nigerian Experience”
Paper presented at the 10th Year Anniversary of the Financial and Fiscal
Commission of South Africa, Capetown International Convention Centre,
Cape town, South Africa, 10 – 12 August, 2004.
Essien, T. (2012), “The Fleecing of Akwa Ibom State: The Secret Agenda of
GodswillAkpabio”, Posted by: Web Admin in Opinions September 6, 2012.
European Journal of Business and Management www.iiste.org ISSN 2222-1905
(Paper) ISSN 2222-2839 (Online)Vol.5, No.31, 2013
68
Eze, C., Omole, J., Onyia, S., and Okonji, P. (2004), Enugu State Revenue
Administration Review. SLGP Consultants’ Report Number 321
Fatoyinbo, I., (2006). Introductory statistics for tertiary institutions. Ilaro: Delak
Ventures: 10- 13. Infrastructure, Online Compact
Ipaye, A. R. (2009), “Taxpayers’ Money in Action: The Worth of my tax as a tool
for economic, social and infrastrucutural development – Akwa Ibom state as a
case study”, Association of National Accountants of Nigeria, Commemorative
Lecture.
Jimoh, Ayodele, (2003), “Fiscal Federalism; The Nigerian Experience” Part of a
Project on Fiscal Policy and Growth in Africa: Fiscal Federalism,
Decentralization and the Incidence of Taxation”, Ad-Hoc Expert Group
Meeting, UNCC, United Nations Economic Commission for Africa 7-9
October 2003, Addis Ababa.
Kenneth J., (1970), "The Organization of Economic Activity: Issues Pertinent to the
Choice of Marketversus Non-market Allocations", in Analysis and Evaluation
of Public Expenditures: The PPP System, Volume 1, pp. 47–64.
Musgrave, R. A. (1959), The Theory of Public Finance, (New York McGraw-Hill).
Ola, C.S., (1988). Boosting Revenue Generation by State Governments in Nigeria.
Strategies for enhanced tax revenue in Nigeria, 8(4).
69
Olowononi, G.D., (2000). An evaluation of revenue allocation formula in Nigeria.
CBN
Olusola, O. O. (2011).Boosting internally generated revenue of local government.
European Journal of Humanities and Social Sciences, 8(1).
Schwartz, G. and Liuksila, C. (1999), “Argentina” in Ter-Minassian (ed) Fiscal
Federalism in Theory and Practice Washington D.C.: International Monetary
Fund.
Soyode, L. &Kajola, S. O. (2006). Taxation principles and practice in Nigeria. (1st
edu). Ibadan: Silon Publishing Company, 6-12, 62.
Suberu, R. T. (2005), “Federalism, Ethnicity and Regionalism in Nigeria”, Revised
draft of paper presented at the conference on the Dilemmas of Democracy in
Nigeria, University of Winsconsin-Madison, U.S.A. held between 10-12
November.
Ter-Minassian, T. (1997), “Intergovernmental Fiscal Relations in a Macroeconomic
Perspective: An Overview” in Ter-Minassian (ed) Fiscal Federalism in Theory
and Practice Washington D.C.: International Monetary Fund
Zeeuw, M. A. & Abdulrazaq, T., (2005).Tax policy assessment for Akwa Ibom state
government. Retrived on the 12th of May, 2012 from
www.slgpnigeria.org/uploads/File/318.pdf
70
Appendix 1
Table 1: Presentation of Data

Data amount in million Naira
Year PAYE SD DL PCI GDP
2013 4,844 951 570 368 2,626
2014 9,815 214 136 19 5,924
2015 5,796 835 296 553 5,694
2016 10,715 2,968 378 558 3,257
2017 8,427 1,284 667 453 8,093
2018 10,905 1,936 655 2,514 3,918
2019 13,991 2,547 299 1,195 6,072
2020 18,181 3,610 510 3,893 8,518
2021 66,186 7,652 725 3,108 10,416
2022 101,436 9,921 1,596 4,329 12,422
Source: compiled by the author from Akwa Ibom state Ministry of planning and budgeting website
71
Appendix 2
Table 2: Descriptive Statistics results

Std.
N Minimum Maximum Mean Skewness Kurtosis
Deviation
Statisti Std. Std.
Statistic Statistic Statistic Statistic Statistic Statistic
c Error Error
PAYE 10 54.23 198 27 69.55 66.451 .656 .512 -1.119 .992
SD 10 15.34 273.44 3.714 1.992 .512 4.040 .992
DL 10 36.37 427.87 1.40 1.281 1.024 .536 .281 1.038
PCI 10 32.58 511.53 2.315 .877 .512 .033 .992
RGDP 10 37.86 196.42 46.47 72.669 1.525 .512 .523 .992
Valid N
10
(list wise)
72
Appendix 3
IGR of Akwa Ibom State
73
Appendix 4
Table 3.1: Regression Analysis results a
Variables Dependent Variable: PER CAPITA INCOME
p-
Β BETA t-value Remark
value
(CONSTANT
4.832 . 672 .461 .075 Insignificant
)
PAYE .145 .872 3.123 .056 Insignificant
SD -5.422 -.334 -9.123 .042 Significant
DL 31.553 . 224 -2.674 .055 Significant
R2 = .953 Adjusted R2 = .856
Average Tolerance = Average Variance
0.248 Inflation Factor = 3.429
0.05
0.01
74
Appendix 5
Table 3.2: Regression Analysis results b
Variables Dependent Variable: REAL GROSS DOMESTIC PRODUCT
Β BETA t-value p-value Remark
(CONSTANT) 7.304 .238 .461 .653 Insignificant
PAYE .406 .367 1.818 .092 Significant
SD -6.677 -.334 -2.674 .019 Significant
DL 39.804 .672 3.123 .008 Significant
R2 = .815 Adjusted R2 = .759
Average Tolerance = Average Variance Inflation
0.568 Factor = 2.161
0.05
0.01
75

Internal Generated Revenue and Economic Development: A Study of Akwa Ibom State

Uploaded by

Copyright:

Available Formats

You might also like

Internal Generated Revenue and Economic Development: A Study of Akwa Ibom State

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Internal Generated Revenue and Economic Development: A Study of Akwa Ibom State

Uploaded by

Copyright:

Available Formats

INTERNAL GENERATED REVENUE AND ECONOMIC

DEVELOPMENT: A STUDY OF AKWA IBOM STATE

BLESSING CLEMENT BENSON

FACULTY OF MANAGEMENT SCIENCES

UNIIVERSITY OF PORT HARCOURT

SUPERVISOR: DR. JOSEPH BENVOLIO

DEVELOPMENT: A STUDY OF AKWA IBOM STATE

BLESSING CLEMENT BENSON

BEING A B.Sc. PROJECT SUBMITTED TO THE

DEPARTMENT OF ACCOUNTING, FACULTY OF MANAGEMENT SCIENCE

UNIIVERSITY OF PORT HARCOURT

IN PARTIAL FULFILMENT OF THE REQUIREMENT OF THE AWARD OF

BACHELORS DEGREE IN ACCOUNTING

SUPERVISOR: DR. JOSEPH BENVOLIO

FACULTY OF MANAGEMENT SCIENCE

INTERNAL GENERATED REVENUE AND ECONOMIC DEVELOPMENT: A STUDY

OF AKWA IBOM STATE

BLESSING CLEMENT BENSON

The board examiner certifies as follows

DR. JOSEPH BENVOLIO

Supervisor Signature Date

Head of Department Signature Date

DEAN, Faculty of Signature Date

EXTERNAL EXAMINER Signature Date

I hereby declare that this project titled: INTERNAL GENERATED REVENUE

AND ECONOMIC DEVELOPMENT: A STUDY OF AKWA IBOM STATE

of accounting, management science, University of port Harcourt, Choba, Rivers

BLESSING CLEMENT BENSON

knowledge, understanding, guidance and protection throughout my stay in the

To my Best Friend, my mother, my number 1 supporter, the backbone of my

my project journey. And to my beloved department of accounting lecturers, friends

Cover page - - - - - - - - - - - - - - - - - - - - - - - - - --- i

Table of content - - - - - - - - - - - - - - - - - - - - - - - - - - vii

CHAPTER ONE: INTRODUCTION

1.1 Background of the study - - - - - - - - - - - - - - - - - - - - ---- 1

1.2 Statement of the Research problem- - - - - - - - - - - - - - - - - - - - -5

1.3 Aims and Objectives of the study- - - - - - - - - - - - - - - - - ---- 6

1.4 Research Questions- - - - - - - - - - - - - - - - - - - - - -- ----7

1.5 Research Hypothesis - - - - - - - - - - - - - - - - - - - - - ---- 8

1.6 Significance of the study - - - - - - - - - - - - - - - - - - -- - - --9

1.7 Biography of the Author of the work being studied - - - - - - - - - - -- - - - - - 9

1.8 Scope of the study - - - - - - - - - - - - - - - - - - - - - - - - - - - - -9

2.1 Introduction - - -- -- - -- - - - -- - - - - - -- -- -- -- -- ---- - - - -- -- - -- - - - -- --- - -- -- --- --11

2.2 Theoretical Framework - - - - - - - - - - - -- - - ---- -- --- - 11

2.2.1 Theory of fiscal federalism - - - - - - - - - --- - - - - - - - - - - - - - 11

2.2.2 The Linear Stage of Growth Theory- - - - - - - - - - - - - - - - - - - - - 15

2.3 Conceptual Literature Review - - - - - - - - - - - -- - - - - - - - 17

2.3.1 The concept of Revenue- - - - - - - - - - - - -- - --------- - - - - 17

2.3.2 sources of revenue - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 18

2.4 importance of revenue - - - - - - - - - - - - - - - - - - - - - - - - - - - 24

2.5 problem of internally generated revenue in Akwa Ibom State - - -- - - -- - - - - - 24

2.6 an overview of akwa ibom state board of internal revenue -- - - - - - - - - - - - 29

2.7 Measures of internally generated revenue - - - - - - - - - - - - - - - - - - - 30

2.7.1 Pay as You Earn - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -30

2.7.2 Stamp Duty - - - - - - - - - - - -- - - - - - - - - - - - - -- - - - - - - - - - - -- - - - - - - - - - - - - - - - 31

2.7.3 Development Levy - - - - - - - - - - - -- - - - - - - - -- - - - - - - - - - - - - - - - - -- - - - - - - - - - 32

2.8 Concept of Economic Development- - - - - - - - -- - - - -- - - - - - -- - -- - - - - - - - - - - - - - - -33