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SOURCES AND PATTERN OF EDO STATE GOVERNMENT REVENUE (1999-2010)

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

There is no country or state that can adequately attend issue of development without having in place adequate and sustainable revenue sources for the activities of government. It is becoming extremely difficult for the government to execute developmental agenda without measures in place to guarantee revenue to finance the project and programs. Oshiomole, (2011) stressed further that the issues of adequate revenue is essential for the sustainability of the state especially in the face of the recent global economic meltdown. The government all over the world depend on contributions of citizens inform of levies and taxes to administer and run the state or sovereignty. The increasing cost of running government coupled with dwindling revenue had left various state governments in Nigeria with no option but to formulate strategies to improve the revenue base. The serious decline in the price of oil in recent years has led to a decrease in the funds available for distribution to the states in Nigeria. The need for state government to generate adequate revenue from the internal sources has therefore become a matter of extreme urgency and importance. The revenue base of the state government must be geared toward making the state government virile, self sustaining and to a large extent less dependent, financially on the statutory allocation from the federation account. However the experience of the last few years in Edo state, indicates that financial independent of the state government has been rather elusive because of political embroiled economic instability and worsening social condition. It is against this background that the subject of revenue generation in Edo State has gained prominence. It has also been observed that a dominant features of the revenue profile of Edo state before the advent of the current administration was dependent on statutory allocation from the federation account. The current administration in Edo state argued that the shock from the international market had drastically reduced the accruing revenue from the federation account so much so that it was near suffocation at the inception of this administration (Edo light, October-November 2010). It was therefore imperative that other sources other than FAAC must emerge if the state will not go under. Measures introduced were the total overhaul of the I G R collections machineries of the state government to increase its revenue base, sensitization and public enlightenment, review of existing tax law, penalties/sanctions for evasion and avoidance.

1.2            STATEMENT OF THE PROBLEM

For any state government to excel in its primary function of providing essential services to the people of her state, there is no doubt that she needs a sustainable revenue generation. However, the performance of many state governments in Nigeria income generation is far below expectation since the advent of democracy. Observation across Edo state since 1999 shows that the state government has not really lived up to expectation in providing social and essential services to the people. Linked to this is the internal revenue generation of the state government which is not properly coordinated. It is for this reason that this research is being proposed or designed to address the following research questions.

·                    What are the sources of revenue of Edo state government since 1999 till date?

·                    Is the revenue generation poor?

·                    Why is the revenue generation in Edo state poor since 1999?

·                    How can the revenue generation be improved?

1.3                     OBJECTIVES OF THE STUDY

General Objective:

           The general objective of the study is to review the sources and pattern of Edo state government revenue since 1999 to 2010.

Special Objectives:

To meet the general objective, the study will focus on the following specific objectives:

(i)                To  examine the sources of generating incomes by each administration in Edo state since 1999 to 2010

(ii)             To ascertain if the revenue generation is poor

(iii)    To identify the causes of poor revenue generation in each administration in Edo state since 1999 to 2010

(iii)           To ascertain efforts being made by the current administration                                         toward boosting her income generation.

1.4            RELEVANCE OF THE STUDY

 The result of the study will be of benefit to:

1.                 The state Government: This study will provide the basis for state government to develop various ways of improving their  I G R and depend less on F A. A. C. This will enable every state government to meet the demands of providing the necessary social basic amenities to the people and enable them to perform its primary function of providing essential services more effectively

2.                 The local Government: This study will help local government in Nigeria to improve their internally generated revenue. There are also a lot of benefits enjoyed by the people under the local Government level

-      Provision of clean water to the people in the locality

-      Construction of good roads for easy movement of goods and services

-      Provision of a well-equipped health centre in the community to reduce the death rate of the people

-      Provision of free education in the community to reduce the level of illiteracy in the community

-      Stability of electricity in the community

1.5            RESEARCH HYPOTHESIS

A hypothesis is a theoretical conceptualization of an idea or quest regarding how researcher thinks the result of his study will look.

It consists of a set of assumptions accepted previously as a base of investigation. It is a proposition that is yet to be tested for its validity.

For the purpose of this research study, the research work is going to make use of null hypotheses (Ho) and alternative hypotheses (H1)

HYPOTHESES 1

H0: Edo state government is not generating its expected revenue.

H1: Edo state government is generating its expected revenue

HYPOTHESES 2

H0: Edo state government revenue is poor

H1: Edo state government revenue is not poor

HYPOTHESES 3

H0: Edo state government has not utilized her collected revenue since 1999

H1: Edo state government has utilized her collected revenue since 1999

HYPOTHESES 4

H0: Edo state government is not utilizing its revenue effectively.

H1: Edo state is utilizing its revenue effectively

1.6            SCOPE OF THE STUDY

The investigation is only concerned with the sources and pattern of revenue generation of Edo state government since 1999 to 2010.

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