Original Research Article | OPEN ACCESS

Taxation of the Informal Sector and Economic Development of Lagos State

For correspondence:-    

Received: August 29, 2019        Accepted: December 21, 2019        Published: December 31, 2019

Citation: Taxation of the Informal Sector and Economic Development of Lagos State. Account Tax Rev 2004; 3(4):110-118 doi:

© 2004 The authors.
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Abstract

The informal sector has been regarded as a catalyst for socio-economic development of nations of the world. This is substantiated by the quantum of literatures available on it. However, the extent to which such studies could be replicated in Lagos State, Nigeria, is yet to be established. This study therefore examines the potentials of the informal sector in Lagos State as well as the challenges and prospects of tax collection from operators in the sector. Data for the study were collected through survey questionnaire distributed among 670 respondents in 5 local government areas in the State. Descriptive statistics was used to analyse the responses while Kruskal-Wallis and Chi-square tests were adopted to test the formulated hypothesis. Findings showed that the informal sector has the potentials to enhance employment creation, revenue generation and economic development of Lagos State. The study therefore recommends, among others, that to ensure compliance on tax payment for operators in the informal sector, there should be less emphasis on documentations and where documentations are required, it must be made easy to prepare and present for them; the tax to be collected from players in the sector should be lesser when compared with that of the formal sector and it should be flexible to fulfill economic reality; incentives or tax relief should be given to players in the informal sector for voluntary disclosure of their tax liabilities.

Keywords: Informal sector, taxation, revenue generation, economic development, tax defaults.