The Complexity of Raising Taxes by Subnational Government and the effect for Public Goods Provision

Imuetinyan Press John Ugiagbe

Abstract


The importance of taxation in any society should never be underestimated because without the payment of taxes by the jurisdictional citizenry there will be virtually no provision of public goods and services for the society to benefit from. Public goods benefit everyone that lives in jurisdictional community and it is the responsibility of every government whether sub or central to ensure that public goods and services are provided within the preamble   available resources. Therefore the quantity or amount of public goods provision is a function of budgetary phenomenon and not a fiscal decision. This article posits taxation in its difficult stead to raise, and also argues that if jurisdictional governments are going to raise taxes, they must also be accorded with expenditure responsibilities as the two go together. The article also argues for the need for equalisation either in form of grants or derivation because of inequality of resources within a country. The result of this is reduced tax bases with a consequence of reduced public spending and taxes. This article is qualitative research and uses secondary sources of information to present its argument. It argues that taxes is a function of the jurisdictional populace and if judiciously applied can derive the public goods and services that could enhance the welfare of the people. The significance of taxation and payment of taxes by the populace is seen as crucial for the provision of public good, therefore both the public and governments must play their crucial role by adequate payment of taxes while central government must ensure fiscal balance in transfer both in vertical transfer and horizontal transfer.


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