AN ASSESSMENT OF THE EXTENT OF CONTRIBUTION OF CAPITAL GAIN TAX TO INTERNALLY GENERATED REVENUE PROFILE OF NASARAWA STATE OF NIGERIA: 2015 – 2019

Abstract

Prompted by state governments’ efforts at attaining fiscal independence following calls and advocacies for reduced state governments’ dependence on revenue from the federation account, this study assessed the revenue effectiveness of capital gain tax regarding Internally Generated Revenue (IGR) of states in Nigeria with a view to determining the extent of its contribution to states’ IGR profile, with specific reference to Nasarawa State for the period 2015 - 2019. The study adopted the mixed design (i.e. descriptive survey and ex-post factor) to carry out the assessment. Both Primary and secondary data were sourced and obtained through questionnaire and State level IGR annual report of the National Bureau of Statistics (NBS), respectively. The data were analyzed using both parametric and non-parametric statistics, i.e. simple linear regression and Mean respectively. Result of the analysis revealed that the Capital Gain Tax collection modality of the Nasarawa Sate internal Revenue Service has not been effective in improving Capital Gain Tax Revenue collection in the state, and that Capital Gain Tax Revenue is statistically insignificant in contributing to the total Internally Generate Revenue of the state within the period under review. The study concluded that the extent of Capital Gain Tax’s contribution to the overall Internally Generate Revenue of the state is negligible owing to the ineffectiveness of the collection modality in place at the Nasarawa Sate Internal Revenue Service. Based on the conclusion, the study recommended that the NIRS should review its CGT collection modality with a view to incorporate into it the need to educate the public through massive awareness campaigns on who should pay, how to compute, where to pay and when to pay CGT.