THE INDISPENSABLE ROLE OF TAXATION FOR STATE DEVELOPMENT IN NIGERIA Maria Chinecherem Uzonwanne Department of Economics, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria. E-mail:mc.uzonwanne@unizik.edu.ng onyiifisayo@yahoo.com ABSTRACT ___________________________________________________________________________ A moment of reflection on the current situation of today’s development in Nigeria suggests that the acquisition of that power stated by a renowned economist Nicholas Kaldor, of post-war generation who was asked to say his view on the relationship that exist between taxation and state development, enumerated a lot of things but summarized his words in one line: “the heart of a state development lies on taxation”, cannot be taken for granted. This paper therefore described the situation of taxation in Nigeria and enumerated the indispensable role of taxation for state development. Primary and secondary data were used. The primary data were collected from the distributed questionnaires while the secondary data were collected from the World Bank Indicators. The data were analyzed and they showed that taxation contributes less to GDP of the Nigerian economy since the IMF threshold of tax revenue to GDP is 15% while the highest taxation was added to the Nigerian GDP is 2.3% in 2010. The paper therefore, concluded that taxation is indispensable for the development of a nation (there is a positive relationship between taxation and state development) and that the ability of tax to stimulate economic growth or development in Nigeria will result from the deliberately designed regimes that will encourage compliance of those who should pay this tax. Hence, the paper recommended that all Nigerians should endeavour to pay their taxes and while this is done, the government should be set to achieve promotion of fiscal responsibility through government transparency and judicious use of revenue generated, promote economic stabilization, and correct market failures or imperfection and to facilitate economic growth. Key words: Taxation, Development, Indispensability, Nigeria ___________________________________________________________________________ INTRODUCTION Most of the researches already carried out in Nigeria today show that tax is taken for granted. While in other countries, there reflects a growing insight among policymakers that a better working tax system helps the state to support economic development/growth. Governments in all parts of the world and at all points in history have faced similar challenges when it comes to funding their ambitions to develop their country or state and to give a good standard of living to the masses in their country or state. We do not believe that governments in the past or in today’s developing world are any less rational or farsighted compared to those in today’s developed world. For this reason, in most countries of the world, the primary objective and purpose of taxation is essentially to generate revenue or raise money for government expenditures on social welfare. The importance of taxation lies primarily in its ability to raise capital formation for development and growth of the economy and also, in assisting in the regulation of consumption pattern resulting in economic stabilization and effective redistribution of income (ICAN, 2009). According to Azubuike (2009), “tax is a major player in every society of the world. It is an opportunity for the government to collect additional revenue needed to discharge its pressing obligations.” Taxation is important in the planning of savings and investments by harmonizing it with development strategy and changing economic structure. The government uses taxation as a powerful fiscal weapon to plan and develop its country. The government Maria Chinecherem Uzonwanne, Int.J.Eco. Res., 2015, 48 - 59 ISSN: 2229-6158 IJER MAY - JUNE 2015 Available online@www.ijeronline.com 48