Personal Income Tax and Infrastructural Development in Lagos State, Nigeria

TL;DR: In this article, the authors examined the contributions of personal income tax to infrastructural development in Lagos state to determine the effect that Personal income tax has on infrastructionural provisions of the state.

Abstract: Infrastructural provisions and availability of resources to meet such needs has been the major point of concern to government in all states of the federation. In recent time Lagos State has been witnessing infrastructural deficit and this is actually affecting the standard of living of the citizens. Since the advent of civilian government in the state, internally generated revenue has been on the increase, yet the state is still witnessing a lot of infrastructural deficits. This study examined the contributions of personal income tax to infrastructural development in Lagos state to determine the effect that personal income tax has on infrastructural provisions of the state. The study adopted ex-post facto research design. The study covered Personal Income Tax and infrastructures development of Lagos State from 1997 to 2018. Secondary data were obtained from Lagos State Internal Revenue Services (LIRS), Lagos State Ministry of budget and planning and Lagos State Ministry of Finance. Data were analyzed using descriptive and inferential statistics. The study found that Personal Income Tax has significant effect on infrastructural development of the state. Given infrastructural provisions; EDH, EDR. On EDH, With Adjusted R2= 0.150, F-stat =3.678, and also at 5% significance level [β = 0.380; P – value = 0.008]. On EDR, Adjusted R2 = 0.315, F-stat = 3.915, Prob (F-stat) = 0.028), at 5% significance level [β = 0.352; P – value = 0.154]. The study shows that more government income from PIT was spent on housing infrastructures over other infrastructural provisions.