Government derives its revenue for public expenditure from a number of sources of which taxation is one of the major ones. As a developing country with considerable endowment in human and natural resources, the greatest drawback to our development efforts has always been the inavailability of adequate, reliable, and stable sources of revenue. With the present economic predicament in our country, the need to diversify our sources of revenue has become inevitable.
The main objective of the study is to examine and analyse the existing main sources of revenue of the state, and the problems and prospects involved, with a view to propose some potential sources of revenue, so that the government can diversify its efforts in revenue generation.
Based on the past state taxes (revenue) collection policies and procedures, we should pin point the short-comings in the existing administrative set up;
mode of collection and to suggest a list of proposed potential sources of revenue in the state in consonance
with the Federal Government Policy on taxation. Existing main sources of revenue have been analysed and found that state government has been heavily depending on statutory allocation and other purposeful grants.
Because of the problems of revenue collections and tax administration and the inadequacy of recurrent locally collected revenue, we suggest for the introduction
i. Sales tax
ii. Property tax
iii. Development Levies
iv. Other sources.
Prospects of revenue collection and tax administration are very bright. Especially if one considers the recent established Decree No 4, 1985 Finance (Miscellaneous
Taxation Provisions) which has tried to improve on the present legislation and has also introduced a few new ideas into our tax laws.
Furthermore, with the re-organisation of the Internal Revenue Department as recommended making it autonomous; providing the department with more trained
personnel; providing more suitable office accommodation; and providing enough transportation, much revenue could be realised from the operation of revenue collection and tax administration system in Sokoto State.
There is therefore, a need for the state government to critically look into these peculiar problems facing the operation of revenue collection and tax administration
system in the state. Immediate solutions to the problems posed must be provided.