Taxes And Infrastructural Developments In Edo State

Taxes are potent instruments for development. State governments however have limited space for tax revenue collections in the face of mounting and emerging functions expected to be performed. Edo State government is one state that is agrarian and an emerging hub of economic activities and one of the few states where the National Insurance Health Scheme and investments in health have occurred. What resources are in the hands of the government to address all of these? This study examined the taxes collected by the Edo State government and their impact on the Infrastructural Development Revenue Service (EIRS). To achieve this objective, the longitudinal research design was used. The data used were obtained from the Central Bank of Nigeria (CBN) and Edo State Internal Revenue Service. We employed the parsimonious Error Correction Model, after conducting a cointegration test, to ascertain the short-run and long-term term-dynamics of the data. Findings revealed that Capital Gains Tax on Individuals (CGTi) and Stamp Duty on Individuals (STDi) had a positive relationship with and significant impact on Infrastructural Development (IFR). In contrast, Value Added Tax (VAT) and Personal Income Tax (PIT) were negative but significant in their impact on Infrastructural Development (IFR). The study concludes that taxes used have a significant role in infrastructural development. The study recommends that the taxpayers should, via incentives and moral persuasion from the government continually pay their taxes, while the government utilizes proceeds of tax for good governance.