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A Proposed Formula For Horizontal Revenue Allocation In Nigeria

Author

Listed:
  • VIRTUE U. EKHOSUEHI

    (Department of Mathematics, University of Benin, Benin City, Nigeria)

  • AUGUSTINE A. OSAGIEDE

    (Department of Mathematics, University of Benin, Benin City, Nigeria)

Abstract

In this study, we have applied optimal control theory to determine the optimum value of tax revenues accruing to a state given the range of budgeted expenditure on enforcing tax laws and awareness creation on the payment of the correct tax. This is achieved by maximizing the state's net tax revenue over a fixed time interval subject to certain constraints. By assuming that the satisfaction derived by the Federal Government of Nigeria on the ability of the individual states to generate tax revenue which is as near as the optimum tax revenue (via the state's control problem) is described by the logarithmic form of the Cobb–Douglas utility function, a formula for horizontal revenue allocation in Nigeria in its raw form is derived. Afterwards, we illustrate the use of the proposed horizontal revenue allocation formula using hypothetical data.

Suggested Citation

  • Virtue U. Ekhosuehi & Augustine A. Osagiede, 2012. "A Proposed Formula For Horizontal Revenue Allocation In Nigeria," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 29(06), pages 1-16.
    • Handle: RePEc:wsi:apjorx:v:29:y:2012:i:06:n:s0217595912500339
    DOI: 10.1142/S0217595912500339
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    Citations

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    Cited by:

    1. Virtue Ekhosuehi & Francis Oyegue, 2015. "On the state of budgetary balance over time via the one-way classification model," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 25(3), pages 5-16.
    2. Virtue Ekhosuehi & Sunday Ogbonmwan, 2014. "Determination of the optimal exchange rate via control of the domestic interest rate in Nigeria," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 24(1), pages 23-36.

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