Fineboy Ikechi Joseph 1 , Jane Chinyere Akujor 2 , Izundu Onwuka CC 3 , Emea Ukairo Kalu 3
1,&3 Department of Accounting & Economics Department, Faculty of Social and
Management Sciences, Clifford University, Owerrinta, Abia State. E-mail: ,
2 Department of Financial Management Technology, School of Management Technology ,
Federal University of Technology, Owerri, Imo State. E-mail:

This study examines tax farming as panacea for increased revenue generation in
Nigeria. Ineffective tax administration appears to be an unending setback in Nigeria as a result
of myriad of challenges resulting in poor tax revenue generation. The study reviewed many
previous studies on tax farming. The reviews revealed that tax farming leads to excessive
exploitation of taxpayers in their bid to overzealously recover the advance payment to the
government and running expense and then make profit. It was uncovered that the
unpredictability and volatility of tenure of tax farmers results in lack of investment in the system
because tax-farmers investments were not secured as their contract could be terminated by the
state at any time thereby discouraging investment in the long-run. However, the advantages
far outweigh the demerits. The study revealed that tax farming is in line with privatization, the
current economic drive where the management of hitherto public enterprises has been
transferred to competent private individuals to ensure efficiency and effectiveness of such
organizations. Again, it ensured a highly coherent and efficient system of resource allocation.
The system similarly provided guidance for resource allocation not only to the tax-farmers but
also to the state. The tax-farming system was a very efficient revenue collection tactic for the
state. It played a substantial role behind the decision of the state to invest directly in the various
industries where it generated enormous tax revenue. The tax-farming system contributed
significantly to the increase in capital in the private sector both by the massive profits it helped
create and by compelling the entrepreneurs to form partnerships. Based on the findings via
review of relevant literatures, the study recommends that tax farming should be introduced by
the government and given legal backing in Nigeria as a veritable strategy for taxes and levies
collection. Government should concentrate on tax administration which involves interpretation
of the law and issuing guidelines, assessment, and auditing to ensure fairness and the rule of
law which will entrench significant degree of monitoring of the government's agents while tax
collection should be contracted out to tax farmers in the collection of determined tax arrears
in order to stop over-collection. They should be engaged in the verification of value of goods
declared by importers at customs to ensure that it corresponds to international price data. This
would guarantee efficient revenue collection and accountability since the amount to be
collected is already determined. The bidding and auctioning off process of tax farming to
determine the right of private sector collectors to collect certain taxes and levies should be
competitive and transparent to ensure that maximum revenue is derived from the system and
to avoid corrupt leaders ceding the right to collect taxes and levies to their cronies, a practice
which negates the primary objectives of tax farming. The bidding process should be done at
arm’s length.
Keywords: Tax Farming, Tax Administration, Tax Farmers, Collection Mechanism

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