The Impact of Personal Income Tax on Government Expenditure in Oyo State
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The study evaluated the impact of Personal income tax on government expenditure in Oyo state. It also investigated the significant components of Personal income tax on government expenditure in Oyo state. Secondary data were sourced from approved budgets of the Oyo State government from 1990 to 2015. Pearson product moment correlation and multiple regressions were employed to examine the relationship between the dependent variable (Government expenditure in Oyo State) and independent variables (Pay As You Earn(PAYE), Capital Gain Tax, Road Tax, and Other Taxes ( Stamp duties, Betting and Gaming Taxes, Business Premises and registration levies, Development levies and Market fees)). Findings reveals that Pay As You Earn (PAYE) has a positive significant impact on government expenditure in Oyo state (β = 1.907001; p ≤ 0.05). Road tax has negative insignificant effect on Government Expenditure in Oyo state (β =-.3206565; p ≤ 0.05) with the adjusted R2 @ 66.7%. In conclusion, Personal income tax has positive significant and statistical impact on Government expenditure in Oyo State. It is now recommended that Oyo state government should reduce the expenditure on governance so that money generated from personal income tax will be expended on payment of salaries of civil servants instead on frivolity. Also Government should increased Road tax inorder to boost government revenue which will ultimately increase government expenditure power extensively.
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