Taxation and Sustainable Development in Nigeria: Informal Sector Challenges

The increasing interest of government to tax the informal sector is driven by pressure on government to generate more revenue for the purpose of embarking on more socio-economic development programmes. However, over the years, this effort has not yielded meaningful results owing to operational constraints. This study examines this concern with a view to identifying the critical challenges, with particular focus on the Rivers State tax district. Data were provided by 75 selected informal business operators and five officials of the Rivers State Internal Revenue Service (RSIRS). Analysis and ranking of the responses indicated the main challenges as bordering on tax officials capacity constraints and largeness of the informal sector as well as the tax district. It is recommended that special training programmes be regularly organized for tax officials involved with the informal sector. The segmentation of tax districts is also advocated to enhance efficiency in the administration of informal sector taxation and promote sustainable development of the Nigerian economy. Keywords: Informal sector, Tax administration, Sustainable Development