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1.1  Background of the study

Like other developing countries, the Nigerian economy considers trade as a principal engine for growth. This is based on the implicit belief that trade creates jobs, expands markets, facilitates competition; disseminates knowledge and raises income both  to the individuals and to the government. These overwhelming benefits from trade, has been a principal factor on which the Nigerian government had engaged in trade over the past decades. At independence, the Nigerian economy engaged in international trade due to the  agrarian nature of the economy while the exportation of agricultural products was the  main source of foreign exchange to the government. The discovery of crude oil however  brought a significant shift in the economy from an export oriented one to an import  dependent one, with importation of virtually all forms of commodity including  agricultural and final product. This advent of crude oil with the instantaneous decline in  agricultural export and the imposition of various trade restrictions on international trade,  prior the adoption of Structural Adjustment Program (SAP) in 1986, led to the decline in  the share of trade revenue to the federal government  The introduction of SAP brought about the emergence of trade liberalization  which was accompanied with the elimination of the exchange control on all current  transactions, disbanding of all marketing/commodity boards, removal of price control and  the reintroduction of import duty surcharge (Ogaba, 1999). The main policy  thrust of Structural Adjustment Program (SAP) through gradual liberalization of the  controlled trade regime that pervaded the Nigerian economy in the pre-SAP period was to  create an environment conducive to enhance increased capital inflows, transfers, adoption  of appropriate technologies and increase the share of trade revenue to the federal  government as a means of reducing the total reliance of the economy on crude oil  revenue. The policy thrust of SAP was also in turn with the standard theory on trade  which suggests that trade policies leads to a more efficient allocation of resources,  enhanced productivity, and higher economic growth (Oche, 2010). In theory, trade policies in addition to its other benefits, is expected to  increase the proportion trade tax revenue in its share of total revenue to the federal  government through the imposition of tariff and excise duties on both imports and exports respectively (Ake and , 1985). In contrast, Coleman (1963) argued that higher tariffs create an incentive for importers to evade tariffs and to seek tax  exemptions. Tax evasion in turn affects the productivity of the tax system leading to a  less than proportionate increase in trade revenue. In the light of this conflicting evidence  in the literature, this study therefore attempts to investigate the effect of trade  policies on trade tax revenue in Nigerian from the periods 1970 to 2009. In addition,  this study also seeks to examine the impact of  trade policy on international  trade tax revenue in Nigeria.

1.2  Statement of research problem

A commercial policy also referred to as a trade policy or international trade policy is a government's policy governing international trade. Commercial policy is an all encompassing term that is used to cover topics which involve international trade. Trade policy is often described in terms of a scale between the extremes of free trade no restrictions on trade on one side and protectionism high restrictions to protect local producers on the other. A common commercial policy can sometimes be agreed by treaty within a customs union, as with the European Union's common commercial policy and in Mercosur. A nation's commercial policy will include and take into account the policies adopted by that nation's government while negotiating international trade. There are several factors that can have an impact on a nation's trade policy, all of which can have an impact on  tax revenues in Nigeria, some of which is tax evasion, mis invoicing among many others.

1.3  Objectives of the study

The primary objective of the study is as follows

1.        To find out what trade policy means

2.        To find out what international trade tax stands for.

3.        To find out the impact of trade policy on international tax revenue in Nigeria.

4.        To find out  how Nigeria generate  tax revenue from international traders.

1.4  Research questions

The following research questions have been prepared for this study

1.        What is trade policy?

2.        What does international trade tax stands for?

3.        What are the impact of trade policy on international tax revenue in Nigeria?

4.        Do you think there is Nigeria generate tax revenue?

1.5  Significance of the study

The significance of this study cannot be underestimated as:

l  This study will examine the impact of trade policy on international trade tax revenue in Nigeria

l  The findings of this research work will undoubtedly provide the much needed information to government organizations, ministry of education and academia.

1.6  Scope of the study

This study examines the impact of trade policy on international trade tax revenue in Nigeria. Hence this study will be delimited to how Nigeria generate tax revenue from international trade.

1.7  Limitations of the study

This study was constrained by a number of factors which are as follows:

 just like any other research, ranging from unavailability of needed accurate materials on the topic under study, inability to get data

Financial constraint , was faced by  the researcher ,in getting relevant materials  and  in printing and collation of questionnaires

Time factor: time factor pose another constraint since having to shuttle between writing of the research and also engaging in other academic work making it uneasy for the researcher

1.8  Operational definition of terms

Impact: the action of one object coming forcibly into contact with another.

Trade policy: defines standards, goals, rules and regulations that pertain to trade relations between countries.

International trade: the exchange of goods and services between countries

Tax revenue:  the funds collected from taxes on income and profits

This material content is developed to serve as a GUIDE for students to conduct academic research


  • Reference(s):

    yes available

  • Methodology: yes available

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