The correct option for the sources of revenue to state government in Nigeria is
C. I and IV (Statutory allocation and Income tax).
Detailed Explanation
- Understanding the Sources of Revenue:
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Statutory Allocation: This is a significant source of revenue for state governments in Nigeria. It refers to the funds allocated to states from the federal government, primarily derived from the federation account. This allocation is based on a formula that considers factors such as population, land mass, and other criteria. It is a guaranteed source of revenue for states.
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Fines from Customary Courts: While fines collected from customary courts do contribute to local government revenue, they are not a primary source of revenue for state governments. These fines are typically minor and do not significantly impact the overall revenue structure of the state.
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Petroleum Tax: This tax is primarily collected by the federal government, not the state governments. Although states may benefit indirectly from oil revenues through statutory allocations, they do not directly collect petroleum taxes. Therefore, this option is not a valid source of revenue for state governments.
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Income Tax: This is a direct source of revenue for state governments. States have the authority to levy income tax on individuals and businesses operating within their jurisdiction. This tax is a significant part of the state's revenue generation strategy.
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Why the Other Options are Incorrect:
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Option A (I and II only): This option includes statutory allocation (correct) but incorrectly includes fines from customary courts, which are not a major source of revenue for state governments.
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Option B (II and III): This option includes fines from customary courts (incorrect) and petroleum tax (also incorrect for state governments). Both components are not valid sources of revenue for state governments.
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Option D (III and IV): This option includes petroleum tax (incorrect) and income tax (correct). However, since one of the components is incorrect, this option cannot be valid.
Summary of Key Points
- Statutory Allocation is a primary source of revenue for state governments in Nigeria, derived from the federal government.
- Income Tax is also a significant source of revenue that states can levy on individuals and businesses.
- Fines from Customary Courts and Petroleum Tax do not constitute major revenue sources for state governments.
- Understanding the distinction between federal and state revenue sources is crucial for grasping the financial structure of government in Nigeria.
Revision Summary
- Statutory allocation and income tax are key revenue sources for state governments in Nigeria.
- Fines from customary courts are minor and not significant for state revenue.
- Petroleum tax is collected by the federal government, not state governments.
- Always verify the authority and jurisdiction of revenue sources when studying government finance.