The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the informal sector. The policy requires all bu\sinesses with annual turnover above ₦5 million to register and pay taxes. However, the policy has been met with resis ance from some bu\siness owners who argue that it will increase their \costs and reduce their competitiveness. U\sing the concept of opportunity \cost, explain why the government's policy may be justified.

Question

The government of Nigeria has introduced a new tax policy aimed at increa\sing revenue from the informal sector. The policy requires all bu\sinesses with annual turnover above ₦5 million to register and pay taxes. However, the policy has been met with resis	ance from some bu\siness owners who argue that it will increase their \costs and reduce their competitiveness. U\sing the concept of opportunity \cost, explain why the government's policy may be justified.

Accepted Answer

The government's policy will increase the opportunity \cost of tax evasion, making it less attractive for bu\sinesses to evade taxes.

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