APPRAISAL OF INCOME TAX COLLECTION AND ADMINISTRATION IN NIGERIA (A CASE STUDY OF BOARD OF INTERNAL REVENUE (B.I.R) ENUGU)
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APPRAISAL OF INCOME TAX COLLECTION AND ADMINISTRATION
IN NIGERIA
(A CASE STUDY OF BOARD OF INTERNAL REVENUE (B.I.R)
ENUGU)
ABSTRACT
This project work deals with “Appraisal
of Income Tax Collection and Administration in Nigeria. A case study of Board of
Internal Revenue Enugu. It explains the income tax collections as a vital tool
of macro-economic management of our society. I have come to acknowledge that
taxation is a patent fiscal full of economic adjustment. Most important of all,
it is looked upon to generate the revenue needed to help us tide our current
economic crises. It is against this background that the research took up by
choice, our society of tax administration in Enugu Board of internal revenue.
The purpose of this study is to study
how well it is meeting the expectation about increased revenue generation. The
researcher many problems in income / tax collection and administration board of
interval revenue Enugu. Some of them are:
(1)
Data collected revealed that the firms used by the Board of Internal Revenue to
collect income do not make revenue generation easier.
(2)
The Board used unqualified personnel for income tax collection and they do not
render correct account of the amount of revenue collected to the Board of
Internal Revenue Enugu.
(3)
It was also discovered that the other categories of revenue agents and revenue
clerks are more efficient and honest in the income tax collection and exercise
and the money collected by all revenue collectors are remitted on time to the
Board of Internal Revenue Enugu.
The recommendations are :
(1)
Members of staff who engaged in sensitive assignments such as tax investigation
and tax assessment should be adequately remunerated and be provided with the
assurance given at government expense.
(2)
Setting up dependable and highly reliable tax administration machinery which
will ensure operation efficiency hard work and loyalty amongst the personnel of
the service.
Setting up a good computerized
information and storage network to enable information to be processed promptly
and accurately. This will also reduce evasion and avoidance tax.
TABLE OF CONTENTS
CHAPTER
ONE
Introduction
1.1
Background of the study
1.2
Statement of problems
1.3
Research Questions / Hypothesis
1.4
Hypothesis
1.5
Purpose of the study
1.6
Significance of the study
1.7
Scope of the study
CHAPTER
TWO
Review of literatures
2.1
Fundamental concept of Nigeria Taxation
2.1.1
History of Nigeria Taxation
2.1.2
Laws governing Income tax in Nigeria
2.1.3
Importance of Taxation
2.1.4
Categories of Taxes
2.1.5
Basis of tax Imposition (major provisions)
2.1.6
A review of major assessment provision
2.1.7
Relevant tax authorities
2.1.8
Problems of tax collection
2.1.9
In adequate qualified man power, poor motivation and corruption
2.1.10
Poor attitude to tax generation and usage
2.1.11
Lack of management audit and unrealistic budgeting
CHAPTER
THREE
Research methodology
3.1
Design of the study
3.2
Area of the study
3.3
Population
3.4
Sample size
3.5
Sampling techniques
3.6
Instrument of data collection
3.7
Validity and reliability of instrument
3.8
Techniques for data analysis
CHAPTER
FOUR
Data presentation and Analysis
CHAPTER
FIVE
5.1
Discussion of the study
5.2
Summary of findings
5.3
Implication of the research
5.4
Limitation of the study
5.5
Suggestion for further study
5.6
Conclusion
5.7
Recommendation
Bibliography
Questionnaire
CHAPTER ONE
1.0
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
Tax is an important factor in economic
planning and development of a nation and I is an important agent of social
change, (Ola 1985:109). Tax according to Agysi (1983:174) the transfer of
resources from private sector to the public sector in order to accomplish some
of the nation’s economic and social goals. Furthermore, tax is a compulsory
levy imposed on the payer by a legal authority or recipient public authority.
Throughout the history of mankind, the right to raise tax has been one of the
principal features of political authority.
Tax is an instrument of fiscal policy,
which plays a leading role in every organized society irrespective of the
political or constitutional structure. Once a society becomes stabilized,
civilized or law abiding the function of government becomes enormous resulting
in heavy expenditure and necessitating tax payment by its subjects.
For a developing country like Nigeria,
the primary economic goal is to increase the rate of economic growth and hence
the per capital income which will lead to higher standard of living
Three main method of financing economic
expenditure in most developing economics include taxes and other current
receipts such as the profit of public enterprises, loans and grants. Of these
sources, tax is perhaps the most important since the level of government
expenditure is to a great extent dependent on the ability of the tax system to
place the required revenue at the disposal of government. Hence, Samuelson
(1980:92) wrote that “in deciding to tax people, the people are really deciding
how resources needed for social wants shall be taken from all various families
and from the enterprises they own and made available for the provision of
social goals and services”.
Again since market system proves
inadequate for ensuring stable price and steady growth, tax has to be used to
bring about employment, stable price and steady growth. In addition, tax is
meant to ensure, at times, a transfer of resources from the hand of the private
to public or government for investment, modification of patterns of investment
and mitigating economic inequalities.
All as, these aims are far from being
achieved in Nigerian society. The tax system is failing in almost all the above
respect. Therefore, there must be crucial problems militating against efficient
and effective tax administration in Nigeria.
There have been discussions on the
problems posed by the dwindling fortune in the oil economy. This problem is
acute because of the undue reliance on federal government for the bulk of the
operating revenue in the state. All the states of the federation are now
required to intensify effort toward the internally generated revenue to make up
allocation from the federation account. Unfortunately the problem engendered in
the internally generated revenue is more acute in newly created states. Before
being carved out, these states were doing fairly well with what they collected
within their confines.
In Enugu state, the problem of
inefficient tax collection is highly pronounced. Due to lack of fund the state
was unable to fulfill its obligations to the citizenry. The present emphasis on
rural development has subdued the state with the problems of socio-economic
development of the rural communities. Beside political duties, it is expected
to provide good roads, health services, primary and secondary education, good
environmental sanitation among others, to her people. As a result of the
government inability to meet with its obligations the people have resorted to
self help projects in most communities.
Observation has shown that the number
of self help projects in most communities outnumbers the government projects
therein. These failures are attributed to the numerous problems militating
against efficient tax collection in the state as shown by this project.
Inspite of the broad nature of taxes,
the tax payers are usually on the look out for loopholes which they could
exploit and less tax to the government. Besides the corrupt tax officials,
evidence abound that there is high incidence of tax avoidance (refusing to pay
tax entirely) and evasion (act by which the amount of tax payable is
dishonestly reduced) in Enugu state.
As a result of the role and importance
of tax as an instrument of fiscal policy, the vital sources of government
revenue, taxation becomes an important area of study. But because of the
failure of taxation to effectively collate resources, secure equitable income
distribution and properly regulate the econo-colateral function of a good tax
system and above all provide the government with the much needed revenue to
meet its various obligations, it is strongly convinced that there must be some
crucial problems militating against effective and efficient tax administration
in Enugu state and Nigeria as a whole. Hence a study of problems of tax
administration and collection with particular reference to Enugu state is
hereby being undertaken to x-ray with a view of finding these problems, their
degree of impediment, the likely prospect and proffering recommendations of
actions that will ensure effective and efficient tax administration and
collection mechanism in Enugu state in particular and Nigeria in general.
1.2
STATEMENT OF PROBLEM
There has been a heart provoking outcry
by various state governments in Nigeria over their poor financial base. The
situation is becoming even more compounded by the obvious dwindling feature of
our oil economy. Moreover, Inspite of the broadness and the comprehensive
nature of our tax system, tax avoidance and evasion are on the increase. This
ugly development has placed most state government in a situation where they can
not cope with their civic responsibilities to their citizen, hence a compelling
need to put an end to this unwholesome circumstances through proper problem
identification;
(1)
It has been a problem to understand the extent to which resources, human /
material are adequate for the management of Enugu State Board of Internal
Revenue. (ESBIR).
(2)
The extent to which the objectives of the organizations are being achieved.
(3)
Also, it is a problem to determine the relationship between the ignorance of
tax benefits and the unwillingness of tax payers to pay their taxes and so
fulfill their civic obligation.
(4)
It is difficult to ascertain the extent to which ESBIR has realized its targets
on priority areas of personal income tax administration.
1.3
RESEARCH QUESTION / HYPOTHESIS
Below are research questions to which
the study would be based.
(1)
To what extent are the resources (human / material) adequate for the management
of ESBIR (Enugu state board of internal revenue)?
(2)
To what extent have the objectives of the organization been achieved in recent
past?
(3)
What is the relationship between the ignorance of tax benefits and the
unwillingness of tax payers to fulfill their tax obligation?
(4)
To what extent has the board realized its targets on priority areas of personal
income tax administration.
1.4
HYPOTHESIS
There will be no significant difference
at 0.05 between the perception of senior and junior staff with regard to assure
adequacy
There is no significant relationship
between proper staff training scheme and objective assessment and collection of
personal Income tax. There is no significant relationship between adequate
public enlightment campaign on tax policies and tax payer’s benefit or
knowledge on tax benefit
There is no significant difference at
0.05 between the perception of junior and senior staff regarding the attainment
of target in priority areas of tax revenue administration.
1.5
PURPOSE OF THE STUDY.
(1)
To ascertain the extent to which the resources (human / material) are adequate
for the management of the organization (ESBIR).
(2)
To find out the extent to which the objectives of the organization (ESBIR) are
being achieved in recent years.
(3)
To determine the relationship between Ignorance of tax benefits and the
unwillingness of tax payers to fulfill their tax obligation.
(4)
To evaluate the ethical validity and the basis of personal Income tax
assessment and collection in Enugu state
1.6
SIGNIFICANT OF THE STUDY.
This research work is being undertaken
to identify the problems hindering personal income tax administration and collection
in Enugu state. It is my hope that this study will help to correct the
deficiency in the personal income tax generation machinery in Enugu state.
Again, there is practically no detailed
study devoted to the problems of personal income tax collection in recent
years. Therefore, the study will adequately fill up the gap. Thus, a research
work that focuses on this topic is timely and very necessary in providing
lasting solution to the incessant and unhealthy problem of waste of revenue
through ineffective personal income tax administration and collection in Enugu
state.
1.7
SCOPE OF THE STUDY.
The topic of this thesis is “The
problems of personal Income Tax Administration and collection in Nigeria with
particular reference to Enugu State Board of Internal Revenue”.
The main objectives of the study are
1.
To find out the extent to which the resources of the organization are adequate
for its management
2.
To ascertain the extent to which the objectives of the organization are being
achieved.
3.
To determine the relationship between Ignorance of tax payers and the
unwillingness to fulfill their tax obligation
Finally, to evaluate the ethical validity and basis of
assessment of collection of personal Income tax in Enugu State.
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