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THE PROBLEMS OF NIGERIA PERSONAL INCOME
TAX ADMINISTRATION
(A CASE STUDY OF MINISTRY OF EDUCATION)
ABSTRACT
This project work is carried out on problem of personal income tax generation
and administration taxation can be simply defined as a compulsory contribution
by individuals and organizations to a statutory Authority. The merits of
taxations are numerous for instance, it could be used for re-distribution of
income or for stabilizing the economy.
In the recent past and till date it has not been easy to fully realized the
objectives of taxation owing to the existence of inefficiency and
ineffectiveness in the system of administration and collection of personal
income tax in Enugu state. This project problems of personal income tax
Generation and Administration in Enugu State. (A case study of internal
Revenue Enugu – North) will highlight those problem militating against the
attainment of the objective of taxation.
In carrying out this research work, questionnaires bad been used to collect
data and simple percentage analysis was used to analyse the data collected.
Also this research work enabled me to observed whether inhabitants of Nigeria
-indulge so much in tax avoidance and tax evasion because they have not been
sufficiently enlightened on the important and merits of taxation.
Finally the research work carried out helped the researcher to know if there is
enough personnel needed for effective tax collection and administration.
The limitation of this study is monetary problem and time, there will be
scarcity of accurate national statistics.
PROPOSAL
Taxation can be simply defined as a compulsory contribution by individuals and
organizations to a statutory Authority. The merits of taxations are
numerous for instance, it could be used for re-distribution of income or for
stabilizing the economy.
In the recent past and till date, it has not been easy to fully realize the
objectives of taxation owing the existence of inefficiency and ineffectiveness
in the system of administration and collection of personal income tax in Enugu
state. This project problems of personal income tax Generation and
Administration in Enugu-State (A case study of internal Revenue Enugu-North)
will highlight those problems militating against the attainment of the
objectives of the objectives of taxation.
In carrying out this research work, questionnaire will be used to collect data
and simple percentage analysis will be used to analyse the data collected.
Also, in carrying out this research work, it will help me to observed whether
inhabitants of Nigeria -indulge so much in tax avoidance and tax evasion
because they have not been sufficiently enlightened on the importance and
merits of taxation.
Finally, it will help to know if there is enough personnel needed for effective
tax collection and administration. The limitation of this study is
monetary problem and time. Moreso, there will be scarcity of accurate
national statistics.
TABLE OF
CONTENTS
CHAPTER ONE:
Introduction
Background of
study
-revenue
Enugu
Statement of
the problem
Objectives of
the
study
Formulation
of research
hypothesis
Delimitation
/ limitation of the study
CHAPTER TWO:
Literature
Review
Origin and
importance of taxation in nigeria
Importance of
taxation in nigeria
Qualities of
good tax
system
Effects of
taxation
Personal
income taxation (general criteria)
Problems of
personal income tax
generation
Problems of
personal income tax administration
CHAPTER
THREE:
Methodology
Population
Sample
Instrument
Validation of
instrument
Collection of
data
CHAPTER FOUR
Presentation
and analysis of data collected
4.1
administration and collection of questionnaire
Analysis of
questionnaire using the simple percentage
CHAPTER FIVE
Summary and
conclusion
Recommendation
Bibliography
References
CHAPTER ONE
INTRODUCTION
BACKGROUND OF
STUDY
In all
generation, the problems of personal income tax generation and administration
continues to surface in one form or another in virtually every society,
especially in this part of the world. It is important to point out that
the federal government has taken adequate steps to wards effective tax
administration.
This failure
on the part of the federal government is responsible for poor financial
positions of both the state and local government. Besides, this
inadequate planning and absolute laws governing taxation, evaluation and
collection is characterized by chaos.
This chaotic
nature of the system can be appreciated by political influence or
interferences in the process of taxation during the civilian administration in
the country which gave rise to untrained and inexperienced personal being
entrusted with the work of collection and administration of personal income
tax.
The important
of these issues to tax administration in the developing countries like.
Nigeria, can be seen from the following extract fromtax administration in under
developed countries. The tax administration finds himself working with a staff
which is inefficient in experienced, and poorly paid.
Taxation may
be defined as the demands made by the government of a country in a compulsory
payment of
money by the citizens of a country.
The
principles of Nigeria taxation by fagbile (PGI) defines it as a compulsory levy
by the government of a country through an appropriate unit or agency usually
the inland or a corporate body.
Taxation,
whether direct or indirect deals with compulsory payments by individual or
companies to the federal, state or local government and it levied in all forms
and shapes.
However, this
project work will be limited to personal income tax administration under the
direct tax system.
Reasons why
taxation is necessary includes:
Providing
basic government series such as schooling, medical care etc.
Administering
the law.
Redistributing
income and wealth
Regulating
the economy.
The various
types off revenue collected from taxes levied on personal income may be
classified as follow:
Pay as you
earn (PAYEE)
Direct
Assessment
Income rate
Penalties
Capital gains
tax
Merriment tax
Withholding
tax on rent
Tax on
dividends
Sales tax
Withholding
tax contracts, royalties etc.
R.A. Rabini
PERSONAL INCOME TAX IN NIGERIA (John West Publication ltd; 1981)
Various
government organs which are responsible for the collection off taxes have
always been criticized by the public government functionaries intellectuals and
media. It is therefore, apparent that an functionaries intellectuals and media.
It is therefore, apparent that an examination of the administration of the
taxes stated above be made with a view in making useful recommendations which
may lead to higher level of efficiency in taxes administration and thus,
greater revenue field.
The direct
assessment is paid by individuals (self employed persons) once or twice a year.
Assessments are raised by the inspector of taxes and distributed to the
individual in payment to the appropriate tax is payable by:
Every
individual (other than corporate, sole or body of individuals) who is resident
for that year in Nigeria.
Every
internal worker found in Nigeria at any time during the year.
Denalties are
levied for non-payment of tax may be due to either neglect or fraud.
Under the
PAYEE system every employer is required to finish a return-containing
particulars off persons employed by him and of remuneration paid to them.
The employee
normally makes return of his income on form ‘’A’’ which is obtained from the
internal revenue department itemizanded on the form. The form provides section
for the statement of relief and allowances, dependent relatives, life assurance
and allowance dependent relative life assurances relief etc. The employee is
then issued with a tax deduction card which guides the employee in the
deduction of tax as and when the salaries are paid.
The taxable
pay for each month or part thereof as studies on the tax-deduction card is
arrived at after allowing for the tax-free amount.
The capital
gain tax is collectable from persons i.e. exactor, trustees, partnership,
community, family and any individual. The tax is charge at the rate of 20% on
gains accruing on disposal of assets situated in or outside Nigeria.
Merriment tax
is designed to get money from moneymakers. The tax payer will have to go the
tax offices (station) to pay. Adhoc workers also, go about on patrol demanding
receipt, license of payment. Failure to produce such receipt or license
attracts a penalty raised for compliance with government regulation.
The cost of
accounting service relative to various tax requirements is enormous and gross
as tax law becomes increasingly, complex maintaining record and preparing for
most individual which must turn to experts for assistance yet, at the high of
administration is interpretation of the law which should be understood by the
tax collector and the tax payer.
STATEMENT OF
THE PROBLEMS
It is true
that problem of tax collection and administration is universal but the third
world countries of which Nigeria is one, seem to be more plagued and inflicted
both in weight and magnitude than the developed nations of the world.
The research
work primarily involves identifying the problems of the personal income tax generation
and administration in Nigeria taking a case study of -Revenue, Enugu-North
Local government area.
These
problems include:
Improper system of keeping accounts and records in the internal Revenue office,
which was seen to be quite mechanical and out dated.
Lack of staff and inadequate training of the available tax collectors.
No enlightenment on the part of tax payers as regards the importance of
taxation is another increase problem of tax generation and administration in
Enugu –North Local Government Area.
Also corrupt alliance of tax collectors with tax payers to avoid tax for them
(tax collectors) to make fast money.
Another back bone of the problem worth mentioning is the uninformed penalties
on tax defaulters. Thus lack of enforcement power on the board makes tax laws
useless and not serious to tax offenders /defaulters.
Since these problems have been identified the researcher considers it necessary
to survey as much as possible to find solution preferred for solving the
problems which will make for higher level of efficiency in the personal income
tax generation and administration in Enugu-North in particular and Nigeria in
general.
OBJECTIVES OF
THE STUDY
The value of
an effective personal income tax collection and administration cannot be over
emphasized. There has been an increase in the demand for governmental service
or the masses. Government is expected to satisfy collective wants and regulate
the economic and social policies of the nation.
Against this background of continuous increase trends in government
responsibilities and expenditure are all levels of government. Nigeria
have been facing fast dwindling finances for the past few years. The
internally generated revenues have been inadequate to meet up the numerous
demand and obligations.
Ascertain
whether there are really problems in personal income tax collection and
administration
Investigate
and identify the factors that cause the problems
find out how
these problems have affected the work of the -revenue.
Determine the
effectiveness and efficiency of personal income tax collection and
administration in Nigeria with Nigeria -Revenue as a case study.
Recommend
measures to overcome or minimize these problems of personal income tax
generation and administration in Nigeria.
FORMULATION
OF RESEARCH HYPOTHESIS
HO1:
Personal income tax administration in in Nigeria
-Revenue is
not very effective.
H1:
Personal income tax administration in Nigeria
-Revenue is
very effective.
The hypothesis above about personal income tax generation and administration in
Nigeria -are based on generalization of the assumed relationship between
personal income tax revenue like administrative costs, population, income of
tax payers, free pay allowance etc.
In any case, the rejection of the null hypothesis HO, is sub-hypotheis which
are reduced to testable firms.
1.
HO: The system of keeping account and records in the -Revenue
office in Enugu area is rudimentary.
H1:
The system of keeping account and records in the internal Revenue office in
Nigeria is not rudimentary.
2.
HO: The internal Revenue office in Nigeria -is
under staffed and ill-equipped H1 the internal Revenue office in
Nigeria -is not under staffed and ill-equipped
3.
HO: The tax payers in Nigeria -Revenue are not enlightened enough to know
the importance of taxation.
HI:
The tax payers in Nigeria -Revenue are enlightened enough to knoe the
importance of taxation.
Owing to flexibility of tax laws in Nigeria and attitude of government toward
the local government level in the area of administration and collection of
personal income tax. It is pertinent to make some assumption that will
guide the work for an opinion to be expressed.
The local
government shall remain one throughout the research period.
Problems
identified and solutions proferred shall apply to all local government areas in
Nigeria.
The revenue
board are those who encounter these problems.
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