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TAX
ADMINISTRATION STRATEGY AND REVENUE GENERATION IN NIGERIA (1990-2012)
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
The
field or Tax Administration Strategy and Revenue Generation has made great
strides in the past two decades, moving from a rather arcane endeavour to one
tested in dozens of countries including Nigeria and well established in a few
other countries like the United States of American, Untied-Kingdom, Canada,
among others (Akinnifesi, 1981; Ajaikoye, 1996; Ariyo, 1997; Auerbuch, 1999;
Brown, 2000; Brown and Ariyo, 2001; Ene, 2004; Njoku, 2006; Hall and Jorgensen,
2008; Adesola, 2010).
In
Nigeria, the direction and magnitude of the influence of Tax Administrative
Strategy (TAS) on Revenue Generation (RG) is not clear and documented evidence
is scarce (Philips, 2008; Justus, 2010). More so, the tax terrain in Nigerian
is rather an expansive one. From Petroleum Profit Tax (PPT) to tenement rate
imposition, there is a wide array of taxes and levies in between individuals
and Companies, Citizens and Foreigners, Manufacturers and Markets, Workers and
Pensioners among others, all are affected by this laid compulsion called tax
exacted by legislative authority. The issues are so numerous; some are legal,
economic and sociological to the extent that some are historical or political
(Ipaye, 2002).
Tax
according to Omotoso (2001) is a compulsory charge imposed by a public
authority on the income of individuals and companies as stipulated by the
government decrees, Acts or Cases laws irrespective of the exact amount of
services rendered to the people in return. In fact, taxes are a compulsory
transfer of resources to the government from the rest of the economy (World
Bank, 2000). Simply, tax is a compulsory levy imposed on a subject or upon his
property by the government to provide security, social amenities and created
conditions for the economic well-being of the society (Appha, 2004; Appha and
Oyandongha, 2011). A tax system offers itself as one of the most effective
means of mobilizing a nation’s internal resources and leads itself to creating
an environment conducive to the promotion of economic growth.
Tax
is a principal source of government revenue; it should be accorded strict and
close monitoring to achieve compliance (Reynold, 1963).
Taxes
are administered in two different forms: Direct and Indirect tax such as:
Personal Income Tax, Company Income Tax, Petroleum Profit Tax, Capital-Gains
Tax, with-Holding Tax, Education Tax, Value Added Tax, Import Duties, Custom
Duties, Excise Duties, Import Duties/Tariff, among others; categorized to suit
the tax-payers to easily identify the form and type the payer belongs and for
tax administration authorities among other functions to conveniently assess and
collect taxes for the governments of Nigeria (Adesora, 1995: Adebisi, 2010).
Nigeria is a Federation which operates a
Three-Tier government namely: Federal, State and Local Governments; each of
which has tax administration authorities viz: Federal Board of Inland Revenue
(FBIR) which is now Federal Inland Revenue Services (FIRS), State Board of
Internal Revenue (SBIR), also now Known as State Internal Revenue Services
(SIRS) and Local Government Tax Authority (LGTA) all of which derived there
creation and different jurisdictions from the Federal Laws (Odusola, 2006).
Taxes constitute key sources of revenue to the Federal account shared by the
Federal, State and Local Governments (Nzotta, 2007).
Financing
government activities and programmes have not been an easy task time
immemorial. These tasks have compelled government to evolve series of theories
and legislations in an attempt at sourcing for fund and ensuring judicious
utilization. In recent times, there has been chaos and controversies as regards
Federal, State and Local government financial incapability to discharge their
fiduciary responsibilities to the citizenry. The complaints of the levels of
government have been inadequate statutory allocation which makes it almost
impossible to carry out the tasks of effective administration and financing
capital projects as well. The problem, no doubt is olden, it took a dramatic
but melancholic turn at the inception of a democratic system of government in
the millennium year 1999. The aftermath of the problem was retrenchment of
workers and general apathy of some states and local government to embark on
capital projects.
In
the wisdom of the Federal Government, the Citizens were made to understand that
thrice or more of the revenue allocated by the then Military regime to States
and Local government is what the States and Local governments receive today in
a democratic dispensation, therefore, they have no cause to complain.
Indeed,
the history and development of sources of government funds over the centuries
have always been a painful rehearsal of the controversy between the three
conflicting extremes of government (Buhari, 2003). However, the increasing cost
of running government coupled with dwindling revenue has left various state
governments in Nigeria with formulating and adopting strategies to improve or
increase the revenue base, tax rate and collection.
More
so, the challenge of ever widening deficit and a near collapse of the National
economy create serious financial stress for all the Tiers of Government.
Statistically, hardest hit are the state governments all of which has
experienced unusual reduction in their share of the National Revenue from the
Federation Account. Despite the numerous sources of revenue available to the
various Tiers of Government as specified in the Nigeria 1999 Constitution, since the 1970’s till now,
over 80% of the Annual Revenue of the three (3) Tiers of Government come from
Petroleum Profit Tax (PPT), and a residual amount of revenue less than 20% from
other sources. Never-the less, the serious decline in the price of oil in
recent years culminated to a decrease in funds available for distribution to
the States. Premised on the forgoing, the States and Local governments as a
matter of extreme urgency and importance contrived the need to explore and
exploit available internal revenue sources to generation adequate revenue to
finance government activities. This need under-scores the eagerness on the part
of State and Local governments and even the Federal Government to look for new
sources of revenue or to become aggressive and innovative in the mode of
collecting revenue from existing sources.
To
meet the inescapable need for increased revenue, both the Federal and State
Governments in Nigeria came up with various Tax Administration Strategies to
boost revenue generation under a programme known as the Accelerated Revenue
Generation (ARG). In the light of the forgoing according to Oluwakayode and
Arogundade (2011), in Lagos State over 300 tax consultants were engaged to
assist the State over 300 tax consultants were engaged to assist the State Board of Internal Revenue
(SBIR) before the appointment of Chief Adekanola. They also added that Chief
Adekanola was appointed in the first instance for a period of two-years
precisely December 1, 1996 to May 31, 1998 as the sole tax consultant included
that the tenets of the agreement included that 15% of the incremental revenue
over and above the 450 Million-Naira monthly tax revenue ever recorded by the
members of staff of the SBIR would be paid; and they failed to generate above
the 450 Million-Naira they received nothing. This agreement was amended in
January, 1997 stating that the tax consultants would be paid 10% flat-rate on
any revenue generated. Furthermore, they revealed some part of the report of
the Accelerated Revenue Generation Program (ARGP) showing the Performance of
the tax consultants between 1996 and 1998 in the table below:
Table 1: performance of the
consultants between December, 1996 and February, 1997:
|
Month of Account
|
Adjusted Revenue Collection
|
Average Monthly Collection
|
Increment in Revenue
|
Actual commission Paid
|
|
December, 1996
|
605, 373,721.44
|
450,000,000.00
|
155,373,721.44
|
27, 651,045.59
|
|
January, 1997
|
535,531,464.59
|
450,000, 000,00
|
85,531, 464.59
|
12,829,719.68
|
|
February, 1997
|
474,007,470.47
|
450,000,000.00
|
24,007,470.47
|
-
|
|
Total
|
1,614,912,656.50
|
1,350,000, 000.00
|
264,912,656.50
|
40,480,763.27
|
Source: Audit inspection report
on the Accounts of Accelerated Revenue Generation programme (ARGP) for the
period 1st December, 1996 to 31st May, 1998.
The
Federal Government in a related move, also, appointed monitoring agents on
Value Added Tax (VAT) and W ith-Holding
Tax (WHT) in the oil industry. In 1996, the Federal Government appointed
Professional Import Duties Administration (PIDA) for the collection of import
duties side by side certain customs officials. Some state governments on their
part, appointed consultants to boost revenue generation in their States (Kiabel
and Nwokah, 2009). These developments attracted diverse comments among various
interest groups and individuals. While the imposition of taxes on individual
and corporate bodies is under the Executive list of the constitution and the
collection of such taxes is placed under the concurrent legislative list. This
means, the power to collect the various taxes is shared among the three tiers
of governments.
It
is upon this background of legal (legislative) issues, which posit towards
generating revenue sufficient enough for the machinery of each level of
government that the issue of Tax Administration Strategy and is emanating
problems and challenges were built.
Moreover,
many multi-national development agencies required deficit reduction as a
pre-condition for development assistance, which did not include reform of the
Tax system and reduction of public expenditure as central objective. All these,
necessitated the need for effective tax administration strategy especially in
the developing countries, such as, Nigeria, where it is in- excusable to wide-
spread corruption and its destructive consequence for the tax system in these
countries as many studies regarding tax system show that more than 50% of tax
revenue goes uncollected because of fiscal corruption and evasion (Bird, 1990; 1992 and Krugman et al, 1992).
According to CITA (2010), the tax administration machinery currently in
existence in Nigeria includes:
a. The joint Tax Board (JTB)
b. The Federal Inland Revenue Services (FIRS).
c. The State Board of Inland Revenue (SBIR)
d. Local Government Revenue Committee.
e. Joint State Revenue Committee.
A. The
Joint Tax Board (JTB) Composition:
a. The
Chairman of the Federal Board of Inland Revenue shall be the Chairman of the
JTB.
b. One
member from each State, being a person experience in income tax matters
nominated by the commissioner for finance of the State.
c. The
Secretary to the Board shall be appointed from the Federal Civil Service
Commission being an officer experienced in income tax matters. The secretary
shall not be member of the Board.
d. The
Legal Adviser of the Federal Board of Inland Revenue shall be in attendance at
any meeting of the Board.
B. Federal Inland Revenue Service (FIRS)
The
FIRS Establishment Act, 2007 has replaced the Federal Board of Inland Revenue
with the Federal Inland Revenue Service.
Establishment and Composition of
the Management Board
v Executive
Chairman to be appointed by the President subject to the confirmation of the
Senate.
v Six
members with relevant qualifications and expertise who shall be appointed by
the President to represent each of the six geo- political zones.
v The
Governor of Central Bank or his representatives
v A
representative of the Minister of Finance not below the rank of a director.
v The
Chairman of the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC)
or his representative who shall be any of the commissioners representing the
thirty-six States of the Federation.
v The
Group Managing Director of NNPC or his representative not below Group Executive
Director.
v The
Controller-General of Nigeria Custom Service or his representative not below
the rank of Deputy Controller-General
v The
Register-General of Corporate Affairs Commission.
v The
Chief Executive Officer of the National Planning Commission or his
representative.
Technical Committee of the Board
Composition
§ Executive
Chairman of the Board as chairman.
§ All
Directors and Heads of Department of the Service
§ The
Legal Adviser of the service
§ The
Secretary to the Board
C. State Board of Internal Revenue (SBIR) Composition
a. The
Executive Chairman of the State Service who shall be a person experienced in
taxation appointed by the State government from within the Sat service.
b. The Directors and Heads of Department within
the State service.
c. A
Director from the State Ministry of Finance.
d. Three
persons nominated by the commissioner for Finance in the State on their
personal merit.
e. A
Legal Adviser to the State Service
f. The
Secretary to the State service who shall be an ex-officio member.
Technical
Committee of SBIR Composition:
a. Executive
Chairman as chairman.
b. All
Directors and Heads of Department of the Senate Internal Revenue Service.
c. The
Legal Adviser to the Board
d. The
Board Secretary.
D. Local Government Revenue Committee:
This
is to be established for each Local Government Area of each State.
Local Government Revenue
Committee Composition:
a. The Supervisor for Finance as Chairman
b. Three Local Government Counselors as
members.
c. Two
other persons experienced in revenue matters to be nominated by the Chairman of
the local government on their personal merit.
Joint State Revenue Committee
(JRSC):
This
was established for each State of the Federation by Decree 19 of 1998.
JSRC Composition:
a. The
Chairman of the State Internal Revenue Service as Chairman.
b. The
Chairman of the Local Government Revenue Committee.
c. A
representative of the Bureau on Local Government Affairs not below the rank of
a Director.
e. The
State Sector Commander of the Federal Road Safety Commission.
f. The
Legal Adviser of the State Board of Internal Revenue
g. The
Secretary of the committee who shall be an ex-officio member.
However,
to achieve effective Tax Administration Strategy, it is imperative to
understand and tackle the major constraints/problems facing effective and
efficient Tax Administration in the country.
Finally,
the obvious truth is that, most previous efforts are constituent on descriptive
research, no known empirical effort had been made in this area and should there
be any conducted, it is almost certain to be obsolete or out-dated.
This
research, therefore seeks to identify the challenges which Tax Administration
Strategy (TAS) posses to Revenue Generation (RG) on one hand and moderating
influence of political influence, government policy and corruption on Tax
Administration Strategy (TAS) and Revenue Generation (RG) on the other, and will
make empirical evidence proposals for dealing with the identified challenges.
1.2 STATEMENT
OF THE PROBLEM
The
direction and magnitude of the influence of Tax Administration Strategy (TAS)
on Revenue Generation (RG) is not clear and documented evidence is scarce in
the Nigerian context. In view of these, the success or failure of any Tax
System or Tax Administration is largely dependent on how much revenue it
generates to cater for the public needs of the society.
However,
effective Tax Administration Strategy (TAS) according to Akinlo (2004) involves
balancing properly between equity and administrative ease. Equity provides
that, incidence of direct taxation should broadly be the same on comparable
income and wealth groups irrespective of the success of such incomes and forms
in which the wealth is held; is an illusion in Nigeria. Administrative ease
requires that tax due should be capable of quick and simple calculation and of
prompt and convenient collection, rather than the complex and cumbersome process
in use. Also, often times, there is conflict here, as the tax designers face
the painful dilemma of being able to achieve improvement in equity only by
increasing the difficulty of Tax Administration Strategy (TAS) or
alternatively, to being able to reduce these difficulties only by increasing
additional in-equalities (Toye, 1979 quoted in Akinlo, 2004; Ayo, 2005 and
Njoku, 2007).
In
another vein, section 4 (1) and (2) of the 1999 constitution of the Federal
Republic of Nigeria empowered the National Assembly to make laws for the peace,
order and good governance of the Federation or any part thereof, with respect
to any matter included in the exclusive list. This list contains subjects like
incorporation, regulation and winding-up of corporate bodies and taxation of
income, Profit, VAT and Capital-Gains. The same constitution further reserves
to the Federal Legislature the power to make laws with respect to matters in
the concurrent list to the extent prescribed in the second columns of that
list. Item 79 of that current list is a collection of Taxes. The Federal
legislature is allowed top delegate the collection or administration of some
taxes to the government or other authority of a state, provided however, that
tax such as VAT, income or Profits of companies cannot be so delegated.
Ipaye (2002) asserts that this clearly
justifies the inference that State may impose, collect and spend any tax fee or
rate which has not been expressly reserved for the Federal Government control.
The assumption is that, States could not have been required to delegate to the
Local government councils what they could not by themselves do.
In
Nigeria, the companies apart from the income tax paid to the Federal
Government, the companies are subjected to a wide array of taxes, levies and
rates by States and Local governments. These multiple taxes have led to massive
protests by individual companies and their associations. They contend that
corporate bodies should not be liable to any tax other than companies’ income
tax and they should only be under the jurisdiction of the Federal Government.
They also claim that these multiplication of taxes drive-up their cost of
production, thereby, making products un-competitive and sometimes forcing them
to go out of business. That it also places artificial restriction on
Inter-State Commerce and makes the prices of locally produced goods
un-competitive when compared with those of imported goods (Ipaye, 2002). This
apparently is a huge challenges to increase in tax-base in the short and long-run
inimical to increase in tax revenue. To this end, what really are the effects
of Constitutional provision that reserves the taxation of companies’ profits
and capital gains strictly for the Federal Government, among other legal
requirements?
Also,
the establishment of Federal Inland Revenue Service (FIRS) has attracted a
great deal of attention from revenue authorities around the world. They are
particularly concerned with the potential increase in tax avoidance and change
jurisdictions. Tax-payers have a legitimate voice in a discussion of this
nature because they bear the cost of any changes in tax systems. The cost
burden could be directly through their tax payments or indirectly through the
cost of complying with new reporting obligations. Tax professionals are equally
challenged to learn about information technology (IT), lend their expertise in
its design/implementation and be in a position to evaluate the tax implication
of a technology enabled business environment (Umeh, 2004). This supposed triangulation
(tax professionals, tax administration and tax payers) of information, design
and implementation is a major challenge in Nigeria.
Obvious
in the issue is a visit to each State of Nigeria, which convincingly depicts
the picture of a dejected, lack of basic social and physical amenities
fundamental to the lives of the citizens. These amenities are the mandatory
obligation of the government to provide through public finance which “taxation”
is a key payer to the citizenry. The failure of government to provide these
basic amenities researchers reveal, is the bane of failure to voluntary
compliance and apathy by tax-payers in Nigeria.
It
is the light of the forgoing that this study seeks to empirically examine the
impact of Tax Administration strategy (TAS) on Revenue Generation (RG) on one
hand and the moderating effects of corruption and government policy have on the
relationship between Tax Administration Strategy (TAS) and Revenue Generation
(RG) on the other hand.
1.3 PURPOSE/OBJECTIVE
OF THE STUDY
The
general purpose of the study is to determine empirically the relationship
between Tax Administration Strategy and Revenue Generation in Nigeria and to
consider the effect of some contextual variables (Government Policy, Political
Influence and Corruption) on this relationship.
The
specific objectives of the study are to:
1. Ascertain
the extent of influence of Tax Legislation (TL) on company Income Tax (CIT) in
Nigeria.
2. Examine
the extent of relationship between Tax Legislation (TL) and Petroleum Profit
Tax (PPT) in Nigeria.
3. Evaluate
the effect of Tax Legislation (TL) on Value Added Tax (VAT) in Nigeria.
4. Examine
the relationship between Tax Consultancy (TC) and Petroleum Profit Tax (PPT) in
Nigeria.
5. Evaluate
the effect of Tax Consultancy (TC)on Value Added Tax (VAT) in Nigeria.
6. Identify
the effect of Tax Consultancy (TC) on Company Income Tax (CIT) in Nigeria.
7. Determine
the extent of influence Inland Revenue Board (IRB) has on Petroleum Profit Tax
(PPT) in Nigeria.
8. Identify
the relationship Inland Revenue Board (IRB) has on Company Income Tax (CIT) in
Nigeria.
9. Evaluate
the effect of Inland Revenue Board (IRB) on Value Added Tax (VAT) in Nigeria.
10. Determine
the effect of Tax Consultancy (TC) on Petroleum Profit Tax (PPT) in Nigeria.
11. Identify
the influence of Tax Consultancy (TC) on Value Added Tax (VAT) in Nigeria.
12. Evaluate
the effect Tax Consultancy (TC) has on Company Income Tax (CIT) in Nigeria.
13. Ascertain
the effect of moderating factors (Government Policy, Political Influence and
Corruption) mediate the influence of Tax Administration Strategy (TAS) on
Revenue Generation (RG) in Nigeria.
It
is in the light of the forgoing that this study seeks to empirically examine
the impact of Tax Administration Strategy (TAS) on Revenue Generation (RG) on
one hand and the moderating effects of Corruption, Government Policy and
Political Influence have on the relationship between Tax Administration
Strategy and Revenue Generation on the other hand.
1.4 RESEARCH QUESTIONS
In
an attempt to address the pertinent problem of this study the following
research questions are posed:
1. To what
extent does Tax Legislation (TL) affect Value Added Tax (VAT) in Nigeria?
2. What
possible relationship exists between Tax Legislation (TL) and Petroleum Profit
Tax (PPT) in Nigeria?
3. To what
extend does Tax Legislation (TL) affect Company Income Tax (CIT) in Nigeria?
4. What
possible relationship exists between Tax Consultancy (TC) and Value Added Tax
(VAT) in Nigeria?
5. To what
extent does Tax Consultancy (TC) affect Petroleum Profit Tax (PPT) in Nigeria?
6. To what
extent does Tax Consultancy (TC) affect Company Income Tax (CIT) in Nigeria?
7. What
possible relationship exists between Inland Revenue Board (IRB) and Value Added
Tax (VAT) in Nigeria?
8. To what
extent does Inland Revenue Board (IRB) affect Petroleum Profit Tax (PPT) in
Nigeria?
9. To what
extent does Inland Revenue Board (IRB) affect Company Income Tax (CIT) in
Nigeria?
10. To what
extend does Political Influence (PI) affect Tax Administration Strategy (TAS)
and Revenue Generation (RG) in Nigeria?
11. To what
extent can Government Policy (GP) affect Tax Administration Strategy (TAS) and
Revenue Generation (RG) in Nigeria?
12. To what
extent can Corruption (C) affect Tax Administration Strategy (TAS) and Revenue
Generation (RG) in Nigeria?
13. Why
taxation in the States of Nigeria not able to generation revenue sufficient
enough to take care of the machinery of the government at each level?
1.5 CONCEPTUAL
FRAMEWORK
The
study variables are those shown in Figure 1. The figure shows the relationship
between Tax Administration Strategy (Independent Variable) and Revenue
Generation (Dependent Variable) from some selected tax handles of the Federal
Government depicted by Value Added Tax (VAT), company Income Tax (CIT) and
Petroleum Profit Tax (PPT) on one hand, and the relationship between Tax
Administration Strategy (Independent Variable) depicted by Tax Legislation
(TL), Tax Consultancy (TC) and Inland Revenue Board (IRB), and Revenue Generation
(Dependent Variable) in Nigeria.
The
study therefore, focuses on empirical examination of Tax Administration
Strategy Influence on Revenue Generation from selected tax handles (PPT, CIT
and VAT) of the Federal government in Nigeria and considers the effects of some
contextual variables (Government Policy, Corruption and Political Influence).
Fig.1. TAX
ADMINISTRATION STRATEGY AND REVENUE GENERATION
A CONCEPTUAL FRAMEWORK
1.6 RESEARCH
HYPOTHESES
The
above research questions lead to a number of hypotheses, here-under stated in
null form and associated with each research question:
H01: Tax Legislation (TL) has no significant effect
on Company Income Tax (CIT) in Nigeria.
H02: Tax Legislation (TL) has no significant effect
on Petroleum Profit Tax (PPT) in Nigeria.
H03: Tax Legislation (TL) has no significant effect
on value Added Tax (VAT) in Nigeria.
H04: Tax Consultancy (TC) has no significant effect
on Value Added Tax (VAT) in Nigeria.
H05: Tax Consultancy (TC) has no significant effect
on Petroleum Profit Tax (PPT) in Nigeria.
H06: Tax Consultancy (TC) has no significant effect
on Company Income Tax (CIT) in Nigeria.
H07: Inland Revenue Board (IRB) does not have
significant effect on company Income Tax (CIT) in Nigeria.
H08: Inland Revenue Board
(IRB) does not have significant effect on Value Added Tax (VAT) in Nigeria.
H09: Inland Revenue Board
(IRB) does not have significant effect on Petroleum Profit Tax (PPT) in
Nigeria.
H010: Corruption (C) does not have a significant
effect on Tax Administration Strategy (TAS) and Revenue Generation in Nigeria.
H011:
Government Policy (GP) does not have a
significant effect on Tax Administration Strategy (TAS) and Revenue Generation
(RG) in Nigeria.
H012: Political Influence
(PI) does not have a significant effect on Tax Administration Strategy (TAS)
and Revenue Generation (RG) in Nigeria.
H013: Tax Administration
Strategy (TAS) has no significant effect on Revenue Generation (RG) in Nigeria.
1.7 SCOPE
OF THE STUDY
The
scope of this study is viewed from the perspective of content scope,
geographical scope and unit of analysis. The study covers Tax Administration
Strategy and the three dimensions-Revenue Generation, its measurements and the
mediating factors that influence the relationship in Nigeria environment.
The
geographical area of the study is Nigeria. However, we will restrict ourselves
to a State in each of the Six (6) geographical zones ceteris paribus; also, we
shall limit ourselves to a Twenty-two (22) year period between 1990 and 2012.
1.8 LIMITATIONS
OF THE STUDY
Although,
the present study was intended to cover the entire Nigeria but due to
limitations which took a toll on us, we could only cover two (2) zones
(South-East and South-South) out of the six (6) geo-political zones of the
country. This is consequent upon the security issues in recent times in most
parts of the country, especially the Northern parts made it inaccessible for
the researcher.
1.9 SIGNIFICANCE
OF THE STUDY
Taxation
is responsible for the circulation of income and the benefits accrued from the
utilization of tax revenue are tangibly available to all citizens. Therefore,
it is pertinent to assert that the study would be of immense importance to
different groups of persons, organizations and even the government. Firstly,
the results of this study would be relevant to members of the public,
especially, those that wish to know the various areas of government operations
which tax revenues are utilized. The study will broaden tax- payers horizon or
knowledge on the area tax revenue are applied and in addition, show the effects
of such revenue application on the productivity of companies in the public and
private sectors.
The
study will also be of great benefit to the Nigerian companies as it will enable
them appreciate the effects of the government of Nigeria in economic
development.
The
study will provide useful information to management of companies on available
tax revenues in Nigeria and encourage them to take advantage of the opportunity
in increasing productivity, profitability, investment and business growth.
The
growth of Nigeria will also find the study relevant. Through the findings, the
government will be able to ascertain how the Tax Administration Strategy (TAS)
affects Revenue Generation (RG) in the country. Thus, government will be
revising with the information to make appropriate adjustment in fiscal policy
measures to enhance productivity capacity and efficiency of companies in the
Nigeria economy.
Finally,
it is hoped that the study in entirety will contribute positively to knowledge
in the area of Tax Administration Strategy and Revenue Generation improvement
as many companies through this study will be familiar with types of Tax
Administration that can improve their operations.
1.10
DEFINITION OF TERMS
Assessable Income:
The aggregate total of a preceding year of a tax-payers income from all sources
after the allowable deductions which includes losses.
Tax Consultant:
Is a tax practitioner in the private-sector engaged by government for the
collection of taxes.
Direct Tax:
These are taxes payable by individuals and limited liability companies on their
incomes, profits and property.
Government Agencies:
This include FIRS, SBIR, EFCC, Local Tax Authorities, and the Nigerian Customs
amongst others who assess and collect revenue for the government.
Indirect Tax:
These are taxes payable on the value of goods and services received. Examples
are Value Added Tax (VAT), Customs Stamp Duty among others.
Petroleum Profit Tax (PPT):
These are taxes on petroleum operations which include obtaining petroleum oil
by drilling or by extraction and the transportation of the oil so obtained by
the company between the entre of operation and place of sale.
Tax Administration:
The care and management to all such things deemed necessary and expedient for
the assessment, collection, custody and accountability for revenue generated.
In simplest terms, tax administration is the implementation of the tax law in
order to achieve their objectives.
Tax Authority:
A person or body of persons saddled with the responsibility under a law of a
territory to impose tax on the income of individuals for the administration of
the laws.
Tax Avoidance:
A lawful method of achieving reduction of the tax liability through loop-holes,
such as, producing more children, taking on more life assurance policies among
others.
Tax Concession:
lawful methods of achieving reduction of the tax liability were certain
behavior of the tax-payer is actually sought. Any type of investment incentives
(accelerated depreciation, initial allowance among others are typical
examples).
Tax Evasion:
Informal practices leading to deceit of tax agents by tax- payers. It is an
illegal method of reducing one’s tax liability either by a mis-statement or
omission of a source or sources of income, usually a deliberate act on the
tax-payer not to pay tax due.
Value Added Tax:
A tax imposed on the net sales value of non-exempt, qualifying goods and
services in Nigeria.
Company Income Tax:
Tax imposed on the profits of all corporate entities who are registered in
Nigeria or derive income from Nigeria, other than those engaged in Petroleum
operations.
Capital Gains Tax:
Tax imposed on capital gains derived from sale or disposal of chargeable
assets.
Political Influence:
It is the political will to continue to strengthen, enforce or distort existing
tax authority by successive government in Nigeria.
Government Policy:
Is an effective rule document on Tax that establishment clear guidelines on
crucial tax administration issues which among others include payment processing
and collection, Record- Keeping, Audit and Investigation, Enforcement of tax
laws and Registration of taxable persons among others.
Revenue Generation:
Is the process of implementing and enforcing the legal framework regulating the
assessment, collection and accounting for all taxes and levies to earn income
for government expenditure.
Corruption:
Is the process or act of Tax Officials colluding with Tax payers to defraud the
Government by reducing assessment, collection, and remittance among others in
Nigeria.
Tax Revenue:
Is a part of an income derived from the collection of an imposed tax on
individuals, legal entities and property owners in Nigeria.
Tax Legislation: Is the passage of a tax bill into tax law by
the National and State Houses of Assemblies in Nigeria.
1.11 ORGANIZATION
OF THE STUDY
The
study is organized into five chapters. Chapter one examines the Background of
the study, which also contains the Research Problem, Purpose and Significance
of the Study including the Research Questions. The chapter also highlighted the
Scope and Limitations of the study. Included in this chapter are contextually
defined Key Terminologies.
Chapter
two will deal with a review of Related Literature. It also will highlight the
Tax Administration Strategy, its concepts and Revenue Generation as well as the
contextual variables adopted in the study. The chapter will end by bringing all
relevant variables to the study in a conceptual framework which will show
clearly how hypotheses were derived.
Chapter
three will explain the Research Methodology used in the study which will
include amongst others, the research design, research population, sample
adopted for the study, methods of data collection and analysis, validity and
reliability of research instrument and measurement of variables.
Chapter
four will focus on the empirical aspects of the study, that is, a detailed
presentation of data analysis and discussion of findings.
Chapter
five will round-off the study with a summary of the conclusions, inherent
implications of the conclusion and recommendation advanced in finality of the
study.
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