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PROBLEMS OF PERSONAL INCOME TAXGENERATION AND ADMINISTRATION

(Accounting)

PROBLEMS OF PERSONAL INCOME TAXGENERATION AND ADMINISTRATION

(A CASE STUDY OF INTERNAL REVENUE )

ABSTRACT

Problems of personal income tax generation and administration in Enugu state (a case study of Enugu state board of internal revenue).  Taxation can be simply defined as compulsory contribution by individuals and organization to a statutory authority. It is a levy imposed by government against the income of the individual and cooperative organization. The merit of taxation include re- distribution of income, providing social amenities and for economic stability. In recent past till date, it has not been easy to fully ascertain the objectives of taxation owing to the fact of the existence of inefficiency and ineffectiveness in the system of administration and collection of personal income tax in Enugu state. This project tapped as problem of personal income tax generation and administration will further highlight those problems militating against the attainment of the objectives of taxation. In carrying out this research work, questionnaire will be used in collecting data and simple percentage analysis will be used in analyzing the data collected. During the cause of this research work, it will help me in observing if the inhabitants of Enugu state board of internal revenue indulge so much in tax evasion and tax avoidance because they have not been enlightened sufficiently on the importance and its merits. Finally, it will help to know if there are enough personnel needed for effective tax collection and administration in their board of internal revenue. The limitation of this study is monetary problem in giving accurate and reliable information.

 

TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION:

1.1      Background of the Study                                

1.2      Statement of the problem    

1.3      Objectives of the Study        

1.4      Research Questions             

1.5      Hypothesis Formulation        

1.6      Significance of the Study                                

1.7      Scope of the study              

1.8      Limitation of the study         

1.9      Definition of Terms              

CHAPTER TWO

LITERATURE REVIEW

2.1      Origin of Taxation in Nigeria  

2.2      Qualities of a Good Tax System

2.3      Effect of Taxation                

2.4      Objectives of Taxation         

2.5      Problems of Personal Income Tax Generation

and Administration              

CHAPTER THREE

METHODOLOGY

3.1      Research Design                  

3.2      Area of study                      

3.3      Population of study              

3.4      Sampling Method   

3.5      Research Instrumentation     

3.6      Validity and Reliability of Research Instruments 

3.7      Sources of Data           

3.8      Method of Data Analysis

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA COLLECTION

4.1      Presentation and Analysis Of Data

4.2      Test of Hypothesis               

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.1      Summary of Findings           

5.2      Conclusion                         

5.3      Recommendation                

Bibliography

Appendix

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Revenue is a very important concern to any nation of the world both for the developed and the under developed nations. The essence of this is to enable her undertake her numerous activities.

The tax policies were primarily targeted at optimizing revenue allocation by government from civil servants and relation. It was maintained in all government establishments including board of internal revenue. The state board is responsible for implementing the tax policies as contained in personal income tax (degree) 104 1993 as the collection of internally general revenue of the state.

       Taxation or tax is a compulsory levy imposed by government upon her citizens for provision of services.

It is also defined as a policy of collecting fees and revenue from individuals, business firms and cooperative bodies.    Policies are the rules and levy guiding the imposition, collection, accounting and use of the generated funds. It forms part of the burden of rights and attribute of sovereignty.   The need for examining the taxation policies is therefore to ascertain the effectiveness of the policies as it affects Enugu state board of internal revenue generation and the effect of political changes in tax system.

The demand of taxation in Nigeria helps to develop our country and without imposition of tax, it will be difficult to generate fund from individual. The fund generated help our country Nigeria to provide social amenities like good roads, bridges, schools to mention but a few.

 

1.2     STATEMENT OF THE PROBLEM

        In Nigeria as a whole, the problem of raising fund in Nigeria is great. This means that fund generated is usually below budgeted target. The problem is not different in Enugu state. The ways of generating fund is less and it will not meet up with the demand of government and individuals equally. The funds already generated were used wrongly and it worsens the situation in Nigeria where there is case of under- development. The problem attributed to inadequate resources, in other words the expenditure made is not justified by the amount generated.

It is also difficult to ascertain the extent to which Enugu state board of internal revenue has realized its target on priority area of personal income tax administration.

 

1.3     OBJECTIVES OF THE STUDY

The general objective of the study is to examine the nature and extent of the threat posted by personal income tax generation and administration to the socio- economic development of the nation. The study equally will be dealing specially with the following:

a.          To examine how decline in tax morality by self-employed person have encourage tax evasion and avoidance in Enugu state.

b.          To determine the extent to which the nature of tax administration in Enugu has contributed to the problems of personal income tax generation.

c.           To find out how the absence of strong deterrent has contributed to the problem.

1.4     RESEARCH QUESTIONS

      In order to carry out this study, the following research questions have been designed:

a.          In what way has decline in tax morality by self-employed personnel encouraged tax evasion and avoidance in Enugu state?

b.          In what way has the absence of strong punishment for tax offenders contributed to the problem of personal income tax generation in Enugu?

c.           In what ways have tax administration affected personal income tax generation in Enugu state?

 

1.5     RESEARCH HYPOTHESES

 For the purpose of this research work, the following assumptions are made:

Where: H0            Null hypothesis

H1           Alternative hypothesis

 

Ho: personal income tax generation in Enugu state board of internal revenue is very effective

 

H1: personal income tax generation in Enugu state board of internal revenue is not very effective.

 

Ho: there is a strong punitive measure for tax offenders by the board of internal revenue Enugu state.

 

H1: there is no strong punitive measure for tax offenders by the board of internal revenue Enugu state.

 

Ho: self-employed person in Enugu state are ignorant of the importance of taxation.

 

H1: self-employed person in Enugu state are not ignorant of the importance of taxation.

 

1.6     SIGNIFICANCE OF THE STUDY

Income tax is very important because it is one of the major sources of revenue to the government. It is a source of fund in both the state and federal government budgets. This tax collected comes to the people (tax payers) in form of social amenities provided by the government. It is an all providing subject which affects the life of nearly everybody and no major accountancy or legal problem can be satisfactory solved without a consideration of its tax aspects.

       Income tax also has some effect on population movement and the extent of business carried on.

In a state where there is low income tax rate, it will be observed that people are bound to move into such state while traders will engage in various schemes of tax avoidance and evasion in such state where tax rate is seen as a threat.

The significant of tax is also shown by the fact that one of the problems inherent in any federal system of government is the allocation of taxing powers between the federal and state government.

 

1.7     SCOPE OF THE STUDY

The scope of these work boarders on the generation and administration of personal income tax with particular reference to Enugu state board of internal revenue.

1.8     DEFINITION OF TERMS

Service  -Non physical amenities by government for public Benefit. E.g. security.

Objective -purpose or aim for a given action or pronouncement.

Social Amenities  - every physical structure provided by the government for the benefit of the community e.g. water/ electricity.

Income Tax - this is a tax levied on the income of an individual’

Funds – financial resources made available to enable government Undertake numerous projects.

Tax Avoidance - paying little or no tax without offending the law.

Tax Evasion - tax payer is doing something against the

law and if discovered will be dealt with the law.

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