THE PROBLEMS OF NIGERIA PERSONAL INCOME TAX ADMINISTRATION
(A CASE STUDY OF MINISTRY OF EDUCATION)
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.
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
Background of study
Statement of the problem
Objectives of the study
Formulation of research hypothesis
Delimitation / limitation of the study
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
Validation of instrument
Collection of data
Presentation and analysis of data collected
4.1 administration and collection of questionnaire
Analysis of questionnaire using the simple percentage
Summary and conclusion
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)
Capital gains tax
Withholding tax on rent
Tax on dividends
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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