ABSTRACT
Taxation as a major source to
Government funding has been chosen as a topic for this research work
because of the incessant an inevitable reduction in the growth of the
economy which has it’s resources and finance from tax. Like the
individual make money to solve their unlimited needs, the Government too
generated revenue for the executive of her project and provision of
essential infrastructures that maker life worth living, like building of
roads, schools, bridges, provision of sound education, provision of
pipe borne water, defence and others.
This not withstanding there
are still some degenerating problems encountered in the assessment and
collection of tax in Enugu State. This is a result of inefficient tax
administrative machinery, which had led to poor compliance by the
taxable citizens of the State.
Based on this development, faster
steps had to be taken to keep the flag of tax collection in Enugu State
flying as tax is the life and brain wire of every economy.
Now
that taxation is the surest and most viable source of fund its therefore
necessary to re-associate all the available tax sources. This study
touches all those strategic points and radial solutions so as to collect
more tax for the state to maintain the ego of a major source of fund
for the government.
PREFACE
This research
work of Tax as a major sources of Government Funding /Case study of
Enugu State Board of Internal Revenue is carefully prepared to highlight
and to review some strategic points towards creating more strength into
the assessment and collection of Tax in Enugu State.
Tax is the
oldest form of revenue and a major source of revenue for the Government.
As a result of this, radical decisions and recommendation has also be
given in this study to solve some inherent problems encountered in tax
collection, like training of staff, providing adequate working material
for tax assessment and collection. Incentives to workers disciplinary
measures for tax evaders and organizing seminars and workshop on tax
collection.
After going through this work one can easily ascertain
comparable figures from other revenues and from tax as to prove
authenticity of the project topic Tax as a major source to government
funding.
TABLE OF CONTENTS
CHAPTER ONE
Introduction
1.1 Background of study
1.2 Statement of the problem
1.3 Purpose/ objectives of the study
1.4 Research Hypothesis
1.5 Significance of the study
1.6 Limitation of the study
1.7 Delimitation of the study
1.8 Historical background of the Board of
Internal Revenue Enugu State
1.9 Definition of Terms
Reference
CHAPTER TWO
2.0 Review of Related Literature
2.1 Importance of Taxation in Nigeria
2.2 People’s View About Taxation
2.3 Theories Purporting the Nature of Taxation
2.4 Types of Tax
2.5 Ascertainment of income for Tax purposes
2.6 Indirect Taxes
2.7 Tax Administered in Enugu State
2.8 Duties and Powers of the Board of Internal Revenue Enugu State
2.9 The Goals and Objectives to the Board of Internal Revenue
2.10 Organs of the Board
2.11 The non Tax Revenue Sources
References
CHAPTER THREE
3.0 Research Design and Methodology
3.1 Sources of Data
3.2 Survey Instruments
3.3 Sample Used
3.4 Statistical Treatment of Data
3.5 Techniques of Data Presentation
3.6 Method of Analysis
Reference
CHAPTER FOUR
4.0 Presentation ,Analysis And Interpretation Of Data
4.1 Data Presentation
Reference
CHAPTER FIVE
5.0 Findings, Recommendation and Conclusions.
5.1 Findings
5.2 Recommendation and conclusion
5.3 Summary
Bibliography
Appendix
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Taxation
is a major instrument for the conduct of public policy. This is true
for both developed and developing countries. Taxation is known to
accomplish a number of objectives revenue generation for government,
economic stabilization and income re-distribution. Taxation as an
instrument of public policy is essentially concerned with the
manipulation of financial operations of both the government anti private
sectors with a view of furthering certain economic objectives.
In
Nigeria these economic objectives includes the attainment of
appreciable level of full employment, avoidance of excessive inflation,
achievement of satisfactory balance of payment position. Appreciable
increase in the national income and a reduction of extreme inequality
among the citizens, provision of other essential necessities of life
like water, school building of bridges roads and others.
The
question now arises, How does the finding of these activities come
about? The government can only discharge these duties by generating
enough revenue to provide enough finance for the accomplishment of these
tasks ahead and the Board of Internal Revenue is by law charged with
the responsibility for assessing, collection and accounting of all taxes
in Enugu State.
The government to the individual and payable to
the economic and social responsibilities define taxation as a compulsory
levy. In Simon’s income tax (1852) Lord Maccnaghten quoted “ Income tax is a on income. Its not meant to be tax on anything else”. Dalton (1954:23)
defined tax as a compulsory contribution imposed by a public authority
irrespective of service rendered in return. Income tax law and practice
by Njokamma. CA. Defined income tax as a creative of
statute. In interpreting its provisions. “ No equity, no intendment” or
anything else should be implied. The clean terms of the law should be
applied but no necessarily restricted against the revenue.
Nevertheless tax is not the only sources of government revenue other sources include.
¨ Fines and fees
¨ Motor licensing fees
¨ Rent on government quotas
¨ Interest and depayments
¨ Dividends and Royalties on government
¨ Share holdings
¨ Miscellaneous
State share of federal government disbursement.
¨ Loans and grants
¨ School fees
¨ Hospital fees
Revenue from government parastatals likes the water co- operation department.
The private sector is not left out in the fund generation do their own fund comes inform of borrowing private savings etc
The
absence of well-organized and locally controlled money markets for
borrowing has faced private sectors in most developing countries
especially Nigeria to rely primarily on fiscal measures to mobilize
domestic monetary resources for fund generation. For instance if profits
of taxation, the marginal efficiency of investment will decline and
consequently a fall in investment is observed. On the other hand if
profit of investment are increased through low tax rate the marginal
efficiency of investment will in investment is observed.
However Duke Man (1962
P .462) said that for an effective tax system that encourages
investment, has to some extent be based on high rates, a fact peculiar
with the paradox of investment stimulating taxation, and as well
discrimination, so long as it is significantly qualitative and
psychologically substantial. This suggestion may not augur well for
investment activity where retained profits and savings form the buck of
capital formation.
Realizing the importance to finance as the
train wires of economic growth the government initiates financial
policies through annual budgets and tax laws to fund and provide
necessary extension services for these business enterprises and also
through several government financial policy, ensures adequate financing
of small scale enterprise.
We are now convinced that of all these
source of revenue by government that tax contributes the largest
proportion. With charges in these considerations above attention have
been focused on the fiscal policy best suited to the economic
development of the country. As part of the search for desirable fiscal
policies high consideration is placed on the value of goods and services
payable by the final consumers. The collections of this tax are
accountable to the federal government by the federal wand Revenue, while
a reasonable percentage is given to the state where VAT is collected
from.
Nevertheless the implementation of various government
measures the their effects are most times, at variance with the
objectives of government. Some of the revenue collection agencies are
either ill equipped to carry out their functions effectively or equipped
with personal of dubious character who trust laudable objectives of the
government. Most tax papers don’t pay willingly, some take laws into
their hands to either evade or avoid tax wile others collide with some
tax official as well as employ the services of tax experts to explore
the tax loophole. As a result of such ill activities towards taxation
there is always a short fall in the government-projected revenue.
In
view of the importance to taxation as a principle source to government
funding as well as a powerful instrument in the conduct of public
policies. This study is aimed at exploring all avenues of tax collection
in Enugu State and the performance of the Enugu State Board of Internal
Revenue to keep the flag flying in support of the topic to the study
that taxation is a major source of government funding.
1.2 STATEMENT OF THE PROBLEM
Tax
constitutes the greater percentage of internally generated revenue in
Enugu State and as well the major source of fund for the government
financing its activities,. Tax however has its fundamental problems in
the area of Administration and management.
There is deficit in
planning, control and Adequate information flow of Tax collection
generally. Since the government financial policy and objectives is to
ensure adequate fund and conducive environment for the people’s
satisfaction through progressive taxation and other fiscal measures
designed to end the rapid growth and development of the society for the
benefit of the citizenry.
It is therefore necessary that these
avenues of fund are solidified. But on the other way round the
implementation of the government taxation policy and the realization of
the taxation goal most a times run at variance with the policy outlined
in the annual budget as well as the tax laws provisions. Many
individuals as well as organization see taxation policy as being harsh
and unfavourable. They argue that while few enterprises especially large
company continues to benefit from the government support through
grants, Subsidies and other tax incentives. Others find the policies
unbearable as a result any little opportunity by such people to evade or
avoid tax is highly utilized.
The results of all these tax
evasion and avoidance are that less revenue that envisage is collected
through tax by the government and thereby less social amentias than
proposed are carried out.
These problem will be solved as soon as
an efficient machinery is set in motion for effective administration and
review of state tax laws if made or amended.
1.3 PURPOSE/OBJECTIVES OF THE STUDY.
The
objectives of the study is finding way of making the tax system
effective and putting up measure that will help the government realize
adequate fund for its developmental activities.
Other objectives are
1. To discuss and analyze the taxes being administered and Eungu state.
2. To ascertain the total value of taxes collected during the period year by year.
3. To determine other sources from which the Enugu State Government can generate more tax revenue.
4. To ascertain other sources of the government revenue improve on them.
5. To
make suggestions on ways of increasing the total revenue of the state
government both tax and other sources of revenue to the Government.
To really achieve these objectives efforts will be made to:
1. Identify all the problems militating against effective tax assessment activities.
2. Analyze the problems and execute the suggested solutions
3. Suggest
implementation strategies with a view to assisting the management in
carrying out government policies and programmes.
4. Bring the problem to the focal eyes of the department and government.
5. Sensitizes
the government and create the awareness on the people with abysmal
attitude towards tax payment and its consequence on the economic and
social development of the state.
1.4 RESEARCH HYPOTHESIS
H0: Tax is not the major source of Government funding
H1: Tax is the major source of government funding
H0: There is no significant relationship between tax revenue generated by the state.
H1: There is significant relationship between tax revenue and total revenue generated by the state.
H0: Tax Administration system in Enugu state is not efficient and there is mismanagement.
H1: Tax Administration system in Enugu State is efficient and there is proper management.
H0: Nigeria government does not adequately accomplishes her taxation problems.
H1: Nigerian government adequately accomplishes her taxation problems.
1.5 SIGNIFICANCE OF THE STUDY
The
study will help to evaluate the tax revenue generated and assess the
tax collection machinery set in motion in Enugu State. It will also help
to evaluate the tax and the government is exploiting other revenue
source available to the state and how these source.
This study if
properly utilized will enable the Board of Internal Revenue and the
State Government to know the problems effecting tax assessment and
collection in the state.
The study will also reveal how far the
tax policies in Enugu State are being implemented furthermore strategies
on improving on the revenues generation has mapped out for the
provision of infrastructure. As a result of this, there will be high
standard of living for the tax papers of the state.
Finally it is
meant to enlighten the citizen of the state to know the objectives of
tax and thereby reducing tax evasion and avoidance.
1.7 SCOPE OF THE STUDY
This
research work is supposed to have covered the tax administration and
its revenue generation system and the comparison with other sources of
government revenue in Nigeria. Some tax administrated by the Federal
Government like Company income tax, petroleum profit tax, capital gain
tax, capital transfer tax could have been involved in this research.
Due
to the limit time constraint, shortage of information supply and
financial constraints, the study cannot be extended to these major parts
and has therefore been limited to the administration of tax as
applicable in Enugu State Government.
1.8 HISTORICAL BACKGROUND OF BOARD OF INTERNAL REVENUE ENUGU STATE.
The
present day Enugu State Board of Internal Revenue would like most
government agencies traced its orgin to when the colonialist established
their government in Nigeria. The needs for government to generate
revenue to enable her execute her programmes brought about the Division
of the Ministry the Independence in 1060. And because of the expending
responsibility, that the Board of Internal Revenue was established as an
autonomous government agency, charged with the sole responsibility of
the tax assessment and collection within their jurisdiction in the then
Eastern State of Nigeria. Therefore the present day Enugu State Board of
Internal Revenue has metamorphosed through various governments such as
Eastern Nigeria, East Central State of Nigeria, Anambra State Board of
Internal Revenue now the most prominent and the highest revenue
generator of all the extra ministerial departments in Enugu State.
The
government of any nation, State or local government formulated and
implements policies for the welfare of the populace. The government at
any level has various organs through which it executes these policies so
formulated for the interest of the Board of internal Revenue and of
which the government has charged with assessing collecting and
accounting for all taxes collected within this state.
The present
day Enugu State Board of Internal Revenue has only (2) two zones as
against (3) three zones before the creation of Ebony state. These tow
zones are 1. Enugu Zone comprising of eighteen Tax offices and (18)
motor licensing offices (2) Nsukka Zone comprises of (12) twelve Tax
offices and motor license offices.
All these tax and motor
licensing office has their protem headquarters at the quarters in Enugu
State. The two zones has their zonal tax authorities charged with
collection and coordinating all tax activities in such zones. At the end
to the every month these zones are duty bound to render their monthly
return to tax collection for the month.
At the end of every month
or on a quarter month basis the statistic department called the
planning. Research and statistics section with collect, summarize and
analyze these return of collected and come out with a wide chart that
will bear all the monthly tax collection and t4h total figure for the
year ended 19… This chart will be carefully prepared that at a glance
one will see the total amount of tax collection for every fiscal year.
1.9 DEFINITION OF TERMS
Some of the terms used during this research, which have special application to study, are defined:
¨ Revenue: This
is the gross receipt or receivable of a governmental unit derived from
taxes, custom and other main sources of government revenue but excluding
appropriation and allotment from the consolidated Revenue fund (CRF).
¨ Tax: The
Oxford Advanced Learners Dictionary of current English DEFINES tax as
“(sum of money purchase etc) to the government for public purpose”.
Tax
can also be defined as a compulsory levy by natural or cooperate,
payable to the government for the benefit of the citizenry.
¨ Tax Assessment: The calculation the tax due to the paid by an individual.
¨ Tax Collection: Staff of the Board charged with collection of taxes from the public.
¨ Zonal Tax Authorities: These are senior tax officer charged with assessing and collecting of tax within their zone.
¨ Tax Law: These
are laws made by the government prone to review as well giving the
guidelines and draft on how and paid. These laws are standard guiding
all the tax offices in the federation. Examples are ITMA 1961 Income Tax
management Act 1991 etc.
Income management Act (ITMA): These are laws committee guiding the collection and payment of tax in Nigeria.
This was promulgated in 1961 but since been amended.