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.
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
of the problem
objectives of the study
of the study
of the study
of the study
background of the Board of
Internal Revenue Enugu
of Related Literature
2.1 Importance of Taxation in
View About Taxation
Purporting the Nature of Taxation
of income for Tax purposes
Administered in Enugu State
and Powers of the Board of Internal Revenue Enugu State
Goals and Objectives to the Board of Internal Revenue
of the Board
non Tax Revenue Sources
Design and Methodology
3.1 Sources of Data
Treatment of Data
of Data Presentation
,Analysis And Interpretation Of Data
4.1 Data Presentation
Recommendation and Conclusions.
5.2 Recommendation and conclusion
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.
on government quotas
and Royalties on government
State share of federal
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.
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.
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.
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
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.
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
Other objectives are
discuss and analyze the taxes being administered and Eungu state.
ascertain the total value of taxes collected during the period year by year.
determine other sources from which the Enugu State Government can generate more
ascertain other sources of the government revenue improve on them.
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:
all the problems militating against effective tax assessment activities.
the problems and execute the suggested solutions
implementation strategies with a view to assisting the management in carrying
out government policies and programmes.
the problem to the focal eyes of the department and government.
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
H1: Tax is the major source of
is no significant relationship between tax revenue generated by the state.
is significant relationship between tax revenue and total revenue generated by
Administration system in Enugu state is not efficient and there is
Administration system in Enugu State is efficient and there is proper
government does not adequately accomplishes her taxation problems.
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
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.
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.
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
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
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
This was promulgated in
1961 but since been amended.