TAX MANAGEMENT AND REVENUE GENERATION (A CASE STUDY OF ANAMBRA STATE)

Abstract

This study was set to determine the impact of good tax management on revenue generation in Anambra State, using Orumba south Local Government Area as the area of study. The study was necessitated by the increasing financial burden on the government at levels occasioned by the surging need to provide social services and infrastructural development for the governed. To accomplish the objective of the study, the researcher has reviewed the opinions of established authorities on the subject matter of study. Well- structured questionnaires were used to elicit information from respondents forming the sample of study.  Data were collected using questionnaire and were analyzed using frequency tables and percentages.

The analysis result revealed that;

The tax system is designed and formulated to facilitate generation of revenue.

The tax system is planned to prevent evasion and avoidance of tax by citizens.

In spite of the high demand for social services and infrastructural development, tax payers still avoid tax.

Tax management in Orumba south L.G.A is effective and has resulted to increased generation of tax revenue.

On the basis of the above findings, the researcher recommends that;

The citizens should be sensitized on the need to pay their taxes as a civic responsibility.

Tax personnel should be persons of proven character

Government should ensure stricter enforcement of existing tax laws to ensure compliance.

TABLE OF CONTENTS

Title page

Approval page                                                        ii

Dedication                                                             iii

Acknowledgement                                                  iv

Abstract                                                                v

Table of contents                                                    vi

CHAPTER ONE

Background of the study                                   1

Statement of the problem                                 6

Objectives of the study                                     8

Research Questions                                          9

Significance of the study                                   11

Scope of the study                                           11

Limitation of the study                                     12

Definition of terms                                           13

References                                                      14

CHAPTER TWO

2.0  LITERATURE REVIEW

2.1 History of Orumba-South L.G.A                         16

2.2 Meaning and definition of Taxation                     17

2.3  Statutory Tax Laws in Nigeria                            21

2.4  Tax Administration in Nigeria                             23

2.5  Sources of generating revenue                           31

2.6  Cannons of Taxation                                        33

2.7  The Purpose of Taxation                                   34

2.8  Tax System                                                    36

       References                                                      31

CHAPTER THREE

3.0  RESEARCH METHODOLOGY

3.1  Introduction                                                    38

3.2  Research Design                                              38

3.3  Sources/method of data collection                     39

3.4  Population and sample size                               39

3.5 Sampling techniques                                        41

3.6 Method of data analysis                                    42

              References                                                      42

CHAPTER FOUR 

4.0  PRESENTATION AND ANALYSIS OF DATA

4.1  Introduction                                                    43

4.2  Presentation of data                                                43

4.3. Analysis of data                                               44

CHAPTER FIVE

5.0  SUMMARY, CONCLUSION AND           RECOMMENDATION

5.1 Summary of finding                                       59

5.2 Conclusion                                                    60

5.3 Recommendation                                           62

5.4 Area of study                                                       63 

BIBLIOGRAPHY                                                       64

APPENDIX                                                       66

QUESTIONNAIRE                                                                                        67

CHAPTER ONE

1.0  INTRODUCTION

BACKGROUND OF THE STUDY

The prime objective of every government is to maintain law and order, to provide and maintain basic essential services without which the community will be unimaginable and which by their nature cannot be left appropriately in the hands of private entrepreneurs. Such services include Internal Law and Order, Maintenance of National defense, provision of good healthcare system, educational system, transportation system, agricultural system etc. To cover the cost of providing these goods and services for the public good, government must generate financial and adequate revenues. The quest to governing meaningful financial resources has often led government to designing and administering some efficient and effective revenue generation systems. Primarily the main source of government revenue includes the following:

Taxation on citizens

 Taxation on income of companies

Borrowing

Grants.

Amongst these sources, taxation (the demand made by the government of a country for a compulsory payment of money by the citizens of that country.) remains the most outstanding. This may be due to it being a civic responsibility that must be performed by the citizens of the state. As a non-penal by compulsory transfer of resources from the private sector, taxation must be levied on the basis of equity, certainty, convenience, economy and productivity. Unfortunately, taxes are not paid in exchange for specific things but are collected for the sake of public welfare and interest.

       Government often uses various kinds of taxations to generate the required revenues. For instance, direct taxes which include personal income tax, often applied on employees, sole traders, partnership, capital gain tax on companies, individual and non- co-operate entities, capital transfer tax (applicable asset transferred from one person to another), purchase tax, petroleum profit tax, and company income tax has constituted a significant source of revenue to the government. Similarly, indirect tax, e.g. stamp duties, custom duties, industrial training fund, toll paid on federal highways, will have often enhanced government revenues.

The administration of tax in Nigeria is in the hands of three relevant tax authorities viz:

The joint Tax Board

The federal Board of Inland Revenue

The various state Board of Internal Revenue

In Nigeria, persons liable to pay income tax include men, women, married or single, trustees and executors, families, villages and indigenous communities. Though government can also raise funds through natural resources such as oil, palm oil, coal and gas which are exported, those alternative sources of income to government are hardly enough to shoulder the burden of government expenditures, especially in the area of economic and social spheres in each year, hence the need for tax payment.

    We must emphasize here that income Tax Law must be interpreted in strict- to- sensor. There is no equity in tax law. The tax payer must be brought within the letter of the law and rigid adherence is the rule. Nothing should be read in and nothing should be implied. The onus of bringing a tax payer into the tax net is on the revenue or assessment authority. Another important point to note is that tax is not imposed on person or individual. Section 4 (1) of ITMA 1961 states that “the tax shall subject to the provisions of this act, being payable for each year of assessment upon income accruing in derived form, brought or received in Nigeria. Studies have shown that in Nigeria, workers pay more than the rich people who invest in various proper ties such as building, transporters, etc as a result of ineffective administration of taxes. Yet those investors are the category of people who would want government to move mountains in terms of raising their socio-economic well being, without meaningfully contributing towards the funds.

       Now that our various government are gearing efforts to revamping over bettered economy and improving the living condition of Nigerians, the need for the evolvement of more effective strategies to ensuring regular tax payment by taxable individuals need not be overemphasized. Taxable adults and organizations in various sectors of the economy must discharge their civic responsibilities. Unfortunately, this can only be achieved if tax systems are effectively administered so that people would in government revenue generation, willingly and without grudges pay their taxes. This will result to improvement in government revenue generation, hence the basis for this research study.