This research work is an investigation into the' administration of
personal income tax and the socio-economic development of Ikeja Local
Government of Lagos State. To tax is to impose a financial charge or
other levy upon a taxpayer (an individual or legal entity) by a state or
the functional equivalent of a state such that failure to pay is
punishable by law. This study adopts both the historical and survey
research methods in generating relevant data. The population of the
study is limited to selected tax payers in Ikeja Local Government Area
of Lagos State. The sample size of the study is 50, while the sampling
technique Used is random. The chi-square (X2) method was adopted as a
method of analyzing the data generated in the course of the study. The
study concludes that the way forward from is for the Lagos State
government to implement its tax policy effectively as to educate and
encourage tax payers in Ikeja metropolis in paying taxes regularly.
Recommendations made in the course of the study among others is that the
Lagos State Government should consider Ikeja taxpayers and other key
stakeholders' interests in fiscal policy formulation and implementation
in order to achieve improved tax awareness and compliance rate in the
local government area.
3.1 Research design
3.3 Sample size
3.4 Sampling technique
3.5 Sources of data
3.6 Method of data analysis
3.7 Research instrument
3.8 Reliability and validity of research instrument
Data presentation and analysis
4.2 Data presentation
4.3 Test of hypothesis
Summary of findings, conclusion and recommendations
5.1 Summary of finding
1.1 BACKGROUND OF THE STUDY
Every Society in whatever form will comprise the ruling and the
authority and the ruled subjects. As social contract term the ruler is
expected to perform some roles; be it administrative, social, economic,
political, cultural or religious. In return, the ruled subjects that
enjoy the benefits from these roles performed are to give something for
keeping the machinery working. This could be in cash or in kind. 'In
light of the above, every constituted human society, whether primitive
or modem, has one form of levy or the other. This necessitates tax and
taxation. A historical review of man and societyreveals that tax exists
as a major source of revenue for government.
Tax payment, according to Nightingale (1998), "is the part of the
price to be paid for living in an organized and orderly society, for if
this is not done, the miscreants produced through the inequality in the
system will be a source of constant irritation to the well-being of
those who have." A system of tax- will vary (even if slightly) from one
'country to the other because it is a sociopolitical and economic'
model representing society's social, political and economic needs and
aspiration at arty given time. Because of this, Nigerian tax system is
dynamic and is continually changing to meet the needs of the
constituents of the society.
An income tax is a tax levied on the income of individuals or
business(corporations or other legal entities). Various income tax
systems exist, with varying degrees of tax incidence. Income taxation
can be progressive, proportional, or regressive, when the tax is levied
on the income of companies, it is often called a corporate tax, income
tax, or profit tax. Individual income taxes often tax the total income
of the individual (with some deductions permitted), while corporate
income taxes often tax net income (the difference between gross
receipts, expenses, and additional write-offs). Various systems 'define
income differently, and often allow notional reductions of income (such
as a reduction based on number of children supported).
According to Lekan and Sunday (2006) "Personal Income Tax is a tax
imposed with income as its base." This income is as received by some
chargeable people. Agbetunde (2004) states that "It is not everybody
that falls under the coverage of this tax but certain sets of people
called taxable persons." The discussion on the administration of income
tax is incomplete without due consideration of the socio-economic
development of Ikeja Local Government Area of Lagos State.
In light of the above, the revenue generated through taxation in
Ikeja Local Government of the state has been channeled to various areas
such as road construction and rehabilitation, transportation, traffic
management, environmental beautification, waste management, flood
control, physical planning and flood upgrading, education, job creation,
health, economic planning, commerce and industry, housing, etc. most
feasible in Mobolaji Bank Anthony Way, ObafemiAwolowo Road, Oba Akran
Road, Airport –Road etc,
The economic impact of personal income tax administration in Ikeja
cannot be over-emphasized. It is seen in the system of transportation in
that, roads have enormous impact on the standard of living of the
people in so many ways. It is also noticeable in the environment to
general, because of the determination to have a sustainable environment
and this has prompted an aggressive promotion of a culture of 'Greening
Ikeja Local Government. '
The success 9f this landscaping and beautification exercise is
self-evident in many outer and inner areas and major roads as stated
In the course of this study, effort shall be made to discuss
extensively on the economic importance of personal income tax
administration in Lagos State, and Ikeja Local Government in particular.
1.2 STATEMENT OF THE PROBLEM
The following are the problems that prompted the pursuit of this study:
a. Low level of awareness of the method of operating
personal income tax system by tax payers in Ikeja Local Government of
b. High level of tax avoidance and tax evasion among traders in Ikeja Local Government.
c. Slow rate of socio-economic development In Ikeja Local Government.
d. Inadequate qualified and competent tax inspectors, tax collectors and tax consultants in Lagos State.
e. Indiscriminate imposition, assessment and collection of taxes by officials of tax authorities in Lagos State.
1.3 OBJECTIVES OF THE STUDY
Relevant to the study is the definition of the general objectives of
this study, which is the evaluation of personal income tax
administration and the socio- economic development of Ikeja Local
Government' Area in Lagos State. The objectives are as follows:
a. To discuss the evolution and development of tax in Nigeria before, during and after colonial era.
b. To evaluate the reasons for the high level of tax avoidance and tax evasion among traders in Ikeja Local Government.
c. To identify the various sectors of the economy of IkejaLocal, Government that requires rapid development. '
d. To discover certain challenges facing effective personal income
tax administration in Lagos State such as unqualified and incompetent
tax officials,indiscriminate imposition, assessment and collection of
e. To find out why the rate of socio-economic development in Ikeja Local Government of Lagos State is low.
1.4 RESEARCH QUESTIONS
The research questions are as follows:
a. How does tax reflects the socio-economic needs of people in the society?
b. How effective is the implementation of personal income tax by Lagos State Government?
c. What is the compliance level by residents, firms and
traders in Ikeja Local Government Area in terms of payment of taxes?
d. To what extent has personal income tax been applied
in the provision of infrastructures in Ikeja Local Government Area?
1.5 RESEARCH HYPOTHESES
The following hypotheses are formulated in this study:
Ho: Personal income tax administration cannot facilitate socio-economic development of Ikeja Local Government Area.
H1: Personal income tax administration can facilitate socio-economic development of Ikeja Local Government Area.
Ho: Low awareness and compliance level of personal income tax
system' by most people in Ikeja Local Government Area is not a major
reason for low tax revenue to the government.
H2: Low awareness and compliance level of personal income tax
system by most people in Ikeja Local Government Area is a major reason
for low tax revenue to the government.
1.6 SIGNIFICANCE OF THE STUDY
This study intends to indicate its meanings and values to the following groups:
a. Tax authorities In Lagos State and Ikeja Local.
Government in particular will realize the need for improvement in the
system of administrating of personal income tax, the need to recruit
qualified personnel and devise effective method of imposing, assessing
and collecting taxes from tax payers.
b. The tax payers should be better enlightened about
the essence of taxation in terms of its economic, social and cultural
implications in a civilized society.
1.7 SCOPE AND LIMITATION OF THE STUDY
The areas to be covered in the course of this study are: tax and
taxation, personal income tax administration, the evolution and
development of tax in Nigeria “characteristics of a good tax system, tax
administration and the socio-economic development of Ikeja, problems
facing tax authorities in ensuring an effective tax system in Lagos
Major constraints or limitations of this study are stated as follows:
a. Inadequate information required for the study write-up.
b. Poor attitude of respondents to research instruments.
c. Insufficient funds for clerical and other related costs.
Nevertheless, this research work will achieve its major objectives.
1.8 PLAN OF THE STUDY
This research work has been arranged chronologically into five chapters as follows:
Chapter one provides a background the study, It "gets out the major
problems prompting the research work. It clearly states the objectives
of the study, the research questions for which answers must be provided,
the research hypotheses that will be tested later (in chapter four),
the relevance or significance of the study to both tax authorities and
tax payers, the scope and limitations of the study, the study plan
(which gives a total framework or arrangement of all the activities
involved the study), the definition of key terms, and an historical
background of the case study (Ikeja Local Government Area).
Chapter two concerns detailed discussion and explanation of relevant
areas of the subject matter in a theoretical and conceptual manner,
making references to related work carried out by some authors of
textbooks, journals, seminar papers, etc.
Chapter three is the description of the methods adopted in conducting
the study. It considers" the research design employed, the study
population, sample size and technique, the sources of data, the validity
and reliability of research instrument adopted, and the method of data
Chapter four involves the presentation and application of method of
data analysis stated in chapter three. It also involves the testing of
the stated hypotheses (hypotheses I and II) and making decisions 'based
on the results of the analysis.
1.9 OPERATIONAL DEFINITION OF TERMS
a. Personal Income Tax: A tax charged on the income of a person,
b. Society: A particular communityof people, who share the same customs, laws, etc.
c. Tax: A compulsory levy imposed by
the government authority through its agents, on its (tax payers) or his
properties to achieve some goals.
d. Taxation: The process of imposing, assessing and collecting taxes.
e. Tax Administration: The interpretation and application of tax laws into practice.
f. Tax Avoidance: An attempt to escape tax payment by capitalizing on the loopholes in tax laws.
g. Tax Evasion: A criminal attempt to escape tax payment by breaking tax laws.
h, Taxable Person: A person on whom certain tax can be imposed.
i. Tax Laws: Legal instrument of fiscal policy that is derived from, adopted tax policies.
j. Tax System: The process of
taxation involving sets of rules, regulations and procedures with the
organs of administration interacting with one another to generate funds
1.10 HISTORICAL BACKGROUND OF lKEJA LOCAL GOVERNMENT AREA
Ikeja Local Government Area is an outer-ring suburb of the city of Lagos and capital of Lagos State. It is one of Nigeria's 774 Local Government
Areas (LGAs). It was founded by an Awori hunter-named 'Akeja Onigorun', after whom the area was named. To this day, the majority of residents in Ikeja are Awori.
Ikeja Local Government Area has numerous infrastructures and government organizations such as Federal Airports Authority of Nigeria with Vs headquarters on the grounds of Murtala Muhammed Airport. The Accident
Investigation Bureau of the Nigerian government is headquartered in Ikeja.