TABLE OF CONTENT
Title page………………………………………………………………………………….i
Certification………………………………………………………………………………ii
Dedication………………………………………………………………………………..iii
Acknowledgment……………………………………………………………………..iv
Table of Content……………………………………………………………………….v
Abstract…………………………………………………………………………………….vi
Chapter one
Introduction………………………………………………………………………..………….1
Background of the Study …………………………………………………….,..……….1
Statement Of Problem ………………………………………………………….………….1
Research Question / Hypothesis …………………………………………..………….5
ABSTRACT
This Paper examines the problems associated with the
Assessment and Administration of Personal Income Tax on Motorcycle riders in
(UMUGUMA)Owerri West LGA Metropolis. The study uses Primary data involving
face-to-face interviews and observations, while descriptive survey was used to
analyze the data. The paper utilizes the stratified random sampling technique
in selecting 28 units out of the 294 units in the Metropolis. One hundred and
fifty (150) Umuguma were randomly selected, observed and interviewed using the
interview and uncontrolled/unstructured observation method. The main findings
of the research are that, tax officials lack adequate training and experience
in carrying out their assignment. Similarly, shortage of staff, payment default
on Direct Assessment Tax System (DATS), insufficient financial resources
available to the tax authority and lack of Political will on the part of Government
in enforcing the tax laws were also found to affect the revenue generation
drive of the State. The paper also finds that Motor cycle (Umuguma) riders do
not pay any form of tax or levy to the State Government, but have very high
expectations from it, in the provision of infrastructural facilities like
Roads, Bridges, Hospitals, Motor cycle Loans etc. The paper recommends that the
State Government in conjunction with the tax authority should embark on proper
recruitment, training and development of staff, provide good remuneration
packages to tax officials, provision of adequate working facilities, and embark
on massive enlightenment of the taxpayers on the importance of tax payment.
This, it is believed, will enhance the revenue generation of the State, by
bringing in hitherto none tax payers into the tax-paying circle. Finally, the
paper strongly recommends a form of Personal Income Tax on Motor cycle
(Umuguma) riders, as it is a promising Industry that could assist the State in
terms of revenue generation.
CHAPTER ONE
1.0 INTRODUCTION
BACKGROUND OF THE STUDY
Tax is an important factor in economic planning and
development of a nation and I is an important agent of social change, (Ola
1985:109). Tax according to Agysi (1983:174) the transfer of resources from
private sector to the public sector in order to accomplish some of the nations
economic and social goals. Furthermore, tax is a compulsory levy imposed on the
payer by a legal authority or recipient public authority. Throughout the
history of mankind, the right to raise tax has been one of the principal
features of political authority. Tax is an instrument of fiscal policy, which
plays a leading role in every organized society irrespective of the political
or constitutional structure. Once a society becomes stabilized, civilized or
law abiding the function of government becomes enormous resulting in heavy
expenditure and necessitating tax payment by its subjects. For a developing
country like Nigeria, the primary economic goal is to increase the rate of
economic growth and hence the per capital income which will lead to higher
standard of living Three main method of financing economic expenditure in most
developing economics include taxes and other current receipts such as the
profit of public enterprises, loans and grants. Of these sources, tax is
perhaps the most important since the level of government expenditure is to a
great extent dependent on the ability of the tax system to place the required
revenue at the disposal of government. Hence, Samuelson (1980:92) wrote that
“in deciding to tax people, the people are really deciding how resources needed
for social wants shall be taken from all various families and from the
enterprises they own and made available for the provision of social goals and
services”. Again since market system proves inadequate for ensuring stable
price and steady growth, tax has to be used to bring about employment, stable
price and steady growth. In addition, tax is meant to ensure, at times, a
transfer of resources from the hand of the private to public or government for
investment, modification of patterns of investment and mitigating economic
inequalities. Allas, these aims are far from being achieved in Nigerian
society. The tax system is failing in almost all the above respect. Therefore,
there must be crucial problems militating against efficient and effective tax
administration in Nigeria. There have been discussions on the problems posed by
the dwindling fortune in the oil economy. This problem is acute because of the
undue reliance on federal government for the bulk of the operating revenue in
the state. All the states of the federation are now required to intensify
effort toward the internally generated revenue to make up allocation from the
federation account. Unfortunately the problem engendered in the internally
generated revenue is more acute in newly created states. Before being carved
out, these states were doing fairly well with what they collected within their
confines. In Imo State, the problem of inefficient tax collection is highly
pronounced. Due to lack of fund the state been unable to fulfill its
obligations to the citizenry. The present emphasis on rural development has
subdued the state with the problems of socio-economic development of the rural
communities. Beside political duties, it is expected to provide good roads,
health services, primary and secondary education, good environmental sanitation
among others, to her people. As a result of the government inability to meet
with its obligations the people have resorted to self help projects in most
communities. Observation has shown that the number of self help projects in
most communities outnumbers the government projects therein. These failures are
attributed to the numerous problems militating against efficient tax collection
in the state as shown by this project. Inspite of the broad nature of taxes,
the tax payers are usually on the look out for loopholes which they could
exploit and less tax to the government. Besides the corrupt tax officials,
evidence abound that there is high incidence of tax avoidance (refusing to pay
tax entirely) and evasion (act by which the amount of tax payable is
dishonestly reduced) in Imo State. As a result of the role and importance of
tax as an instrument of fiscal policy, the vital sources of government revenue,
taxation becomes an important area of study. But because of the failure of
taxation to effectively collate resources, secure equitable income distribution
and properly regulate the econo-colateral function of a good tax system and
above all provide the government with the much needed revenue to meet its
various obligations, it is strongly convinced that there must be some crucial
problems militating against effective and efficient tax administration in Imo State
and Nigeria as a whole. Hence a study of problems of tax administration and
collection with particular reference to Imo State is hereby being undertaken to
x-ray with a view of finding these problems, their degree of impediment, the
likely prospect and proffering recommendations of actions that will ensure
effective and efficient tax administration and collection mechanism in Imo
State in particular and Nigeria in general.
1.2 STATEMENT OF PROBLEM
There have been a heart provoking outcry by various state
government in Nigeria over their poor financial base. The situation is becoming
even more compounded by the obvious dwindling feature of our oil economy.
Moreover, inspite of the broadness and the comprehensive nature of our tax
system, tax avoidance and evasion are on the increase. This ugly development
has placed most state government in a situation where they can not cope with
their civic responsibilities to their citizen, hence a compelling need to put
an end to this unwholesome circumstances through proper problem identification;
(1) It has been a problem to understand the extent to which
resources, human / material are adequate for the management of Imo State Board
of Internal Revenue. (ISBIR).
(2) The extent to which the objectives of the organizations
are being achieved.
(3) Also, it is a problem to determine the relationship
between the ignorance of tax benefits and the unwillingness of tax payers to
pay their taxes and so fulfill their civic obligation.
(4) It is difficult to ascertain the extent to which ISBIR
has realized its targets on priority areas of personal income tax
administration.
1.3 RESEARCH QUESTION / HYPOTHESIS
Below are research questions to which the study would be
based.
(1) To what extent is the resources (human / material)
adequate for the management of ISBIR (Imo State board of internal revenue)?
(2) To what extent have the objectives of the organization
been achieved in recent past?
(3) What is the relationship between the ignorance of tax
benefits and the unwillingness of tax payers to fulfill their tax obligation?
(4) To what extent has the board realized its targets on
priority areas of personal income tax administration.
1.4 HYPOTHESIS
There will be no significant difference at 0.05 between the
perception of senior and junior staff with regard to assure adequacy There is
no significant relationship between proper staff training scheme and objective
assessment and collection of personal Income tax. There is no significant
relationship between adequate public enlightenment campaign on tax policies and
tax payer’s benefit or knowledge on tax benefit There is no significant
difference at 0.05 between the perception of junior and senior staff regarding
the attainment of target in priority areas of tax revenue administration.
1.5 PURPOSE OF THE STUDY.
(1) To ascertain the extent to which the resources (human /
material) are adequate for the management of the organization (ISBIR).
(2) To find out the extent to which the objectives of the
organization (ISBIR) are being achieved in recent years.
(3) To determine the relationship between Ignorance of tax
benefits and the unwillingness of tax payers to fulfill their tax obligation.
(4) To evaluate the ethical validity and the basis of
personal Income tax assessment and collection in Imo State
1.6 SIGNIFICANCE OF THE STUDY.
This research work is being undertaken to identify the
problems hindering personal income tax administration and collection in Imo
State. It is my hope that this study will help to correct the deficiency in the
personal income tax generation machinery in Imo State. Again, there is
practically no detailed study devoted to the problems of personal income tax
collection in recent years. Therefore, the study will adequately fill up the
gap. Thus, a research work that focuses on this topic is timely and very
necessary in providing lasting solution to the incessant and unhealthy problem
of waste of revenue through ineffective personal income tax administration and
collection in Imo State.
1.7 SCOPE OF THE STUDY.
The topic of this thesis is “The problems of personal Income
Tax Administration and collection in Nigeria with particular reference to Imo
State Board of Internal Revenue”. The main objectives of the study are
To find out the extent to which the resources of the
organization are adequate for its management
To ascertain the extent to which the objectives of the
organization are being achieved.
To determine the relationship between Ignorance of tax
payers and the unwillingness to fulfill their tax obligation Finally, to
evaluate the ethical validity and basis of assessment of collection of personal
Income tax in Imo State.