The importance of personal income tax to government, both as a revenue sources and as a fiscal policy factor cannot be over emphasized. But the concept administration principles of income tax has remained clouded in vagueness, controversies and ambiguity. I therefore embarked on this project to attempt a concise clarification and de-mystification of income taxation particularly in rural setting of Nigeria.

To achieve this objective I have divided this project report into five (5) chapters, each chapter dealing with an aspect of the work and helps to highlight the rudiments which when collated, gets to the root of the investigation.

Chapter one deals with the general introduction of the report and cover areas like the background to the study, statement of problems, purpose of study, scope of the study, research question, statement of hypothesis and significance of the study.

Chapter two reviews existing literature on personal income tax in Nigeria with special attention to rural areas. In this segment I touched on ideas, opinions and statements of experts and other interested writers on taxation and relevant legislation relating to income tax.

Chapter three deals with the research design and methodology.

Chapter four involves the presentation and analysis of data collected from primary and secondary sources.

Chapter five then rounds up with the findings, and recommendations.

It is the hope of the researcher that if the recommendations are implement, at least in part the effectiveness and efficiency of personal income tax administration in Ugwuaji community in particularly and Enugu state in general would be absorbed to a great extent.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

History, the commonest enemy of the people of rural communities in all races or cultures is the tax collectors. In the Bible, they were regarded as sinners just for the sake of their freely chosen and legitimately recognized occupation. In the biblical context, it was even offensive to dine with tax collectors since that meant contaminating oneself. Imagine the degree of hatred.

The history of cultures depict the same picture of hatred for both the tax (tribute) collectors and their employees. The history of empires such as the old Roman empire, the British empire, Empires of Western Sudan and those of Hausa states, just to mention a few, were sustained. The common attributes of all these tributes are that their collection generated a lot of controversies.

Here in Nigeria, it can be recalled that imposition and payment of taxes was one of the most outstanding activities of the colonial government. Through different methods, the British were able to imposed taxes on the citizens who viewed them as unwarranted exhortation and exploitation. The situation has not changed since independence regime after regime has been faced with the problem of resistance to tax payment by the citizens who, like their colonial generation regard tax payment as an expenditure in futility, a distasteful exercise, an avoidable loss, a legalized exhortation and punitive measures by he greedy government. Even the rapid development in education has not done much to influence. The negative attitude towards tax payment.

If the educated elites or more precisely, the enlighten population of the urban or civilized area regards taxes as obnoxious, those in the rural communities would regards it as a taboo for obvious reasons. One should have witnessed encounter between tax collection and villagers to be able to understand the degree of bitterness existing between the two parties. In fact, a story goes that in one such occasion, a tax collector was killed: incidents of this nature resulting during tax raids in village markets and squares are not regarded as new in the rural communities .

Studies show that government do not just impose taxes without due consideration of certain under principles. It is also known hat money raised through taxes are not just dumped in a dustbin or packed in a ware house. In fact, an appropriate agency of the government explains from time to time the uses to which the tax revenues are put in a addition to other reasons.

In spite of the position stated in the above paragraph, revenues from taxes have continued to be below expectations. On the part of the tax payers, the cries have not abated. What a horn of dilemma. Acts of National Assembly, tribunals and task forces on the issue of tax have not yielded the desired results.

The following questions, therefore readily come to the mind:

i. Are all the enactment by different regimes relating to tax administration, faulty ab-initio?

ii. Are the tax laws badly implemented?

iii. What are the causes the citizens’ negative attitude towards tax especially in rural communities?

iv. Are there any ways of correcting the anomalies?

v. Is there a communication problem between the government and the tax payers.

Expanding the above questions in relation to the rural community under study, some more questions such as these would emanates:

a. Does the Acts/decrees take any cognizance of the conditions of the rural dwellers on the issue of assessable income of self employed persons? In other words, what are the criteria for determining the assessable income of the self employed?

b. Is the resulting income tax payable by the people too big or too small?

c. Do the actions or inactions of the collections contribute to the negative attitude of the people towards tax payment? In other words, are the tax agents and collectors suspected to be dishournest while performing their duties.

d. Do the rural dwellers actually know the importance of paying tax.

e. Do politics affect tax payment? If so, how?

f. Has there been any variations in the methods or techniques employed over the years and what affect has both of the methods on the proceed from tax payment?

An efficient and effective tax administration is important since the revenue from this source is vital to the survival and growth of the benefiting ties of government. In a federal system like Nigeria, especially with the continuous creation states and local government councils, the financial commitment of the lower ties has continued to grow. To be at far with increased expenditure, different states have introduced levies such as radio levy, development levy, education and technology, fund levy, survival levy etc. all these are to help the government execute, some of her programmes. There seems to be much pre-occupation with what new levy/tax to introduce and too little attention to improvement of the performance of existing source, notably income tax.

But income tax is unique as a source of revenue to the government since apart from the primary objective of generating revenue, it serves to achieve other social economic and political objectives. It is therefore imperative that no amount of attention is too much to be devoted to ensure efficient tax administration due to the multiple purpose nature of tax policy. A diligent administration of our tax policy would ultimately reduce or render unnecessary, the imposition of so many levies n the search of increase revenue.

The above and many more questions can be answered through a serious research work. Hence the topic “Problems of income tax administration in Ugwuaji community”.