PROBLEMS OF PERSONAL INCOME TAX GENERATION AND ADMINISTRATION IN ENUGU (A CASE STUDY OF BOARD INTERNAL REVENUE ENUGU)
This project work is carried out on problem of personal income tax generation (a case study of Board Internal Revenue Enugu) taxation can simply be defined as a compulsory or mandatory contribution by individual and organization to a statutory authority the of taxation are numerous for instance, it could be used for re-distribution of income or for stabilizing the economy. In the this research work, primary and secondary data were used in which information was gotten through textbooks, newspapers and questionnaires. Through this research, it was discovered that some problems associated with the personnel internal revenue (Enugu North). Also simple percentage analysis was used to analyze the data collected. In chapter four the presentation and analysis of data gotten from the questionnaires returned.Also this research work enabled me to observe whether inhabitants of Enugu North Local Government Area indulge so much in tax avoidance and tax evasion because they have not been sufficiently enlightened on the important and merits of taxation. In chapter five is the summary of findings and recommendation to help curb the problems of taxation avoidance and evasion in Enugu North. This research help in knowing if the personnel need more training and techniques on how to carryout their duties. The limitation of this study is monetary problem and scarcity of accurate national statistic.
Taxation can be defined as a compulsory contribution by individuals and organizations to a statutory Authority. The merits of taxations are numerous for instance, it could be used for re-distribution of income or for stabilizing the economy.
In the recent past and till date, it has not been easy to fully realize the objectives of taxation due to the existence of inefficiency and ineffectiveness in the system of administration in Enugu State. This project problems of personal income tax generation and administration in Enugu-State (A case study of Internal Revenue Enugu-North) will highlight those problems militating against the attainment of the objectives of taxation.
In carrying out this research work, questionnaire will be used to collect data and simple percentage analysis will be used to analyse the data collected.
Also, in carrying out this research work, questionnaire will be used to collect data and simple percentage analysis will be used to analyze the data collected.
Lastly, it will help to know if there is enough personnel needed for effective tax collection and administration limitation are scarcity of time and accurate national statistic.
TABLE OF CONTENTS
Table of contents
1.1 Background of study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Formulation of research hypothesis
1.5 Delimitation / limitation of the study
2.1 Origin and importance of taxation in Nigeria
2.2 Importance of taxation in Nigeria
2.3 Qualities of good tax system
2.4 Effects of taxation
2.5 Personal income taxation (general criteria)
2.6 Problems of personal income tax generation
2.7 Problems of personal income tax administration
3.4 Validation of instrument
3.5 Collection of data
4.0 Presentation and analysis of data collected
4.1 administration and collection of questionnaire
4.2 Analysis of questionnaire using the simple percentage
5.1 Summary and conclusion
1.1 BACKGROUND OF STUDY
In all generation, the problems of personal income tax generation and administration continues to surface in one form or another in virtually every society, especially in this part of the world. It is important to point out that the federal government has taken adequate steps to wards effective tax administration.
The failure on the part of the federal government is responsible for poor financial positions of both the state and local government. Besides, this inadequate planning and absolute laws governing taxation, evaluation and collection is characterized by chaos.
This chaotic nature of the system can be appreciated by political influence or interferences in the process of taxation during the civilian administration in the country which gave rise to untrained and inexperienced personal being entrusted with the work of collection and administration of personal income tax.
The important of these issues to tax administration in the developing countries like Nigeria, can be seen from the following extract from tax administration in under developed countries. The tax administration funds itself working with a staff which is inefficient in experienced.
1.2 STATEMENT OF THE PROBLEMS
It is true that problems of tax is universal but the third world continues of which Nigeria is one, seem to be more plagued and inflicted both in weight and magnitude than the developed nations of the world. The research work primarily involves identifying the problems of the personal income tax generation and administration in Nigeria taking a case study of board of internal revenue, Enugu North Local Government Area. These problems include
Improper system of keeping account and records in the internal revenue offices which was seen to be quite mechanical and outdated. Lack of staff and inadequate training of the available tax collectors.
No enlightenment on the part of tax payers as regards the importance of taxation, these is another problem of tax generation and administration in Enugu North Local Government.
Also corrupt alliance of tax collector with tax payers to avoid tax for them (tax collectors) to make fast money. Another problem worth mentioning is the uninformed penalties on tax defaulters.
Since these problem have been identified the researcher consider it necessary to survive as much as possible to find solution preferred for solving the problem which will make for higher level of efficiency in the personal income tax generation and administration in Enugu North and Nigeria in particular.
1.3 OBJECTIVES OF THE STUDY
The value of an effective personnel income tax collection and administration cannot be over emphasized. There has been an increase in the demand for government service from the masses. Government is expected to satisfy collective want and regulate the economic and social policies of the nation.
Against this background, continuous increase trends in government responsibilities and expenditure in all level of government Nigeria have been facing fast dwindling finances for the past few years. The internally generated revenue have been inadequate to meet up the numerous demand and obligation.
1. Ascertain whether there are really problem in personal income tax collection and administration
2. Investigate and identify the factors that cause the problems
3. Finding out how these problems have affected the work of internal revenue
4. Determine the effectiveness and efficiency of personal income tax collection and administration in Nigeria with Enugu North Board of Internal Revenue as a case study
5. Recommend measures to overcome or minimize these problems of personal income tax generation and administration in Nigeria.
1.4 SCOPE OF THE STUDY
The board of internal revenue Enugu was established to administer income tax in Enugu state just as there are in other states of the federation. Income tax was first introduced in Nigeria in 1904 by late Lord Lugard. The introduction of Native Revenue ordinance of 1927 was most difficult in the Eastern areas of the country, due mainly to absence of recognized central Authority Resistance to this form of direct taxation in such that it leaf to riots notably in Calabar, Owerri and the Famous Aba women Riot of 1929 which was so severe that it attracted a probe. Beside, the Native Revenue ordinance were also Native direct taxation ordinance for the colony and the Native income tax ordinance.
These ordinance were late modified and incorporated into the direct taxation ordinance No 29 of 1940, cap 54 and the income tax ordinance No 29 of 1943 respectively. This ordinance were later modified and incorporated into direct taxation ordinance No 29 of 1940, cap, 54 and the income tax ordinance 1940 empowered native.
The direct taxation ordinance 1940 empowered native authorities to tax Africans in their areas of jurisdiction while the income tax ordinance 1943 was for the taxation of non-Africans in companies. The two ordinances were the foundation of our modern taxation which necessitated establishment of board of internal revenue in each of the state of the federation which Enugu Board of internal Revenue is on of them. The zonal tax authority which Enugu north board internal revenue belongs to the Enugu zonal authority. The highest authority in the area is the assessment authority.
ADMINISTRATIVE STUCTURE OF THE BOARD OF INTERNAL REVENUE IN THE AREA
The assessment officer is the head of the board of internal Revenue in the area. He is appointed by the Board of internal Revenue, Enugu State. He is responsible for the assessment of tax and its collection and as well as accounting for it. He carries out the duty with the help of collection, assessment and administrative officers. He is directly in change of assessment and administration. He has the power to issue notice to tax payers to deliver statement of incomes or to finish further returns. Where there is suspected doubts as to genuineness of returns, he might ask the tax payer to produce before assessment Authority books and documents of the tax payer covered by pay as you earn (PAYE).
The Assessment Authority could ask an employer to prepare and deliver a return on his employees. After assessment and responsibility of collection of this assessed income rests on the tax collector. He makes use of tax agents, tax drivers or the workers of the board and other processes which may be applied from time to time to generate tax in the area.
The structural administration of personal income tax is rested in the joint tax Board (JTB) under the income tax management Act 1961.
The board is made up the chairman who is appointed by federal Board of internal Revenue (FBIR) which is the federal body. The personal must be experienced in tax matters. Also, a secretary and a legal adviser are appointed, some of their functions are:
a. To exercise the powers or duties conferred upon them by any express provision of the Act, and any other power and duties arising under the Act which may be agreed by the board.
b. To exercise the powers and duties conferred on them by any enactment of the Federal Government imposing tax on the income or properties of companies or which may be agreed by the Federal Board of internal Revenue.
The administration of the income tax in each state, its collection and administration is vested on the state board of internal revenue. It is headed by a chairman with the Director of Revenue as his Deputy Chairman and the chief executive of the board. Other members of the board include representative of specified ministries and from field economics, accountancy and legal professions. Their major function include to see the retrieval of the revenue collected by various tax officers in all local government head quarters and forward it to state government for disbursement.
Inspectors of taxes are controlled by the Board. They have variety of duties covering all aspects of taxation some of their duties are:
a. Receipt and examination of tax returns and other information from tax payers.
b. Preparing and issuance of assessment based on the returns on which tax is payable.
c. They also employ the best of judgment guesses, if returns were not received or there is evidence of false information.
i. Returns of income forms
ii. Notice of assessment
iii. Summonses and affidavits and other sources of information.
1.5 HYPOTHESIS OF THE STUDY
HO1:Personal income tax generation and administration in Enugu North Board of Internal Revenue is not very effective.
H1: Personal income tax generation and administration in Enugu-North Board of internal Revenue is very effective.
The hypothesis above about personal income tax generation and administration in Enugu North Local Government area are based on generalization of the assumed relationship between personal income tax revenue like administrative costs, population, income of tax payers, free pay allowance etc.
In any case, the rejection of the null hypothesis HO, is sub-hypothesis which are reduced to testable firms.
1. HO:The system of keeping account and records in the Board of internal Revenue office in Enugu North Local Government area is rudimentary.
H1: The system of keeping account and records in the internal Revenue office in Enugu North is not rudimentary.
2. HO: The internal Revenue office in Enugu North Local government area is under staffed and ill-equipped
H1 The internal Revenue office in Enugu North local government area is not under staffed and ill-equipped
3. HO: The tax payers in Enugu North Board of internal Revenue are not enlightened enough to know the importance of taxation.
HI: The tax payers in Enugu North Board of internal Revenue are enlightened enough to know the importance of taxation.
Owing to flexibility of tax laws in Nigeria and attitude of government toward the local government level in the area of administration and collection of personal income tax. It is pertinent to make some assumption that will guide the work for an opinion to be expressed.
1. The local government shall remain one throughout the research period.
2. Problems identified and solutions preferred shall apply to all local government areas in Nigeria.
3. The revenue boards are those who encounter these problems.
1.6 LIMITATION OF THE STUDY
For many years, the generation and administration of personal income tax has been causing some problems especially on money generated from it. In a way to keep the work within manageable proportion and with the limited time and resources available, the researcher has confined the study to problem of personal income tax generation and administration in Nigeria using Enugu North Local government area as case study and is of the view that this will bear good results that will be proper for generalization.
Authority resistance to this form of direct taxation in such that it leaf to riot notably in Calaba, Owerri and the famous Aba women riot of 1929 which was also severe that it attracted to probe. Beside the native revenue ordinance were also native direct taxation ordinance for the colony and the native income tax ordinance.
These ordinance were late modified and incorporated into the direct taxation ordinance No 29 of 1940 cap 54 and the income tax ordinance No 29 of 1943 respectively. These ordinance were later modified and incorporated into the direct taxation ordinance No 29 of 1940, cap 54 and the income tax ordinance No 29 of 1943 respectively.
The direct taxation ordinance 1940 empowered native authorities to tax Africans in their area of jurisdiction while the income tax ordinance 1943 was for the taxation of non-Africans in companies. The two ordinance were the foundation of our modern taxation which necessitated the establishment of board of internal revenue in each of the state of the federation which Enugu board of internal revenue is on them.