The Problems Facing Personal Income, The Administration In Rural Communities (a Case Study Of Ugwuaji Community In Enugu South Local Government Area Of Enugu State)

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The importance of personal income tax to government, both as a revenue source and as a fiscal policy factor cannot be over emphasized.

In order to achieve this objective, the project work was divided into five chapters, each chapter dealing with an aspect of the work and helps to highlight the rudiments which when collated, get the root of the investigation.

Chapter one deals with the background of the study, statement of problem, purpose of the study, delimitation of the study, research questions, and statement of hypothesis and significance of the study.

Chapter two deals with the literature review. In this segment I touched on ideas, opinions and statements of exports and other interested writers on taxation and relevant legislation relating to income tax.

Chapter three deals with the research design and methodology.

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

Chapter five then records up with the findings, discussions of the findings and recommendation.

It is the hope of the researcher that if the recommendations are impudent, at vast, in part, the effectiveness and efficiency of personal income tax administration in Ugwuaji community in particular and Enugu State in general would be assured to a great extent.







Table of contents



1.1       Background of the study

1.2       Statement of problem

1.3       Purpose of study

1.4       Delimitation of the study

1.5       Research questions

1.6       Statement of hypothesis

1.7       Significance of the study



2.1       Historical background and development of personal income tax in Nigeria

2.2       General principles and practices of income taxation

2.3       Administration of personal income tax

2.4       Summary of literature review.



3.1       Research design

3.2       Area of study

3.3       Population of the study

3.4       Sample and sampling procedure

3.5       Instruments for data collection

3.6       Validation of the research instrument

3.7        Reliability of the research instrument

3.8       Methods of administration of research instrument

3.9       Methods of data analysis


Data presentation and analysis


Designation: implementation: recommendation

5.1       Designation of results

5.2       Implications of the results

5.3       Recommendations

5.4       Suggestions for further research

5.5       Limitations of the study






Historically, the commonest enemy o 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 meant containing oneself. Imagine the degree of hatred!

   The history of other cultures despite the same picture of hatred for both. The tax (tribute) collectives and their employees. The history of Empires such as the old Roman Empires, the British Empire, Empire of Western Sudan and those of Hausa State, just to mention a few, were sustained by tribute (taxes) paid y their subjects. The common attribute of all these tributes is that their collection generated a lot of controversies.

Here in Nigeria, it can be recalled that imposition and payment of taxes were one of the most outstanding activities of the colonial Government. Through different methods, the British were able to impose taxes on the citizens who viewed them as unwarranted extortion and exploitation. The situation has not changed since independence.

Regime after regime has been face with the problem of resistance of tax payment y the citizens who, like their colonial generation regard tax payment as an expenditure in futility, a distasteful exercise, an avoidable loss, a legalized extortion and punitive measure by the greedy government. Even the rapid development in education has not done much to influence the negative attitude towards tax payment.

If the educated elites are precisely, the enlightened populations of the Urban or civilized areas regard taxes as obnoxious those in the rural communities would regard it as a taboo for obvious reasons. One should have witnessed an encounter between tax collection and villagers to be able to understand the degree of bitterness existing between the two partners. 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 communities.

Studies show that government do not just imposed taxes without due consideration of certain underlying principles. It is also know that money raised through taxes are not just damaged in a dustbin or packed in a warehouse.

In fact, an appropriate agency of the government explains from time the users which the tax revenues are part in addition to other reason.

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

The following questions, therefore reading come to the mind:

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

ii.            Are the tax laws badly implemented

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

iv.          Are there any ways, of collecting 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 emanate

i.             Does the Acts / dress take any cognizance of the issue of assessable income of self employed person? In other words, what are the criteria for determining the assessable income of the self-employed?

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

iii.           Are the tax agents and collectors suspected to be dishonest while performing their duties.

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

v.           What are the causes of the citizen negative attitudes towards tax especially in rural communities?

vi.          Has there been any varieties in the methods or techniques employed over the years and what effect has both of the methods on the proceed for tax payment?

An effective and efficient 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 state and local government councils, the financial commitment of the lower ties has continued to grow. To be at par with increased expenditure, different state 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 the programmes

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 objective. 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 render unnecessary, the imposition of so many levies in the search of increased revenue.


The problems that inform and create the necessity for studying the topic of study can be seen in a glance in the following common observation

i.             For every fiscal year, the income tax revenue particularly from rural communities has fallen short of expectations

ii.            There has incessant promulgation and amendment of personal income tax laws in Nigeria by successive administration without achieving optimum result, and this calls to question, their suitability or otherwise for effective income tax administer in rural areas.

iii.           The administrative machinery for taxation, just like any other machinery, is fraught with technical and administrative problems, which militate against their effective operations. 


Some of the main objective of the study are as follow:

1.    To find out the causes of the persistently low revenue derivable from income tax of rural communities with particular reference to Ugwuaji community.

2.    To explain the reasons behind the negative attitude of the rural dwellers towards payment of income tax

3.    To discover  to what extent  the provisions of different  acts and degrees relating to income tax are applied with regards to assessment and collection

4.    To make recommendation as to how best income tax administration should be carried out to achieve the desired result.


This study is intended to attempt an empirical investigation of the effectiveness and efficiency or otherwise of personal income taxation in rural area. To achieve this objective questions will be addressed objectively with a view to identifying the problems facing tax administration and consequently, proper solutions to them.

1.    To what extent dose the board of internal revenue achieve its target revenue from rural income tax payers in the area under study?

2.    What is the general attitude of tax payers in rural areas towards payment of personal income tax and what effect has on tax administration?

3.    How efficient and effective are the operations of the tax authority in the rural communities especially in the latest tax laws?

4.    In what way can tax administration be improved to achieve

 revenue generation


It is expected that this study will be of great benefit to the government in particular and the society in general. By highlighting the problems and making recommendation, the study will help policy makers to take measures that will ensure or create smooth income tax administration not only in the area under study but throughout Enugu State. The amount of revenue accruing to government in a better position to discharge her responsibilities to her citizens.


On the part of the citizens, the result of this study may enlighten them on the good intention of taxation. The taxpayers’ rights and obligations would be enumerated and this may go a long way to educate them.

Future researchers may find the result of this study very useful so far  it relates to their research topic.


The focal point of this study is personal income tax (PIT) as defined by income tax management Act (1961) as amended to date by various Decrees and Acts. The study will not cover company income tax, petroleum profit tax, valued Added Tax, capital gain tax, capital transfer tax, and other numbers indirect tax.

However, mention would be made, where necessary, of these forms of taxation especially as a way of clarifying certain conceptual applications

The researcher intends to restrict the study to personal income tax under the authority of state Board of internal revenue which exclude Affairs and Foreign missions.


Another aspect of delimitation is that the pay as you earn system tax payers and its administration will not feature in terms of qualitative measurement by may serve as a guide where necessary. The researcher does not intend to study this aspect of personal income tax since its’ administration is uniform in both urban and rural areas.


The researcher does not cover the accounting aspect of income tax administration. It is restricted to assessment collection machinery and the resulting tax yield. The reference period of the study is 2001 to 2003.


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The Problems Facing Personal Income, The Administration In Rural Communities