THE DIFFICULTIES OF PERSONAL INCOME TAX GENERATION AND ADMINISTRATION
(A CASE STUDY OF ENUGU BOARD OF INTERNAL REVENUE)
The topic “The Difficulties in Personal Income Tax Generation and Administration” A case study of Enugu Board of Internal revenue evaluates the salient facts in the topic in question with respect to a prove that there is actually difficulties in personal income tax generation in Enugu to be specific, investigating and identifying the factors that contributes to such difficulties and come up with means to eradicate such difficulties. To make the work more practical and comprehensive, systematic random sampling method were used. Questionnaires were administered to thirty four respondents and one hundred and three responses were generally used, decisions were taken based on the response that scores the highest percentage. After which an observation made was that the Enugu Board of Internal Revenue lack adequate staff and resources needed to carry out their functions/duties effectively. And also that the tax payers are yet to know the need for tax. We therefore, recommended that the system of keeping record in the Board should be enhanced, the board should be well equipped with materials, tax payers should also be enlightened more on the need and importance of taxation, the tax of the Board should be well remunerated especially the field workers and there should be provision for award to the staff of the Board who will perform best in the local government, which will serve as means of motivation. This will make personal income tax generation and administration in Enugu and Nigeria in general to be effective and efficient.
The difficulties of personal income tax generation and administration is generally traced in this chapter with regard to the research question that aids and could aid expected and usable results, scopes and limitations of this study including simplification of terms to be meet under this study/research work.
1.1 Background of the Study
In age all over, the difficulties of personal income tax generation and administration had a negative effect in one form or another in some societies of the world.
The public expenditure is realistic only when there are matching and enough revenues. The federal government is responsible for poor financial position of both the state and local government.
It is a fact based on strong evidence that the political interference in the process of taxation during military administrations in the country, which gave rise to untrained and inexperienced personnel being entrusted with the job of tax collection and administration.
The need of these issues to tax administration in the developing country like Nigeria can be seen from the following extract from tax administration in undeveloped countries.
Tax administration staff in Nigeria are mostly inexperienced, insufficient and are been compensated with low salary. This is why proper records are hardly kept as ought to be demanded by a developing nation.
The Nigeria economy consist of private and public sector and these sectors are interrelated.
The public sector is classified into; Federal, State and Local Governments, each taxing power. This is called the three tiers of government. Despite the fact that the Nigeria local government are technically creatures of the state within local government constitution. The fiscal relationship between state and local government are inevitable in the fiscal design of the public sector.
Local government impact in public sector through its enlarged revenue is worthy of note. One of the pillar of this revenue enlargement is the current direct revenue allocation to the local government from the federal government.
Moreso, it is important to state that government at various level derive revenue from taxes.
The state government spending are the heaviest in the area of such as: education, health and state roads. The state government collect taxes like personal income tax, Capital Gain Tax, Entertainment Tax, Stamp Duties, Purchases Tax, withholding tax and Road taxes.
It is also important to point out that in most cases the responsibilities of the state and local government are above their revenue capacity. This brought about the need for inter-governmental grants. Such grants are transferred from the higher level of government to the lower level of government, added to this transfer to lower level of government are public borrowing.
Therefore, the tax administrators must often demand the tax from businesses and individuals with deep suspicion ranging to contempt of the collectors from a public whose opposition to tax payment, arising from a basic lack of confidence in government is almost very antithesis of the attitudes, which must be the cornerstone of ever successful democratic tax system, that tax are price necessarily paid for civilized society.
1.2 Statement of Problem
Difficulties in Tax administration and collection is universal but Nigeria seems to be more plague and inflicted than the developed nations of the world.
This research work is mainly concerned with identifying the difficulties of the personal income tax generation and administration in Nigeria under a case study of Enugu Board of Internal Revenue. The following constitutes tax difficulties; lack of orientation on the tax payers on the importance of tax, lack of staff and inadequate training of the available staff, bribery and corruption on tax defaulters, which notifies the law and poor record keeping system as regards accounting and record keeping system in the internal revenue office and as well lack (inadequate) of mobility which would enable them to collect and administer tax in remote areas within the jurisdiction of the board.
having identified these as the case of difficulties in personal income tax generation and administration, survey to find solution for solving them (the problems) will be made for higher level of efficiency on personal income tax generation and administration in Enugu State particularly and Nigeria at large, but before then, it is important to point out that, in many areas, the problem of tax is that some are not satisfied on how tax collected is been utilized and they seem to respond less positive.
In Enugu State, during the early regime of the civilian governor of Enugu State; Barrister Sullivan I. Chime, the amount he met according to him with the state revenue board and in all the state treasury was far below expectation.
Therefore, it is important to investigate the administration of personal income tax and (administration) generation to disclose the difficulties, cause of inefficiency and poor responses to income tax payers, and then come up with reasonable solutions to yield or that will yield the desired result.
1.3 Purpose of the Study
The importance of an effective personal income tax generation and administration cannot be over-emphasized. The demand for governmental services is rising as year go on.
Government is expected to satisfy collective wants and regulate the economic and social policies of the nation.
Against this background of rapidly increasing trend in government responsibilities and expenditure at all levels of government in Nigeria i.e The federal, state, and local government (in Nigeria) level have been facing facts dwindling finances for the past few years. Internally generated revenues have been grossly inadequate to meet up the numerous government obligations. This is therefore, why the objective of this study is to:
(i) Ascertain whether there are actually difficulties in personal income tax generation and administration in Enugu local government (specifically) or not.
(ii) Investigate and identify the factors that contributes to these difficulties.
(iii) Find out how the Board of Internal Revenue in Enugu have been affected by the difficulties.
(iv) Determine how Enugu Board of Internal Revenue is effective and efficient in tax administration and collection.
(v) Come up with the means to eradicate these difficulties.
1.4 Research Questions
i. Is the system of keeping accounts and tax records in the Board of Internal Revenue in Enugu rudimentary?
ii. Is the internal revenue office in Enugu understaffed and ill-equipped?
iii. Are the tax payers in Enugu not enlightened enough to know the importance of taxation?
iv. Do the Board have enough and adequate mobility, which will enable the field workers collect and administer tax in remote areas within the jurisdiction of the Board?
1.5 Significance of the Study
The importance of this research work will go a long way in helping the tax collectors, the three tiers of government and students in department concerned to procure studies that will be conducted in future in this area.
Income tax is an easy agent of social changes especially when used as creative force in economic planning notably developed investments. Students and other researchers as well, will be made to know the diversification as regards new policies to govern tax administration.
Local productions even are stimulated by government through tax by increasing import duties. When import duties are increased, people are discouraged from importing goods thereby resorting development.
Moreover, the importance of this research work will go a long way to educate the tax payer and tax collectors as well, on the importance and administration of tax.
1.6 Scope of the Study
The generation and administration of personal income tax has been facing a lot of difficulties especially on money generated and how it is been generated and inadequacy of mobility for the field workers, which will help them collect and administer taxes in remote areas. Considering the time limit and the resource at the researchers disposal, the researchers have confined this study with due respect to Enugu Board of Internal Revenue in Enugu Local Government Area with the view that this will be proper for generalization.
This work is limited with the scope of tax officials in Enugu local government area of Enugu State such that it can be fully assessed under the following two dimensions viz:
i. Difficulties in tax collection and procedures in the local government area and
ii. Effective administration and collection of the tax system including the revenue grand from the system.
The study laid more emphasis on the administration and collection of personal income tax and their inherent problems in the area understudy.
1.7 Limitation of the Study
In this present system of government, there is no easy flow of information due to the fact that most atimes the researchers are mistaken to be federal or state government agents. Some payers turned down personal interview, which are the salient source of data for research work. But due to time inadequacy, the response from the available source are considered accurate and correct since time at the researchers disposal could not allow for further investigation.
Moreso, it is important to include the time inadequacy under this heading.
The researchers achievement took a lots of time and money and even needs more money if broader and clearer work is to be done in this same area of work.
1.8 Definition of Terms
i. Personal Income Tax: This is direct tax and is levied on the wages, salaries and other source of income that accrue to individuals. According to Udeh Okey S. 2005 in his Book title Theory and Management of Public Finance (P.70) personal income tax is a tax levied on the income of a person and it is usually deducted at source, from the payers income.
ii. Revenue Generation: Tax is the primary source of revenue generation to the government. Therefore revenue generation is the same as fund generation.
iii. Assessment Authority: These are the body of persons who are responsible under the law of the territory to assess people to pay tax on their individual income.
iv. Tax Avoidance: This is the legitimate way of indulging tax liability through tax planning.
v. Taxation/Tax: This is non-punitive but a compulsory levy on properties and income of an individual or corporate bodies. The money raised therefore on tax constitutes part of source of finance for general government expenditure in the economy.
vi. Inflation: This refers to a rapid increase in price of good and services, products or commodities, which results in fall in the purchasing power of money.
vii. Import Duties: This refers to the amount chargeable on goods imported to a country.
viii. Casino: This refers to public building or room for gambling.
ix. Rudimentary: This simply means “not completely developed”.
x. Recession: This means temporarily dealing in economic activities.
This research work has been carried out to determine the status of Information and Communication Technology in Polytechnics and Universities in Imo State. The population of the study consists of 40 students in the selected institutions of higher learning viz; Federal University of Technology Owerri (FUTO), Imo State University (IMSU), Federal Polytechnic Nekede (FEDPONEK) and Imo State Polytechnic (IMOPOLY). Five research questions were used to guide the study. About 30 full completed copies of questionnaires were used to analyze the data collected. The result of the findings show that Information and Communication Technology (ICT). Meanwhile, equipments such as computer was recommended as a major hindrance in teaching and learning of Information and Communication Technology in these institutions of higher learning in Imo State. It was recommended that this Information and Communication Technology should exist in all institutions of higher learning in Imo State and the schools should provide adequate equipments such as computer for the teaching and learning of Information and Communication Technology so that students will have the adequate skill and knowledge of Information and Communication Technology as to work in any computerized organization after graduation.
Background of the Study
In this fast growing and moving world faced with globalization, the core of economic development today depends on knowledge and technology but successful economics excel at generating and disseminating knowledge, as well as exploiting it. Technology is the engine of change that transforms resource based economy to knowledge based economy but at the macro-level, technology enables national leverage in the modem world and it brings about wealth and better welfare for the people.
In as much as development is concerned, these is now a new trend of religion that is sweeping across the world like a wild-fire in both length and breath and thereby transforming the entire world as a global unit-Information and Communication Technology (ICT).
Information and Communication Technology (ICT) has been defined by many elites from different perspective thus: Lucy, (1990) defined it as term involving the process of acquisition, processing, storage and dissemination of local pictorial, textual and numeric information. Information technology is not merely seen as a hardware development but also as software which is advantageous in changing works, attitude to work, in establishing efficiency in business transaction, in achieving efficiency in communication, increasing profits margin creating new jobs and effective in mass education. Ohakwe, (2001).
Information Technology has applications in almost all spheres of human endeavours; Akpore (2005) states that developing suitable economy through information technology implies applying information and communication technology in all the main sectors of the economy hence as the world is transiting from being a resource based one into a knowledge – based one. Much as natural resource can provide as much as can be realized from the output of a society that has truly become a knowledge – based society”.
Sadly enough, our schools (The learning environment is a shadow of itself in terms of quantity and quality of items of information and communication technology… the result being that we are using yesterday’s knowledge, skills, abilities and competencies” in this era. Consequently, the introduction and use of such technologies in communication and information such as internet, computers, Microelectronics Tele communication tools as the e-mail, e-commerce, e-banking just to mention but a few is a mirage. Even many educators and students in higher institution are yet to be in abreast with some of this soft and hardware’s what an education tragendy; Ohakwe, (2001).
Recently, in e-learning, that is, electronic learning, project embarked by Zinox Technology across 40 institutions of higher learning with the aim to train Nigerian undergraduates to internationally acceptable standards hence coming to the heels of computerizing Nigeria thereby taking this venture to all the nooks and crannies of this country, hence the establishment of Information and Communication Technology parks in institutions of higher education with Imo State inclusive, therefore, it becomes imperative to determine the status of Information and Communication Technology in polytechnics and universities in Imo State.
Statement of the Problem
The information and communication technology as a new trend in linking several African universities to the global village with ultra modern world class information and communication technology tools is aimed at capacity building, youth empowerment, expert information technology (IT) training and information and communication technology certification which in the short-run will help address the shortage of expert information and technology skills in the country and in the long run as a lunch pad for attracting global out-sourcing opportunities for Nigerians with graduates in particular.
Therefore this approach towards capacity building as an effective model to bring training, technology and digital access to people within the geographical location and there need for effective global competitiveness.
But in higher institutions in Imo State especially the universities and polytechnics, this approach towards capacity building seems to be a far cry in as much as information and communication technology is not seen either to be talked about nor thought, even is existence and usage among the student are nothing to write on its foundation, thereby using the yesterdays knowledge abilities and competence in today’s educational sector. thereby leaving their undergraduates groping in the dark, as far as modern and information and communication technology is concerned.
Therefore based on this problem identified, motivated the researcher to ascertain the status of information and communication technology in the polytechnics and universities in Imo State.
Purpose of the Study
The major purpose of this work is to ascertain the status of information and technology (ICT) in polytechnics and universities in Imo State.
Other objectives include;
1. To identify areas of information and technology open to the students.
2. To determine the level of knowledge and skills of the undergraduates in the information and technology.
3. To determine how information and communication technology is taught in this institutions.
4. To ascertain the degree of existence and usage of information and communication technology in polytechnics and universalities in Imo State.
5. To highlight hindrance to teaching and learning information and communication technology in these institutions.
Significance of the Study
This study is an attempt to provide empirical base for ascertaining the status of information and communication technology in polytechnics and universities in Imo State.
Equally, the study will be great benefit and assistance to institutions of higher learning, the government and other stake holders in education in Imo state in knowing there position in the global world as far as information and communication technology is concerned and to impact the greatest information, communication and technological skills to their undergraduates.
The study also highlighted the numerous benefit accruing from information and technology which will encourage the population under study to embark on full information and communication technology system.
More so, it will help in guiding the national and state boards for technical education and national universities commission in Imo state to plan and design their academic curriculum.
Finally the findings of the study are of great benefit to educational institutions where office workers like secretaries are trained. The information obtained will enable them update their curriculum and also increase their training facilities.
This research is focused on the following questions as to determine the status of the information and communication technology in Imo state polytechnics and universities.
1. Does information and communication technology exist in the polytechnics and universities in Imo state?
2. Does the students have the knowledge and skills of information and communication technology tools?
3. Does the students benefit from the usage of information and communication technology tools in these institutions of higher learning in Imo state?
4. Are there any hindrance in teaching and learning of information and communication technology in institutions of higher learning in Imo state?
5. Is the knowledge of information and communication technology taught in these institutions of higher learning in Imo state?
Scope of the Study
The study is only interested in determining the status of information and communication technology in universities and polytechnics in Imo state.
In addition, some factors may be beyond the researchers control such as:
a. Time constraint which may not permit a fully detailed work.
b. Acquiring/obtaining of vital text books and information may not be very easy. So the researcher may be forced to use only a few available journals, magazines, seminar papers text books and internet.
c. The researcher may have to limit this study to only selected universities and polytechnic due to financial constraints.