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.
TABLE
OF CONTENTS
Title page………………………………………………………………………………….i
Certification………………………………………………………………………………ii
Dedication………………………………………………………………………………..iii
Acknowledgment……………………………………………………………………..iv
Table of Content……………………………………………………………………….v
Abstract…………………………………………………………………………………….vi
CHAPTER
ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF
PROBLEM
1.3 RESEARCH
QUESTION / HYPOTHESIS
1.4 HYPOTHESIS
1.5 PURPOSE OF THE
STUDY.
1.6 SIGNIFICANCE OF
THE STUDY.
1.7 SCOPE OF THE
STUDY.
CHAPTER TWO
2.0 CONCEPTUAL FRAMEWORK AND LITERATURE REVIEW ON THE CONCEPT OF
TAXATION
2.1 TAX ADMINISTRATION IN NIGERIA
2.2 OBJECTIVES OF TAX ADMINISTRATION
2.3 NEED FOR EFFECTIVE TAX ADMINISTRATION
2.4 PRINCIPLES OF TAXATION
2.5 RELEVANT TAX AUTHORITIES AND THEIR
FUNCTIONS
2.6 TYPES AND PROCEDURE OF TAX ASSESSMENT
2.7 TAX COLLECTION PROCEDURES
2.8 UMUGUMA OR PARA-TRANSIT PUBLIC TRANSPORT MODES
CHAPTER THREE
3.0 RESEARCH METHODOLOGY AND DESIGN
3.1 SAMPLING TECHNIQUE
CHAPTER FOUR
4.0 PRESENTATION AND ANALYSIS OF DATA AND
DISCUSSION
CHAPTER FIVE
5.0 SUMMARY OF
FINDINGS AND RECOMMENDATION
5.1 SUMMARY OF
FINDINGS
5.2 RECOMMENDATIONS
REFERENCES
APPENDIX A
CHAPTER ONE
1.0 INTRODUCTION
1.1
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.
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