ABSTRACT
This study investigated the effects of
efficient tax administration on revenue generation (a case study of Lagos state
government). To guide the research, three research questions and three
hypotheses were formulated. The target population comprised all the civil
servants that are connected with tax administration in Lagos state. The total
number of respondents was sixty (60) comprising twenty from each L. G. A. The
instrument used for data collection was a set of questionnaire. All data
collected was subjected to quantitative analysis, using frequency and
percentages and the hypotheses were tested using chi-square at 0.05 level of
significance. Findings from this study
indicated that there is significant impact of adopting electronic means of tax
administration on revenue generation in Lagos state. The study further revealed
that there is significant impact of efficient tax administration on revenue
generation in Lagos state. Finally, it was revealed that there is significant
impact of engaging Tax Monitoring Agents on revenue generation in Lagos State.
The study concluded that tax administration in Lagos state has progressed from
what it used to be to being efficient in revenue administration. The electronic
payment system has brought with it positive impacts; and even monitoring by tax
agents has been made easier. Based on the findings, the study recommended among
others that Government should ensure that the business environment and other
welfare matters of micro, small, medium and large scale businesses are taken
care of to encourage voluntary tax and other non-tax revenue payment
compliance.
TABLE
OF CONTENTS
Cover/Title Page
i
Certification Page ii
Dedication Page iii
Acknowledgements Page iv
Abstract Page v
Table of Contents vi
CHAPTER
ONE: INTRODUCTION
1.1
Background to the Study 1
1.2
Statement of the Problem 2
1.3
Objectives of the Study 3
1.4
Research Questions 3
1.5
Research Hypotheses 4
1.6
Significance of the Study 4
1.7
Scope of the Study 4
1.8 Definition of Terms 5
References 6
CHAPTER
TWO: LITERATURE REVIEW
2.0 Introduction 7
2.1 Conceptual Framework 7
2.1.1 Definitions of Government Revenue 7
2.1.2 Sources of State Government Revenue 7
2.1.3 The Problems of Revenue Generation 9
2.1.4 Tax as a Primary source of Revenue: An Overview 10
2.1.5 Definition of tax administration 13
2.1.6 The Tax System in Nigeria 14
2.1.7 Tax Policy 15
2.1.8 Tax Laws
16
2.1.9 Multiple Taxation 16
2.1.10 Tax Administration 17
2.1.11 Causes of Tax Evasion and Tax Avoidance in
Nigeria 18
2.1.12 Reforms in tax administration 20
2.1.13 Ongoing Reforms of FIRS 25
2.1.14 Internally Generated Revenue in Lagos Compared
with State of the Federation 26
2.2 Theoretical Framework 28
2.2.1 Theory of taxation 28
2.3 Empirical Review 29
References
31
CHAPTER
THREE: RESEARCH METHODOLOGY
3.1 Introduction 35
3.2 Research
Design 35
3.3 Study Population 35
3.4 Sample Size and Sampling Technique 35
3.5 Instrument
for Data Collection 35
3.6 Validity
of the instrument 36
3.7
Reliability of the instrument 36
3.8 Procedure for Data collection 36
3.9 Data Analysis 36
CHAPTER FOUR: DATA
PRESENTATION AND ANALYSIS
4.0 Introduction 37
4.1 Demographic Data 37
4.2 Analysis
of Research Questions 38
4.3 Test of Hypotheses 42
4.4 Discussion
of Finding 46
References 49
CHAPTER
FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATION
5.1
Summary of Findings 51
5.2
Conclusions 51
5.3 Recommendations 52
5.4 Suggestion for Further studies 52
Bibliography 53
Appendix 58
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
The citizens of every country hold their government
responsible for its development. For most countries, the government is saddled
with the responsibilities of providing basic infrastructure such as roads,
hospitals, legal protection, welfare security, environment preservation,
improved standard of the education, health care, pension funds, welfare,
homeland security, etc. Thus development is associated with funds and much
revenue is needed to plan, execute and maintain infrastructures at the state
level for her citizens (AFDB, 2013) since upgrading the infrastructure sector
can in itself be a stimulus for growth, development and productive employment.
To achieve this role, the government needs revenue. The primary source of
revenue for the government is tax. Tax is a term used to describe the money
generally collected from the citizens of the state. In other words, a tax is an
imposed levy by government to individuals and companies for the various
legitimate function of the state (Olaoye, 2008). It is essential for civilization
and mandatory for all individuals and companies alike. Without tax, national
development will be crippled by inadequacy of fund.
Thus, in developed and developing countries, there are
wide range of taxes and levies that affect individuals and companies, citizens
and foreigners, manufacturers and marketers, workers and pensioners. In Nigeria
taxes range from petroleum profits taxation to tenement rate imposition, and
taxes are imposed at different levels to enable the government provide certain
essential services and facilities to the population (Kiabel & Nwokah,
2009). Every state has his own way of collecting tax from its citizen. This
implies that development of the state requires a collective efforts of both the
citizens and the government. While the citizens contribute money through tax,
the government invests the tax money by providing infrastructure.
The present study therefore examines the effects of
efficient tax administration on revenue generation with particular interest on
Lagos State government. As pointed earlier, every government needs revenue for
it to function properly; and tax is one of such sources of revenue for the
government. Unfortunately, it has been observed that, in spites of knowing the
importance of tax on national development, most Nigerians citizens, including
corporate firms shy away from paying tax. As observed Afuberoh and Okoye
(2014), over the year, revenue derived from taxes has been very low. This also
the case of Lagos state as justified Enahoro and Olabisi (2012) who opined that
tax administration in Lagos State is similar to what obtains in other parts of
the country.
Paramount to the challenges of efficient tax
administration in Lagos state is inadequate institutional body for tax
collection. According to Naiyeju (2005) most of the tax authorities in Lagos
State Local Government lack the desired institutional capacity to administer
tax system effectively. The bulk of tax today is paid by only the employees and
less privileged individuals in the state. Politicians, the rich, the
professionals and the privileged individuals are not equitably taxed. Such
discrimination in tax collection deprived the state from the revenue needed for
its development. Enahoro and Olabisi (2012) also identified some other factors
that impede efficient tax administration in Lagos state to include: corruption,
inadequate personnel in terms of quantity and quality, poorly equipped tax
collectors, among others.
There are cases of tax evasion and avoidance, stealing
by tax officials, etc. Thus, Otoghile and Edigin (2011) attributed the poor
attitudes of taxpayer towards taxpaying to lack of trust on the tax official
who has been described as dishonest and corrupt. According to Otoghile and
Edigin (2011) the little funds made available to the governments is diverted to
individual pockets. Again, the machinery put in place for collection of revenue
is inadequate hence, most of the government money is not collected and this is
in case of the internally generated funds. All these problems affect efficient
tax administration in Lagos state. The present study is rather limited in
investigating the effect of efficient tax administration in Lagos state.
1.2
Statement of the Problem
There are many
challenges facing the growth and development of Lagos state. In most cases, the
demand exceeds the supply of basic infrastructure such as roads, hospitals,
legal protection, welfare security, environment preservation, improved standard
of the education, health care, pension funds, welfare, homeland security, and the
finance necessary to stimulate rapid provision is simply not available. The
state is challenged by high cost of materials needed for infrastructure
development. There are also cases of corruption which is too high and allows
incompetent hands to handle contracts and other responsibilities (Oyedele, 2012). Added to this
unfortunate situation is the fact the revenue generated to cater for the
developmental needs of the people are grossly inadequate. The collection and
remittance of tax in Lagos State, Nigeria is very low. In spites of the fact
that several strategies to improve revenue base such as Accelerated Revenue
Generation Programme (ARGP), Consultants or Tax Monitoring Agents (TAMA), etc.
have been adopted to raise revenue base of Lagos State, the contending problem
of tax evasion, collusion of tax officer and diversion of revenue belonging to
government into private pockets remain insurmountable. Perhaps, if these
problems associated with efficient tax administration are alleviated, Lagos
state would be more developed. Hence the problem of this study is to examine
the effects of efficient tax administration on revenue generation in Lagos
State.
1.3
Objectives of the Study
The primary objective of this study is to examine the
effects of efficient tax administration on revenue generation with particular
interest on Lagos state government. Specifically, this study seeks:
1. To
determine the impact of adopting electronic means of tax administration on
revenue generation in Lagos state
2. To
determine the impact of efficient tax administration on revenue generation in
Lagos state
3.
To ascertain the impact of engaging Tax
Monitoring Agents on revenue generation in Lagos State.
1.4
Research Questions
1. What
impact does adopting electronic means of tax administration on revenue
generation in Lagos state?
2. To
what extent does impact of efficient tax administration affects revenue
generation in Lagos state
3.
What is the impact of engaging Tax
Monitoring Agents on revenue generation in Lagos State?
1.5 Research Hypotheses
H01:
There is no significant impact of adopting electronic means of tax
administration on revenue generation in Lagos state
H02:
There is no significant impact of efficient tax administration on revenue
generation in Lagos state
H03:
There is no significant impact of engaging Tax Monitoring Agents on revenue
generation in Lagos State.
1.6
Significance of the Study
The significance of this study is basically to add to the
general body of knowledge by enlightening the general public on the effect of
efficient tax administration on revenue generation. The study will provide a
research based data to be used by the managements of Lagos Inland Revenue
Services. Other states of the federation will equally benefit from the study
since it will expose them to methods of removing loopholes in tax
administration and improving revenue generation.
The research will also be beneficial to other researchers as
it would provide an empirical evaluation of the effect of efficient tax
administration on revenue generation. Also, researchers can also build upon the
limitation for this study to carry on further study for the purpose of knowledge
enhancement.
1.7
Scope of the Study
The study will be carried out on the effect of
efficient tax administration on revenue generation. Three local governments
Surulere, Mushin and Somulu will be studied. Only the civil servants connected
with tax administration will constitute the study population. The variables
associated with this study include, examining the impact of adopting electronic
means of tax administration; the impact of efficient tax administration; and
the impact of engaging Tax Monitoring Agents on revenue generation in Lagos
State
1.8
Definition of Terms
Tax:
This can be defined as a compulsory transfer of resources and Income from the
private sector in order to achieve some of the nation economic goals
Revenue
Generation: This is systematic gathering / collection
of income revenue.
Revenue:
This could be described as an income accruable to person(s), government and
organization.
Statutes:
This is a legal frame work upon which actions/ inaction are based.
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