the past years, none of the students of the department of Accounting either NCE
or B.Sc. has made any write-up on the topic Nigeria Tax system.
view of this, it is important and necessary to let students of Accountancy
Department and necessary and other Department to know the importance of tax
system in the Development of Nigeria economy.
has become imperative because of the ignorance of people on the importance of
Nigeria Tax system, which has been a hindrance to the economic development.
People usually feel cheated when asked to pay up their tax liabilities. If
people are aware of the aims, objectives and contribution of the Nigeria tax
system to the economy, they will not feel reluctant to discharge their civic
responsibilities while the government will not hesitate to provide the masses
with vital social amenities.
TABLE OF CONTENTS
TABLE OF CONTENTS
to the Study
of the Problem
and Purpose of the Study
of the Study
and Plan of the Study
of the study
various Types of Taxes
Aims and Objectives of Taxation
of Tax Collection in Nigeria
CASE STUDY AND METHODOLOGY
of the Kwara State
of Internal Revenues
structure of the Board
of the Board of Internal Revenue
of Data Collection
DATA PRESENTATION AND ANALYSIS
Analysis (PAYE and Direct Assessment)
of Tax to the Nigerian Economy
SUMMARY, CONCLUSION AND RECOMMENDATION
A. Letter of Introduction
BACKGROUND TO THE STUDY
of taxes had been before the colonization of African countries. Taxes existed
in Africa for the common benefits of African populace.
Nigeria; taxes were paid and were properly recognized then and there were few
cases of tax evasion and tax avoidance.
compared with what we have now taxes realized then were relatively small but
sufficient for the need of the society as at that time.
what we have in Nigeria today Is to a large extent an offspring of the British
tax system, inherited from our colonial masters.
example taxes were prominent In the northern part of Nigeria before the
colonial era, by the way of rendering free services such as clearing of bush,
digging of wells, digging of pit toilets, etc. all these were recognized as
taxes for the benefits of the community as a whole.
rearers and citizens even went to the extent of giving cows and horses so that
community could sell them and use the proceeds for the economic development of
laws or regulations guiding the procedure, then and even if there were any,
they where not on record today.
those days, the obas, Emirs and obis were appointed and recognized as
commissioners for tax purpose which is now equivalent to the modern commissioners
for finance and ‘revenue. These chiefs would in turn appoint ward chiefs who
would be operating under their authority. Also, the ward chiefs would appoint
family heads to carry out any responsibilities given to them.
matter which could cause delay in tax administration would be jointly decided
by the Oba, Emir or obi and his council of’ chiefs and the Oba, Emir or Obi are
usually the chairman of such a panel or meetings. The system ha know been
adopted by: the joint tax board with some moderation as the letter is not the
combination of chiefs but a combination of different professionals from’
different fields of human endeavour.
views the system of tax administration during pre-colonial period, there taxes collected
at times, could be less than expresses incurred during the process of
there were few cases of tax evasion and tax avoidance could be attributed to
the level and standard of education. People are now educated and so they now
know how to avoid and evade tax cleverly.
with all this above mentioned points, the pre-colonial tax system has its
disadvantage because this custodian of this money could easily run away with it
or misappropriate part of the whole money or it may be stolen there were
banking in those days.
some family head were assigned to collect the tax liabilities of their wards.
They could not do much in collecting the taxes from their family members who
refuse to pay. They may even except their own immediate families from paying tax.
view of those problems and disadvantages, in 1904 Lord Lugard introduced
community income tax into Northern Nigerian. It is important to mention here
that Nigeria tax system as it is today is an offspring of the British tax
further changes and amendments were made in the 1904 tax, which result to the
native Revenue ordinance in 1917, 1918, it was extended to the southern part of
in operation in Abeokuta in Ogun State and Benin City in Edo state. In 1928,
the provision was extended to the introduced as income tax on the income of
individual trade,’ vocation or profession. This was however limited to profit
withdrawn by the owners.
company income tax was enacted in 1943 while the Nigerian income tax was also
enacted in 1940. the tax laws and the administration of tax was not met with
joy by Nigerians as the colonials masters encountered great problems in
executing most of those tax laws. Were not proper and should annulled,
consequence of which riot erupted. The same thing happened in the western state
in Abeokuta. This was a way showing the dissatisfaction of the people with the
tax laws and many women and children died in the two riots.
1943 there had been some other legislation which is still relevant today. These
modern ‘legislation are up to date for the modem economic system.
STATEMENT OF THE PROBLEM
paramount problem that calls for this study Is the general unawareness of the citizenry
about the importance and contribution of taxes to the economy.
major problems being faced by the board of Internal revenue which reduces the
revenue generation capacity of the government Include the following:
of working facilities, such as vehicles, strong safe and cabinet etc.
problem which has to do with shortage staff. Illiteracy among taxpayers which
impedes communication with them.
taxpayers don’t keep proper record of account and assessment of such taxpayers
is based on the judgment of tax officials
evasion and tax avoidance
the statistics departments rely on this market women Information, which may be
tax collectors were not fully trained In the field so they are ineffective when
carrying out their duties
employers of labour do not always corporate with the tax authority in respect
of paye system of their employment and this also occurred in the limited
liabilities companies which makes it very difficult for the board of internal
revenue to assess their tax liabilities.
practice & by some tax collections
OBJECTIVE AND PURPOSE OF THE STUDY
primary objective of this study is to sensitize the citizenry about the
Importance and contribution of taxes to the economy of Nigeria as well as to
let them now the need to pay their taxes promptly.
proffer solutions to the obstacles often faced by tax collectors and the payer
in the country.
study how revenue is raised for finance of government expenditure.
know resources are transfer from the citizens to the government.
the main purpose of the study to let students and non students know the role,
contributions and importance’s of taxation to the economic development of the
is because of the ignorance of this people on the importance of Nigerian tax
system which has caused low revenue generation to the government and
consequently a negative effect on economic development.
find it difficult to know the importance of taxation arid feel cheated when
ever they are asked to pay. Up their tax liabilities.
will not feel reluctant to discharge their civic responsibilities if they are
aware of this system and contribution of Nigeria taxes to the development of the
words, proper awareness of the people about the tax system and its contribution
to the economy of the county will make them discharges their civic
responsibilities with enthusiasm.
Hence, government would not hesitate to
provide the Masses with vital social amenities, which will definitely lead to
economic growth and development.
an important purpose is to focus on the areas of difficulties with a view to
providing them with possible solutions.
SCOPE OF THE STUDY
study is primarily designed to look at the areas of difficulties in order to
find the means of bringing them out for possible solution.
has many ways of generating revenue through taxes. This study is however restrained
to the taxes generated by the stare board of internal revenue which is majorly
the personal income taxes of individual is working .either with the government or
in the private establishment.
the factors determining the revenue generating capacity of the government is
the administrative competences of the tax colleting organs of the government,
that is the board of internal revenue in this case.
works are carried out using various research methods. These include the primary
and secondary sources of data. These sources have been employed in collecting
the information used in the study.
primary data used are questionnaire as well as interviews. While the secondary
data used are from text books journals and other publications.
following hypotheses were developed and tested to determine the importance of
different taxes to the state revenue:
in Nigeria has been the pivot on which this Nigeria economy revenues.
the various taxes, pay as you earn (Paye) is the easiest to collected and it
also contributes to the revenue. Tax is a necessary ingredient for civilization
DEFINITION OF TERMS
Ø Paye (Pay As You Earn): System of taxation whereby people are
asked to pay a tax liability proportionate to their earnings are of internal,
revenue: This is a statutory body, created by the enactment of edict No. 9 of
1984 saddled with the responsibilities of administrating the tax system of the
Ø Tax Avoidance: This is the act of reducing tax
liability by tax payer, by taking advantage of loopholes in tax laws.
Ø Tax Evasion: This refers to illegal act of refusing
to pay tax at all Tax collectors: These are the people appointed by the government
to collect tax on their behalf.
Ø Citizenry: These are people staying in a country
which may be by birth, naturalization and honorary.
Ø Tax Authority: this is the body vested by the law to
make law’ performing to tax collection.
ORGANIZATION AND PLAN OF THE STUDY
of the study starts with the background of the study the problem of the study,
objective and’ purpose, scope and limitation of the study, research method
employed in coBectin9 data and the definition of terms.
also includes the summary and recommendation.
one deals with the background of the study statement, of problem, objective and
purpose’, and limitation and definition of terms.
two deals with literature: review definition of taxation, types of taxes
theoretical aim and objective of taxation, miscellaneous taxes, procedure for assessment
and problems of tax collection research methodology and cases study.
three is on research method and case study, history of Kwara State Board of Internal
Revenues, structure of the board, the objectives of the board, and testing of
hypothesis, limitation of the study.
four deals with data presentation and analysis other revenues sections and
five contains the summary, conclusion as well as recommendations.
LIMITATION OF THE STUDY
encountered in the course of this study is primarily the time constraint as the
stipulated time for the submission of the project is not sufficient enough for
through and deep research into the subject.
there is difficulty of finance, lack of co-operation from the officers in
charges as regard disclosure of needed data.