TABLE OF CONTENTS
PAGES
Title page i
Certification ii
Dedication iii
Acknowledgment iv
Table of Content vi
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the Study 1
1.2 Statement of the problems 7
1.3 Objective of the study 7
1.4 Scope and Limitation of t he study 8
1.5 Significance of the problem 8
1.6 Research Question 9
1.7 Plan of the study 9
CHAPTER TWO
Literature Review
2.1 Introduction 11
2.2 Objective of Tax 12
2.3 Quality of A Good Tax System 12
2.4 Problem of Tax 15
2.4.1Composition of the Federal Board of
Inland
Revenue 16
2.4.2Duties and Power of the Board 16
2.5 Budget and Tax 18
2.6 Taxation as an Agent of Social Change 20
CHAPTER THREE
3.0 Research
Methodology
3.1 Description of the Population 24
3.2 Sampling Methods 24
3.3 Sample Size 26
CHAPTER FOUR
4.0 Data
collection and Analysis 27
4.1 Data Collection 27
4.2 Data Analysis 27
4.3 Analysis of Responses to Questions
4.4 Response on Solutions Highlighted by
Respondents
CHAPTER FIVE
5.0 Summary
of Findings, Conclusion and Recommendations
5.1 Summary
of Findings 38
5.2 Recommendations 38
5.3 Conclusion 40
5.4 Suggestions for Further Research 41
REFERENCES 42
QUESTIONNAIRES
44
CHAPTER ONE
1.0 INTRODUCTION
This chapter
aims at discussing the brief history of taxation and various sources of tax law
and types of tax Acts promulgated by the Federal Government of Nigeria. Taxation can be defined as a compulsory levy
by the government imposed on the incomes of individuals firms and corporate
bodies. Emphasis will also be regained
towards examining the different versions of tax authorities responsible for the
tax laws and other relevant problem that confront its smooth operation and
growth. Moreover the various tax laws or
involved in the collection of
taxes and to know their impact in the implement of taxes how they have contributed either negatively or positively in the course of their
operation. These Regulatory bodies
include the Federal Board of Inland Revenue (F.B.I.R) and the state Board of
Inland Revenue (S.B.I.R) Tax objective and it classification principles
concepts incidence e.t.c.
1.1
BACKGROUND OF THE STUDY
Taxation system had been in
operation from time immemorial dated back to the time of our forefather during which communities
taxed each other as a result of the failure
of their member to carry
out their communal assignment such assignment such as bush
clearing pit digging well e.t.c. all for
the benefit of the community concerned.
Failure to render, such service usually resulted in Seizure of property
which might be reclaimed on payment of money.
This practice continues until 1904 when late Lord Lugard introduced the
first income tax into the system. With
the emergence of the Native Revenue
ordinance of 1917 and subsequent
amendment, the income tax became operative in the southern Nigeria in 1918 precisely
Abeokuta in the Western Nigeria and Benin city in Mid-Western Nigeria and by 1928, it has extended to the Eastern Nigeria. With the passages of time the Native Revenue
ordinance of 1917, 1918 and 1928 were transform into Direct Taxation Ordinance
in 1940 and this automatically replaced the Nature Revenue Ordinance and the
Native Direct Taxation (Colony) of 1937 which of course was regarded as been
discriminatory in nature for the fact that it only applies to native in Nigeria
other than Lagos Colony or township. In
1943, the Federal Board of Inland
Revenue (F.B.I.R) was born as the sole tax authority
to asses employees to tax on a
current on Actual basis in
respect of his emolument.
It must be emphasized here
that the Government accounting gear then was between 1/4/19 - to 31/3/19 – e.g. An employees assessed to
tax between 1/4/1943
and 31/3/1944
would be taxed based on 1993/44 year of
assessment.
COLONIAL
ERA TAX AUTHORITIES
The following entities
represent the various tax authorities during the colonial Era.
(i)
The Resident appointed by the Government to
administer a particular province.
(ii)
Any other officer authorized by the Resident to
perform such duties.
(iii)
The chiefs, Elders and other persons of
influence in each district.
(iv)
Any native authority appointed by the Governor
to be a tax collection authority.
(v)
Any village council, district headman or other
suitable person on group of person appointed by the Governor.
DUTIES OF
COLONIAL TAX AUTHORITIES
The duties of
the colonial Tax Authorities were to supply
information, supervise tax
collection render tax
collection account e.t.c. penalty for non – accountability of tax collected attracted
a five of four hundred naira
(400.00) or imprisonment for two (2) years.
PRODUCTS ASSESSABLE
TO TAX IN THE COLONIAL ERA
(i)
Income from land
(ii)
Rent derived
from land
(iii)
Annual profit of the produce from land which
were enjoyed by the community or individual.
(iv)
Profit from trade and manufacturing
(v)
Dividend or Interest
(vi)
The value of all livestock owned by individual
or the community.
PROCEDURE FOR CLAIMING
REMEDY WRONG TAX COMPUTATION AND TAX EXEMPTION IN THE COLONIAL ERA
Where any native was
assessed to tax within the area of the authority of a District council and to
the Resident if need be. In the light of
seeking tax exemption, than Governor otherwise called the chief commissioner
reserved the right to exempt
individual from tax and as well make regulation far carrying out the provisions
of ordinance i.e. he provides statements on the tax returns, claims for remedy,
deduction of tax at source or monthly
deduction known as pay As – You Earn System.
SOURCE OF TAX LAWS/ACTS
Tax laws or Acts in Nigeria came into being as a result
of lack of uniformity in the tax collection system as observed
between the Africans and non – Africans living in some part of the
regions of Nigeria most especially Lagos Territory. Informed sources revealed that income of a
larger population of Europeans were not taxed.
This recommendation was embodies in the Nigeria order in council (Constitution), 1960 and
formed the basis of the income Tax management Act (I.T.M.A) 1961 thereafter
- referred to at the ACT. With the emergence of the Act, the unfair
treatment of some African
resident and the unjust exception given to the non-African (e.g.
Europeans) were faced out.
TYPES OF TAX LAWS
The following are the
various tax laws which have been promulgated by the Federal Government of
Nigeria.
(i)
INCOME TAX MANAGEMENT ACT (I.T.M.A): This
gives rise to law relating to individual partnership, trustees and executors
(in settlement and family). It was
promulgated by the Federal Government in 1961 with further amendment and
modifications full date.
(ii)
PERSONAL INCOME TAX ACT (P.I.T.A): This
give rise to law relating to personal income.
It was promulgated in 1961 by the Federal Government with further
amendment.
(iii)
COMPANY INCOME TAX ACT (C.I.T.A): This is
administered on companies by the Federal Board of Inland Revenue (F. B.I.R) it
was promulgated by the Federal Government in 1968 and further amended in 1979.
(iv)
PETROLEUM PROFIT TAX ACT (P.P.T.A): The
Federal Board of Inland Revenue is the only tax authority that is responsible
for assessing and collecting petroleum profit tax from all companies engaged in
petroleum operation in Nigeria. The tax payable relates to profit made by
companies dealing controlling and sales.
(v)
CAPITAL GAIN TAX ACT (C.G.T.A):- This
Act was enacted in 1967 and deemed
to introduce taxation
of capital gains on assets into the Nigeria tax system.
Initially, when this act was introduced, stocks and share were
specifically exempted from the provision of the Act.
(vi)
CAPITAL TRANSFER TAX ACT (C.T.T.A): This
tax the total value of a person property at graduated rates starting from a
minimum of one hundred thousand
naira (100,000.00) either at
death or
on gift made interview during his life time. This Act was enacted by the Federal Government
in 1979 gazette No. 18 Vol. 66 of 12th April 1979.
1.2 STATEMENT OF THE PROBLEM
The statements of
the study are as follows:
(i)
What are
the constraints put against the smooth tax generation in Nigeria with
particular reference to Lagos
State.
(ii)
Has
location in Nigeria
effective in it various functions with particular reference to Lagos State.
(iii)
Another
Statement is what are the problem confronting the collection of tax in Nigeria.
(iv)
Moreover,
how does an external body influence the poor collection of tax in Nigeria with reference
to Lagos State.
1.3 OBJECTIVE OF THE STUDY
The mains and
objectives of the study are as follows:-
(i)
To look
into the introduction of taxes in Nigeria its meaning and its
operational process.
(ii)
To find
out and evaluate the problem confronting the effective tax collection in Nigeria and its
solutions.
(iii)
One
other objective of the study is to know the function and activities of the
various tax authorities in Nigeria
and their operational process.
(iv)
Furthermore,
the study will also try to find out the impact of taxation in Nigeria and the
economy at large.
1.4 SCOPE AND LIMITATION OF THE STUDY
In view of the constraints regarding time and
money. The scope of this study has been
restricted to selected offices of state of internal Revenue and the Federal
Inland Revenue Department in Lagos
metropolis. Another reason was the
uniformity in tax law applicable throughout the country and the fact that the Lagos State
is the centre spread of all commercial activities. In this regard therefore, the population on
which the sample have been draw with from the basis of analysis. While limitation can be the scope of study
constrained by time, money and reluctancy of the tax authority staff of divulge
information to a third party for fear that such information may not be used for
the purpose other than intended.
1.5 SIGNIFICANCE OF THE STUDY
It is relevant to conduct this research in order
to find out the problem confronting the generation of taxes in Nigeria with
particular reference to Lagos
State.
Furthermore, the study will also reveal the
function of taxes and roles and active of various tax authority.
The research work will also be of immense
help in under standing the fact that administrate and ensure the fair
redistribution of wealth and income among the low medium and higher income
earners.
1.6 RESEARCH QUESTION
(i) What are the problem confronting the smooth and effective
generation of taxes in Nigeria
with particular reference to Lagos
State .
(ii) Has taxation in its responsibilities of regulating and
administering fair redistribution of wealth and income among the low, medium
and higher income earners contribute to the problem confronting its smooth and
effective operation.
(iii)
What are
the other regulatory bodies that constraints the smooth and effective
generation of taxes in Nigeria, the regulatory bodies like the Joint Tax Board
(J.T.B.) Federal Board of Inland Revenue (S.B.I.R) how have they imitate the
smooth and effective tax general in Nigeria.
1.7 PLAN OF THE STUDY
The study as a whole is divided into five chapters
while the individual chapters deal with various districts but related topics.
Chapter one introduce the topic spells o8ut
the background of the study, the statement of the study, the objective, scope,
significance and research question of the study and references.
Chapter two comprises various related
literature review and bring out the meaning of taxation its objective,
classifications, principles, concepts and the incidence of taxation. It also stress the composition and duties of
Nigeria Tax authorities, Taxation and its effect in Nigeria Economy, Budget and
Taxation, Taxation as an agent of social change. Relief’s And Allowance and references.
Furthermore chapter three
examine the research design and methodology – scope and method of the study,
description of population sample sizes hypothesis of the study and the
limitation of the study.
Chapter four focuses on data
collection and analysis and the frequency table analysis.
Finally, chapter five is
concerned with the summary of the findings, recommendation, conclusion,
suggestion, bibliography and appendices of the project.
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