THE ANALYSES OF THE PROBLEMS OF PERSONAL INCOME TAX ADMINISTRATION IN NIGERIA

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ABSTARCT

There is now a large and complex literature on optimal income taxation, within the context of second-best welfare economics. This paper considers the potential role of this analysis in the practical design of direct tax and transfer structures. It is stressed that few results are robust, even in simple models, in view of the important role played by alternative social welfare functions, the nature of the distribution of abilities and the preferences of individuals. In view of these negative results, it is suggested that a range of empirical tax analyses, capturing particular issues, can provide helpful guidance for policy analysts. Numerical illustrations are provided, paying attention to the role of a ‘top’ marginal tax rate applied to higher-income groups. In particular, behavioral micro simulation models can be used to examine marginal direct tax reform. Such models have the advantages of capturing the full extent of population heterogeneity and the complexity of the tax structure.

Personal income tax is the tax paid by individuals from both the formal and informal sectors of the economy. While those on employment pay as they earn which is popularly known as PAYE, those in formal and informal sectors are directly assessed based on the income they generate from their entrepreneurial ventures, which is also known as Direct Assessment. The aim of this paper is to assess the contribution of personal income tax as a source of revenue for state governments in Nigeria. Data for the analysis were derived from published secondary sources. The paper has established a significant difference between the amount generated as internally generated revenue and the inadequacies of the internally generated revenue to cater for the states’ total expenditure profiles. There is also an indication of a higher reliance on the federation account for the states revenue profile. It is recommended that the states must look inwards and develop new strategies to enhance their internally generated revenue base, most especially given the current dwindling prices of oil in the international market.

 





TABLE OF CONTENTS

Title page                                                                                                    i

Declaration                                                                                                 ii

Certification                                                                                                         iii

Dedication                                                                                                  iv

Acknowledgements                                                                                     v

Table of contents                                                                                        vi

List of Tables                                                                                              ix

Abstract                                                                                                      x

 

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study                                                                      1

1.2 Statement of the problem                                                                     3

1.3 Objectives of the study                                                                         4

1.4Research Questions                                                                                                           5

1.5 Research Hypotheses                                                                                     5

1.6 Significance of the Study                                                                      5

1.6.1 Internal audit unit/department                                                           5

1.6.2 Abia State Ministry of finance                                                           6

1.6.3 General public                                                                                   6

1.6.4 Researchers/students                                                                         6

1.7 Scope of the Study                                                                               6

1.8 Limitations of the study                                                                       7

1.8.1Time                                                                                                   7

1.8.2 Finance                                                                                              7

 

CHAPTER TWO

LITERATURE REVIEW

2.1 Conceptual Framework                                                                        8

2.1.2 System Audit                                                                                    10

2.1.3 InternalAuditTechniques                                                                   12

2.1.4 Application of Analytical Technique in Fraud Detection                            14

2.1.5 Types of Fraud                                                                                  15

2.1.6 Functions of Internal Auditor in corporate control of errors,            irregularities and frauds                                                                            15

2.1.7 Problems of an Internal Auditor                                                                  16

2.2 Theoretical Framework                                                                        17

2.2.1 Agency theory                                                                                   17

2.2.2 Stewardship theory                                                                                     18

2.2.3 Stakeholders Theory                                                                         19

2.3 Empirical Review                                                                                 20

 

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design                                                                                   22

3.2 Population of the Study                                                                       22

3.3 Area of the Study                                                                                 22

3.4 Methods of Data Collection                                                                  23

3.4.1 Personal interview                                                                             23

3.4.2 Questionnaire                                                                                    23

3.5 Sample Size and Sample Size Determination                                       24

3.6 Validity of instrument                                                                          25

3.7 Reliability of the instrument                                                                 25

3.8 Model Specification                                                                              25

3.10 Data Analysis Techniques                                                                            27

CHAPTER FOUR

 

PRESENTATION AND ANALYSIS OF DATA

 

4.1. Presentation of Data                                                                                     28

4.2. Discussion of Findings on Hypothesis 1                                                       32

4.2.1 Test of hypothesis 1                                                                          34

4.3. Discussion of Findings on Hypothesis 2                                                       35

4.3.1 Test of hypothesis 2                                                                          37

 

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings                                                                                     38

5.2 Conclusion                                                                                           39

5.3 Recommendations                                                                                41

References                                                                                                  43

Appendix A

 

 



 

LIST OF TABLES

Table 4.1: Distribution of questionnaires and the response rate of            respondents.                                                                                                28

Table 4.2: Regression Data                                                                         29

Table 4.3 Qualification of Respondents                                                     31

Table 4.4 Years of Work Experience                                                                   31

Table 4.5: Ordinary least squares method on Hypothesis 1.                      32

Table 4.6:  Ordinary least squares method on Hypothesis 2.                     36

 

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

Advertising is a powerful marketing communication tool used by companies to fulfill the promotional task, it is impersonal form of communication or presentation of goods, ideas, or services conducted through paid media under open or identified sponsorship. It is a marketing tool that helps to sell goods, service, images, and ideas through information and persuasion.

One function of the mass media which is becoming increasingly important in the modern world is the economic function of advertising. The mass media perform this function for the people by bringing together buyers and sellers through advertisement. Again, the world is fast becoming a common market place of ideas. Many multinational and national companies have come to realize that people have the same basic needs and desires. Consequently, they have heeded to calls for global marketing and can promote their goods and services using advertisements.

An advertisement is defined by the Advertising Practitioners Council of Nigeria (APCON) as “a communication in the media paid for by an identifiable sponsor and directed at a target audience with the aim of transferring information about a product, service, idea or cause”. According to Eluwa (2005), “advertising is a form of non-personal method of communicating information which is usually paid for by a sponsor through various media”. These definitions point to the fact that advertising is a persuasive communication, because it tries to persuade the readers, viewers or listeners to take to the sponsor’s point of view and also take some appropriate actions towards an object of advertisement.

In an industrial and free competitive market economy, where the interplay of economic variables dictates the market, the problem of survival of business becomes a very nightmarish one from producers and manufactures. The singular desire of manufacturers becomes how to create awareness and market for their goods. Advertising is the one strategy that fulfills their desire completely. The desire to be buoyant and to increase profit has given advertisement an irrevocable reputation.

Advertising is not undertaken by management just for fun or to keep products or services. It is principally involved in persuasion or advocacy even apparently, just giving is information, using media that are paid for it to get through to the mass audience with the identity of the advertisers being clear. Advertising has the mandate to sell the advertiser’s goods and help the consumers to shop wisely (Okoro, 1995:42). Thus, advertising is to communicate information about a product, service or idea and thus stimulate demand.

For the foregoing, advertising is clearly a very broad concept that encompasses all forms of promotional communication, regardless of the means or methods of execution. A summary of these definitions shows that advertising is simply an attempt to inform people who are not aware of the existence of a product and its location and those who are able to buy. Without advertising a product, buyers and sellers end up being strangers to each other. Advertising is an agent of choice, one of the most important benefits is that it facilitates the consumers becoming active rather than passive agents in the economic cycle. For a consumer to make a purchase, he need to be informed, he receives information from variety of sources and make his decision one.

 

What is the FMCG industry?

Also known as the Consumer Packaged Goods or CPG Industry, this multi-million dollar sector is made up of a huge range of famous brand names – the kind that we use every single day. These fast moving consumer goods are the essential items we purchase when we go shopping and use in our everyday lives. They're the household items you pick up when you're buying groceries or visit your local chemist or pharmacy. These goods are referred to as 'fast moving', quite simply, because they're the quickest items to leave the supermarket shelves. They also tend to be the high volume, low cost items.
Cleaning and laundry products, over the counter medicines, personal care items and food stuffs make up a large bulk of the goods in the FMCG arena, but it doesn't end there. Paper products, pharmaceuticals, consumer electronics, plastic goods, printing and stationery, alcoholic drinks, tobacco and cigarettes can all be considered fast moving consumer goods or consumer products too.
The top FMCG companies are characterized by their ability to produce the items that are in highest demand by consumers and, at the same time develop loyalty and trust towards their brands. Some of the leading FMCG companies in the country include: Coca Cola, Indomie Noodles, Flourmill, Pepsi, Milo, and Cadbury products etc, The FMCG are those organizations that produce and market the basic needs of the masses or consumers in the population. The producers and marketers of such FMCG products adapt a unique marketing communication strategy.


1.2 Statement of Problem

It is a known fact that television advertisements are persuasive techniques to appeal to consumers’ sense of buying. It is also inevitable that television advertisement have a lot of influence on human behavior. One of such influence is that it stimulates consumers to buy even in the face of inflation and economic hardship.  As such, business organizations the world over spend fortune in ensuring that the existing of their products is brought to the knowledge of their target audience.

However, despite such efforts, consumers many a time have turned down the content of advertisements due to various reasons. Some even maintain that the information content of the advert is not enough, while others are of the opinion that the information content of the advert does not reveal the contents of the product.

On this backdrop, this work sought to investigate and evaluate the impact of television advertising on Nigerian consumers using a cross section of consumers in Owerri as a study group.

 

1.3     Objectives of the Study

The major objective of this study is to determine the effect of television advertising on the consumers of FMCG in Imo State. The other objectives of the study is TO;

i.     examine the extent at which television advertising has impacts on consumers’ awareness of FMCG in Imo State.

ii.    examine the extent at which such television advertising has enhanced the brand loyalty of FMCG users in Imo State.

iii.   determine the effect of television advertising on the product trial of consumers of FMCG in Imo State..

iv.   determine the effect of television advertising on the purchase acceleration among FMCG consumers in Imo State.

v.    determine the influence of television advertising on the sales patronage attitude of FMCG users in Imo State.


1.4     Research Questions

Sequel to the objectives/of the study above, this study is guided by the following research questions:

a.                 To what extent has television advertising impacted on consumers’ awareness of FMCG in Imo State?

b.                 To what extent has television advertising enhanced brand loyalty of FMCG in Imo State?

c.                  To what extent has television advertising enhanced the FMCG product trial among the consumers?

d.                 To what extent television advertising influence the purchase acceleration of FMCG in Imo State.?

e.                  What is influence of television advertising on the sales patronage attitude among the FMCG users in Imo State?

 

1.5     Hypotheses Formulation

Any study that adopts a scientific method or technique proceeds by making conjectural statements about the relationship between variables. This work is no exception and as such the following null hypotheses will be tested.

HO1: There is no significant relationship between television advertising and consumer awareness of FMCG in Imo State..

HO2:  There is no significant relationship between television advertising and brand loyalty of FMCG in Imo State..

HO3:  There is no significant relationship between television adverting and FMCG product trial by consumers in Imo State..

HO4:  There is no significant relationship between television advertising and FMCG purchase acceleration among consumers in Imo State..

HO5: There is no significant relationship between television advertising and FMCG purchase acceleration the sales patronage attitude of FMCG among consumers in Imo State.


1.6     Significance of the Study

This implies those that will directly or indirectly benefit from this work at its reasonable conclusion. As always, the immediate academic community will be the first to benefit from it as it will form a basis for subsequent studies on this area of research-advertising and consumer behavior.

Secondly, this work to a large extent will help resolve the debate on the impacts of television advertising on consumers by students, lecturers and practitioners.

Thirdly, business organizations will find this work invaluable as it will guide them accordingly, and provide as well an insight into the impact of television advertising on consumer buying behavior in Imo State.

Finally, the work will be good for public consumption as everyone is directly or indirectly a consumer.


1.7     Scope of the Study

Scope according to Nnamocha (2005) is defines as the boundaries for the work”. Accordingly, considering the limitations and constraints of working with the population (Nigerian consumers as a whole) of the study, the researchers resorted to use the consumers in Oweeri urban of Imo state as the study group. Hence, the scope of this study is the strength of consumes in Imo State comprising of students, civil servants, teachers, bankers, artisans, business men and women etc.

 

1.8 Limitations of the Study                      

Limitations according to Nnamocha (2005:49), “are restricted imposed on a researcher by circumstances, environment and realities.” As such, certain factors acted as serious challenges to this work. One of such is the acute shortage of relevant literature in certain key areas; where such were available, they are mostly narrow in scope and scattered about several websites. It was therefore time consuming and costly locating and assembling these materials.

Secondly, the time frame for a research of this nature is relatively short considering the fact that one has to meet up other academic challenges.

Thirdly, the unfriendly attitude exhibited by some respondents never helped matters; mainly the business men and women in Owerri, Orlu and some part of Okigwe. They delayed this work and increased the budgeted cost of the work in terms of transport fee toand fro.

Subsequently, there were other significant problems (challenges) encountered in the course of carrying out this research work but not paramount in any way to warrant their discussion here but suffice it say that they never in any way uttered the quality of this work as the study was completed in a record time.

 

1.9     Definition of Terms

For easy understanding, it is necessary to give the operational definition of some terms used in the body of this report as thus:

Appeal of Advertisement:

Appeal is the slogan or need-creating stanza used in advertisement. Attractive personality, commercial’s keyword/caption and some information adding to knowledge come under the appeal of the advertisement of a specific brand. They motivate the consumer to center his/her attention to the specific brand of product (Wells et al., 1995).

Acceptance of Advertisement:

Acceptance is the extent to which, a consumer relies on the advertisement’s information and act accordingly to the appeal, keyword / caption, stanza, slogan and model personality (Wells et al., 1995).

Consumer Behavior:

The decision process and physical activity individuals engage in when evaluating, acquiring, using, or disposing of goods and services (Loudon & Bitta, 1994).

 

a.                 Advertisement:  This refers to a communication in the media, paid for by an identifiable sponsor and directed at a target audience with the aim of impacting information about a product (Kottler, 2003:250).

b.                 Advertising Company: A company whose sole responsibility is to advertise the product of an organization via an appropriate channel or means (Osuala, 2005:121).

c.                  Communication: This is the exchange and flow of information and ideas from one person to another. It involves a sender transmitting an idea, information or feeling to a receiver (Osuala, 2008:16).

d.                 Market Segment:A group of people that share one or more characteristics. Each market segment is unique as business managers decides on various criteria to create their targets (Adirika, 2006:241).

e.                  Marketing-A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others (Anyanwu, 2000:89).

Television Advertising –A form of advertising involving sound and pictures which enhances easy understanding and offers the benefit of reaching large member of audience in a single exposure (Adirika, 2006:148).


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