An Appraisal Of The Tax Administration In Nigeria (A Case Study Of Ogun State Internal Revenue Services)
Price: 2000 Naira (BSC, MSC)
The level of revenue generated in the state has been in a declining form due to poor administration and collections of taxes and lack of proper return of accounts. These are the negative effects that affect government revenue generation which are targeted to meet her basic functions like provision of basic amenities for her citizenry in the state. The aim of this research study is to evaluate the appraisal of the tax administration in Nigeria a case study of ogunstate internal revenue services. The research design adopted in this study was survey research method. Primary and secondary sources of data were used in collecting information which was analyzed using simple percentages and hypothesis tested using chi – square statistical method at 0.05 level of significant for validity and to make decisions. Findings show that there was rampant incidence of tax evasion and avoidance in the state, and the tax administration in Ogun state is inadequate, not effective and not efficiently managed thus: inadequate staff and facilities also hinder tax administration and collection. The researcher, in the final analysis drew a lasting conclusion, some of which are:- the apathy of Ogun State people towards payment of tax could be reduced by involving them in the decision making of tax administration, collection and utilization of the tax revenue. The environment should be made better by both the government and its agencies. The staff of the SBIR Ogun should be well remunerated and ensure adequate administration of tax laws in accordance with the laid down rules and regulations.
1.1 Background of Study
… As government is the means by which the common problems and needs of a community constituting a countryare economically catered for, so also local communityrevolves jointly those common problems and needs, which could have been difficulty to solve individually, (Olaoye etal, 2009:12)
Nigeria as a sovereign nation operates a federal system of government, that is, the federal government, state government and the local government councils.
Onwo (1992) Observed that each level of the three tiers of government derive itspowers not from the magnanimity of the central government but from the constitution; each level of government has defined responsibilities assigned to it by the constitution. The implication of this is that the three segments of governments are mutually interrelated in a unified effort to make life worth – while for the masses.
Local governments operate at the grassroots and are expected to provide services to their stakeholders. In a federal system like Nigeria, local governmentsare close to the people and hence could effectively alter socioeconomic and politicalconditions within their jurisdictions. Apart from providing and maintaining basicinfrastructures, local governments can complement the economic activities of other levels of government. This of course depends on the availability and proper utilization of funds.
Revenue generation is therefore an important issue for Local Government Councils. It is through this activity that the Councils source the finance for fundingtheir operations, thus to a large extent, determining the quantity and quality ofservices provided to the generality of people within their domain. These reasons,coupled with the fact that Local Governments are engines of growth anddevelopment, make imperative the need for Local Governments to map outstrategies for improved revenue generation, emphasising especially the internalsources which are more flexible, and could be in the total control of the LocalGovernments.
Local governments in Nigeria are created to bring governance closer to the people at the grass-root level and promote political participation. It is the closest tierof government to the people in Nigeria, yet the resident population in it is denied thebenefits of its existence. This is evident in the environmental state, deteriorating public school buildings, poor market facilities and lack of health centers as well as access roads and drainages. According to Olusola (2011), the failure of the Local governments in the area of service delivery has made the citizens to lose trust in government as an institution. In some areas, council officials are better known for the harassment of citizens than service delivery (Shar, 2007). This is basically due to the difficult in generating revenue for its operations, as well as fulfilling its constitutional responsibilities. As a result of this development, many Nigerians crave for change in the local government system as presently constituted in order not only to bring it in conformity with present day realities but also to make it live up to theexpectations of the people who have been yearning for development and a sense of belonging.
In order to fulfill these important constitutional responsibilities, local governments require huge sums of money, which is usually difficult to generate. Theprimary source of local government sustenance is from Federal Allocation. It is thelivewire of a local government. Sections 7 and 8 of the 1999 Constitution of theFederal Republic of Nigeria provide for the existence of an autonomous anddemocratic local government. It also outlined the sources of local governmentrevenue to include rates, statutory allocations, fines, earnings and profits, fees andcharges, grants, loans and other miscellaneous sources. The extent to which a localgovernment can go in accomplishing its goal largely depends on its revenuestrength. The capacity of local government to generate revenue internally is onevery crucial consideration for the creation of a local council. Despite theseconsiderations, the local governments still encounter mirage of difficulties ingenerating revenue.
Local government administrations in the country experienced fundamental changes in 1976. The 1976 local government reform created for the first time, asingle-tier structure of local government in place of the different structure in thevarious states. The 1976 reform is of great importance because it hinges onrestructuring of the financial system of local governments in Nigeria. The reformsinstituted statutory allocation of revenue from the federation accounts with theintention of giving local government fixed proportions of both the federation account and states revenue. This allocation to local government became mandatory and wasentrenched in the recommendations of the Aboyade Revenue Commissions of 1977.
The 1979 constitution empowered the national Assembly to determine what proportion of the federation account and revenue from a state to allocate its local governments.
1.2 Statement Of The Problems
It is true that problem of tax collection and administration is universal but the third world countries of which Nigeria is one, seem to be more plagued and inflicted both in weight and magnitude than the developed nations of the world.
The research work primarily involves identifying the problems of the personal income tax generation and administration in Nigeria taking a case study of Board of Internal Revenue, Ogunstate. The specific problems of this research are as follows:
1. Improper system of keeping accounts and records in the internal Revenue office, which was seen to be quite mechanical and out dated.
2. Lack of staff and inadequate training of the available tax collectors.
3. No enlightenment on the part of tax payers as regards the importance of taxation is another problem of tax generation and administration in Ogunstate.
4. Tax collection and administration in Ogunstate is not efficient and efficiently managed.
5. Also corrupt alliance of tax collectors with tax payers to avoid tax for them (tax collectors) to make fast money.
Thus lack of enforcement power on the board makes tax laws useless and not serious to tax offenders /defaulters.
1.3 Objectives Of The Study
The general objective of the study is to ascertainthean appraisal of tax administration in Nigeria using case study of Ogun State.
The specific objectives of the research work is to
1. To examine if the use of mechanical and outdated system in recording and keeping accounts affect tax administration on revenue generation in Ogun State.
2. To ascertain whether lack of adequate staff in the SBIR affect tax administration on revenue generation in Ogun State.
3. To examine if enlightening the tax payers on the importance of taxation affect tax administration in the state.
4. To determine if the effectiveness and efficiency of personal income tax collection and administration in the state is properly manage.
5. To ascertain whether they are corrupt alliance of tax collectors with tax payers to avoid tax for them (tax collector) to make fast money.
1.4 Research Questions
Upon the following research questions, hypothesis where formulated.
1. To what extent has the use of mechanical and outdated system of keeping and recording accounts affect tax administration on revenue generation in Ogun State?
2. To what extent does lack of sufficient staff and inadequate training of the available tax collectors affected tax administration on revenue generation in Ogun state.
3. To what extent has lack of improper enlightening of tax payers has affected tax administration on revenue generation in Ogun State.
4. To what extent has tax administration in Ogunstate been effective and efficiently manage.
Owing to flexibility of tax laws in Nigeria and attitude of government toward the local government level in the area of administration and collection of personal income tax. It is pertinent to make some assumption that will guide the work for an opinion to be expressed.
1.5 Research Hypothesis
Ho: The use of mechanical and outdated system does not affect tax administration and collection in Ogun State.
Hi: The use of mechanical and outdated system affects tax administration and collection in Ogun State.
Ho2: Inadequate staff and training of the available tax collector does not affects tax administration and collection.
Hi2: Inadequate staff and training of the available tax collector affects tax administration and collection.
Ho3: Enlightening the tax payers on the important of tax payment does not affect tax administration in Ogun State.
Hi3: Enlightening the tax payers on the important of tax payments affects tax administration in Ogun State.
Ho4: Tax collection and administration in Ogunstate is effective and efficiently managed.
Hi4: Tax collection and administration in Ogunstate is not effective and efficiently managed.
1.6 Significant Of the Study
The researcher is motivated to study the ways through which internally generated revenue in Ogunstate could be enhanced.
The information contained here will benefit the society at large as it will expose the society to the need to pay tax and consequence of failure to pay tax.
The study will no doubt charge the aggressive attitude of an average Ogunman towards the payment of tax and collectors of taxes who were hitherto regarded as enemies.
Owing to the present steps taking by federal government in re – branding the economy activities, the research work will recommend measure that will be taken by the state Board of internal Revenue, Federal Inland Revenue Services, budget and Planning department and other government decision – making bodies ways to enhance effective administration of her services and achieve immensely her stated objectives, especially in the area of tax administration on revenue generation.
The study will also unleash problems affecting tax effectiveness, which if appropriate corrective measures taken will go a long way in improving the state internally generated revenue machineries of the government.
1.7 Scope of the Study
The research will focus on:
Reasons why tax payers avoid or evade tax.
How tax evasion and avoidance are carried out.
The rate of revenue generation.
The manner of sourcing for tax in Ogunstate government for the past few years.
What are responsible for poor tax collection in the state.
1.8 Limitation of The Study
The study will cover the Ogun State.
This study would have been extended to the entire Ogunstate of the Federation but for limitation of resources and time.
Inadequate time due to the combination of class schedule and project work.
Uncooperative attitude of some employees that were approached.
Exeat : restriction to go out and source for materials.
Insecurity as a result of bombings in most states in Nigeria during the period which this work is carried out also limits the study.
Despite all this limitations mentioned above and hindrances, the research study no doubt turned out to be successful.
1.9 Definition Of Terms
Words that are frequently used in this research work are short listed here and briefly discussed to enable the reader get equipped with their meaning. Some which are:
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 Okpe (1998: 109)
Tax Evasion: Here, the tax payer adopts illegal means so as to pay less than he should ordinarily pay. “It is also involves an unlawful refusal or neglect by a tax payer to pay the tax due.” J.C Aroh& E.O Nwadialor (2009: 352)
Tax Avoidance: This is a means where by the tax payer arranges his affairs legally so that he pays less tax than he should otherwise pay.
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.
Tax Jurisdiction: This refers to an area where one tier of government has power to collect tax.
Tax Allowance: This refers to the proportion of income exempted from tax.
Tax Holiday: This is a period of grace granted to a company during which it’s income is not subjected to tax.
Taxable Income: This refers to that proportion of income that is liable to tax.
P.A.Y.E (Pay As You Earn) is one of the systems of personal income tax based on the proportion of the income usually deducted at source.
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