ABSTRACT
The importance of personal income tax to government, both as a revenue sources and as a fiscal policy factor cannot be over emphasized. But the concept administration principles of income tax has remained clouded in vagueness, controversies and ambiguity. I therefore embarked on this project to attempt a concise clarification and de-mystification of income taxation particularly in rural setting of Nigeria. To achieve this objective I have divided this project report into five (5) chapters, each chapter dealing with an aspect of the work and helps to highlight the rudiments which when collated, gets to the root of the investigation. Chapter one deals with the general introduction of the report and cover areas like the background to the study, statement of problems, purpose of study, scope of the study, research question, statement of hypothesis and significance of the study. Chapter two reviews existing literature on personal income tax in Nigeria with special attention to rural areas. In this segment I touched on ideas, opinions and statements of experts and other interested writers on taxation and relevant legislation relating to income tax. Chapter three deals with the research design and methodology. Chapter four involves the presentation and analysis of data collected from primary and secondary sources. Chapter five then rounds up with the findings, and recommendations. It is the hope of the researcher that if the recommendations are implement, at least in part the effectiveness and efficiency of personal income tax administration in Ugwuaji community in particularly and Enugu state in general would be absorbed to a great extent.
TABLE OF CONTENTS
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Purpose of the Study
1.4 Scope/Delimitation of the Study
1.5 Research Questions
1.6 Research Questions
1.7 Significance of the Study
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Historical Background and Development of Income
Taxation in Nigeria
2.2 General Principles and Practices of Income
Taxation Definitions 77
2.3 Revenue Generation
2.4 Assessment and Computation of Personal Income
2.5 Computation of Changeable Income
2.6 Administration of Personal Income Tax in Nigeria
2.7 Methods of Personal Income Tax Collection
2.8 Summary of Literature Review
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Research Design
3.2 Area of Study
3.3 Population of Study
3.4 Sample and Sampling Procedures
3.5 Instrument for Data Collection
3.6 Validity of the Instruments
3.7 Reliability of the Instruments
3.8 Methods of Data Collections
3.9 Methods of Data Analysis
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
CHAPTER FIVE
5.0 SUMMARY OF FINDINGS, CONCLUSION
AND RECOMMENDATIONS
5.1 Findings
5.2 Implication of the Research Findings
5.3 Recommendations
References
Appendix
CHAPTER ONE
1.1 BACKGROUND TO THE STUDY
History, the commonest enemy of the people of rural communities in all races or cultures is the tax collectors. In the Bible, they were regarded as sinners just for the sake of their freely chosen and legitimately recognized occupation. In the biblical context, it was even offensive to dine with tax collectors since that meant contaminating oneself. Imagine the degree of hatred.
The history of cultures depict the same picture of hatred for both the tax (tribute) collectors and their employees. The history of empires such as the old Roman empire, the British empire, Empires of Western Sudan and those of Hausa states, just to mention a few, were sustained. The common attributes of all these tributes are that their collection generated a lot of controversies.
Here in Nigeria, it can be recalled that imposition and payment of taxes was one of the most outstanding activities of the colonial government. Through different methods, the British were able to imposed taxes on the citizens who viewed them as unwarranted exhortation and exploitation. The situation has not changed since independence regime after regime has been faced with the problem of resistance to tax payment by the citizens who, like their colonial generation regard tax payment as an expenditure in futility, a distasteful exercise, an avoidable loss, a legalized exhortation and punitive measures by he greedy government. Even the rapid development in education has not done much to influence. The negative attitude towards tax payment.
If the educated elites or more precisely, the enlighten population of the urban or civilized area regards taxes as obnoxious, those in the rural communities would regards it as a taboo for obvious reasons. One should have witnessed encounter between tax collection and villagers to be able to understand the degree of bitterness existing between the two parties. In fact, a story goes that in one such occasion, a tax collector was killed: incidents of this nature resulting during tax raids in village markets and squares are not regarded as new in the rural communities.
Studies show that government do not just impose taxes without due consideration of certain under principles. It is also known hat money raised through taxes are not just dumped in a dustbin or packed in a ware house. In fact, an appropriate agency of the government explains from time to time the uses to which the tax revenues are put in a addition to other reasons.
In spite of the position stated in the above paragraph, revenues from taxes have continued to be below expectations. On the part of the tax payers, the cries have not abated. What a horn of dilemma. Acts of National Assembly, tribunals and task forces on the issue of tax have not yielded the desired results.
The following questions, therefore readily come to the mind:
Expanding the above questions in relation to the rural community under study, some more questions such as these would emanates:
An efficient and effective tax administration is important since the revenue from this source is vital to the survival and growth of the benefiting ties of government. In a federal system like Nigeria, especially with the continuous creation states and local government councils, the financial commitment of the lower ties has continued to grow. To be at far with increased expenditure, different states have introduced levies such as radio levy, development levy, education and technology, fund levy, survival levy etc. all these are to help the government execute, some of her programmes. There seems to be much pre-occupation with what new levy/tax to introduce and too little attention to improvement of the performance of existing source, notably income tax.
But income tax is unique as a source of revenue to the government since apart from the primary objective of generating revenue, it serves to achieve other social economic and political objectives. It is therefore imperative that no amount of attention is too much to be devoted to ensure efficient tax administration due to the multiple purpose nature of tax policy. A diligent administration of our tax policy would ultimately reduce or render unnecessary, the imposition of so many levies n the search of increase revenue.
The above and many more questions can be answered through a serious research work. Hence the topic “Problems of income tax administration in Ugwuaji community”.
The problem that informs and create the necessity for studying the topic of study can be seen in a glance in the following common observation.
The main purposes of this study can be summarized as follows:
The focal point of this study is personal income Tax (PIT) as defined by income Tax management Act (1961) as amended to date by various decrees and Acts. The study will not cover company income, Tax, Petroleum profit tax, value added tax, capital transfer Tax, capital gain Tax, and other numerous indirect taxes.
However, mention would be made, where necessary of these forms of taxation especially as a way of clarifying certain conceptual applications.
The researcher intends to restrict the study to personal income tax under the authority of state board of internal revenue which exclude income tax of Armed Forces and police personnel, residents of federal capital territory, personnel of the ministry of external affairs and foreign missions.
Another aspect of delimitation is that the pay as you earn system tax payers and its administration will not feature in terms of quantities measurement but may serve as a guide where necessary. The researcher does not intend to study this aspect of personnel income tax since its administration is uniform in both urban and rural areas.
The researcher does not cover the accounting aspect of income tax administration. It is restricted to assessment collection machinery and the resulting tax yield. The reference period of the study is 1994 to 1997.
This study is intended to attempt an empirical investigation of the effectiveness and efficiency or otherwise of personal income taxation in rural areas. To achieve this objective certain pertinent questions will be addressed objectively with a view to identifying the problems facing tax administration and consequently, proffer solutions to them. Some of these questions are:
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