The Impact of Education Tax Fund on Tertiary Institutions in Nigeria
Chapter One
PURPOSE OF THE STUDY
The objectives of engaging in this study are;
- To determine how beneficial the education tax fund has been to the tertiary institutions.
- To explore the problems impeding the disbursement of the fund.
- To find solutions to these problems to enhance the tertiary institution.
CHAPTER TWO
REVIEW OF LITERATURE
INTRODUCTION
Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.
Precisely, the chapter will be considered in three sub-headings:
- Conceptual Framework
- Theoretical Framework
- Empirical Framework
CONCEPTUAL FRAMEWORK
Education Tax Fund
The Education Tax Fund having been established by Education Tax Act No. 7 of 1993 and amended by the Act No. 40 of (22nd Dec) 1998 imposed the 2% tax on all assessable profits of all companies registered in Nigeria. The collection of the tax fund however started in 1994. And the ascertainment was as specified in the companies Income Tax Act or the Petroleum Profits Act Tax as the case may be. This amendment brought about the establishment of Education Trust Fund as an intervention agency with project management to improve the quality of Education in Nigeria (Tech., 2011). The Federal Inland Revenue Service (FIRS) is empowered by the Act to assess and collect Education Tax. The fund administers the tax imposed by the Act, and disburses the amounts to educational institutions at federal, state and local government levels. It also monitors the projects executed with the funds allocated to beneficiaries. The mandate of the Fund as provided in Section 5(1) (a) to (g) of the Act No. 7 is to administer and disburse the amount in the Fund to Federal, State, and Local Government Educational Institutions, including primary and secondary schools, for any other matter ancillary thereto, but specifically to the following: Work centres and prototype development; Staff development and conference attendance; Library systems at the different levels of education; Research equipment procurement and maintenance; Higher Education Book Development Fund; By the year 2008, the Tertiary Education Trust Fund (TETFUND) came into being (Uzondu, 2012). This Tertiary Education Trust Fund (TETfund) was established as an intervention agency under the TETfund Act – Tertiary Education Trust Fund (Establishment, ETC) Act, 2011. This Act repeals the Education Tax Act Cap E4 Laws of Federation of Nigeria 2004 and Education Tax Fund Act No. 17, 2003 and established the Tertiary Education Trust Fund – charged with the responsibility for imposing, managing and disbursing the tax to public tertiary institutions in Nigeria (TETfund News Panaroma, 2013). To enable the TETfund achieve the above objectives, TETfund Act 2011 imposes a 2 percent Education Tax on the assessable profits of all registered companies in Nigeria. The vision of the TETfund is to be a world-class interventionist agency in Nigeria’s Tertiary Education. Its mission is to provide focused and transformative intervention in public tertiary institutions in Nigeria through funding and effective project management. For the reason of efficient management and other reasons best known to the fund Board, they ruled out the inclusion of principal officers such as vice chancellors, rectors, provosts and their deputies, the directors of works, librarians etc as beneficiaries. For the ETF operations, assessment and collection as at 1994 – 1999, and the distribution formula, the Act approves a secretariat for the fund, headed by an Executive Secretary and assisted by other management and support staff, under the direct supervision of the Board of Trustees. It also provides for zonal offices all over Nigeria to liaise with beneficiaries in project identification, data collection and communication with education institutions. The zonal offices also liaise with the Federal Inland Revenue Service in the respective zones to ensure that there is close monitoring of the assessment and collection of Education Tax. The actual fund is managed by the Board of Trustees which oversees the allocation of tax collected in any one year among the various tertiary, secondary and primary institutions as provided for in the Act setting up the fund. The Board of Trustees has resolved to expend in any one year only what was collected in the previous year (Ugwuanyi,2014). The Education Tax Fund Act assigned the responsibility of assessment and collection of the education tax from respective companies to the Federal Inland Revenue Service. The Board at its inauguration inherited the balance of the N10.3 billion being the amount collected as at the end of December 1998 less the amounts disbursed by the previous Board. Within the first five year period after the inception of the ETF, there was a gradual decline in the amounts of assessment and collection of taxes but with the inauguration of the Board on 28th September 1999 and a management put in place, the trend was reversed and prospects improved upon. The Education Fund (according to Section 5(2) of the Act No. 7 of 1993) is to be distributed as follows:- – Higher Education – 50% of the total tax collected in any one year. – Primary Education – 40% of the total tax collected in any one year. – Secondary Education – 10% of the total tax collected in any one year. The distribution for tertiary education is to be shared as between universities, polytechnics and Colleges of Education in the ratio of 2:1:1 OR 25%:12.5%:12.5%. The 1998 amendment changed the disbursement to 50% (Tertiary education); 30% (Primary education) and 20% (Secondary education). There are procedures, according to one of the publications of the ETF (of 26th April, 2001), that must be followed and the project cycle adopted by ETF shall be Jan-Dec i.e. 12 months in any particular year.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description.
This study was carried out on the impact of education tax fund on tertiary institution in Nigeria using federal university of technology Owerri, Imo State as a case study. Selected students form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of one hundred (100) questionnaires were administered to respondents of which one hundred (100) were returned and all were validated. For this study a total of 100 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
In this study, our focus was to examine the impact of education tax fund on tertiary institution in Nigeria using federal university of technoogy, Imo State as a case study. The study specifically was aimed to find out how beneficial the education tax fund has been to the tertiary institutions, explore the problems impending the disbursement of the fund and find out the solutions to these problems in order to enhance tertiary institution. A total of 100 responses were validated from the enrolled participants where all respondent are drawn from students of the University.
CONCLUSION
Based on the finding of this study, the following conclusions were made:
- The education tax fund has been beneficial to the tertiary institutions
- The problems impending the disbursement of the fund is bureaucratic and technical delays, stringent preconditions, fund conditionality/guidelines and elaborate procurement and corruption.
- The solutions to these problems in order to enhance tertiary institution is segregation of duties, authorization and processing of disbursements, managing Restricted funds and internal accounting controls checklist.
RECOMMENDATION
Based on the responses obtained, the researcher proffers the following recommendations:
- Tertiary education trust fund does not significantly relate to project developments of Nigerian federal universities in the period of this study.
- Tertiary education trust fund does not significantly relate to research & journal publications of Nigerian federal universities in the period of this study.
- Tertiary education trust fund does not significantly relate to library developments of Nigerian federal universities in the period of this study.
- Tertiary education trust fund does not significantly relate to staff training of Nigerian federal universities in the period of this study.
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