Contribution of Tax Revenues to Total National Income Generation in Nigeria
Chapter One
Research Objectives
The main objective of the study is to access the contribution of tax revenues to total national income generation in Nigeria. The specific objectives are:
- To examine if the use of mechanical and outdated system in recording and keeping accounts affect tax administration on revenue generation.
- To ascertain whether lack of adequate staff in the SBIR affect tax administration on revenue generation.
- To examine if enlightening the tax payers on the importance of taxation affect tax administration.
- To determine if the effectiveness and efficiency of personal income tax collection and administration in Nigeria is properly manage.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
GENERAL OVERVIEW ABOUT THE STUDY
In view of the low achievement recorded in internal revenue generation, the country government put in place aggressive internal revenue collection machinery in order to reduce our over – dependence on the federal government in 2006.
The apathy of the people towards payment of tax in this part of the country as well as the administration deficiencies accounted for the non – performance of internally generated revenue over the years. It is obvious that taxes are the major sources of government revenues. There are many types of taxes in Nigeria. They include income tax, profit tax, death duties, capital gain tax, custom duty, purchase tax, value added tax, entertainment tax etc.
According to Ewujowo (1996: 68) of the personal income tax, revenue comes from the government employees and it’s associated establishment. Ironically, in this country the tax system is progressive and the collection is prompt and efficient only as it affects the public sector;( Government ministries parastatals and government Agencies) and the organized private sector, when it comes to the collection of the direct tax from the self employed citizens in the country who constitute the affluent members of the society it becomes difficult to assess and collect.
For instance, because it was compulsory for candidates viewing for political positions to pay tax in 1979, it was discovered that many highly placed citizens never paid tax. This gave rise to the issue of whether one pays tax as at when due because they paid their areas of taxes retrospectively.
The continued use of revenue consultant in the country is not helping matters either. Most other countrys have since discarded the use of revenue consultants in assessing and collecting revenues.
According to Nzewi (1986: 108) the rich and influential in the society pay less as a result of this unprogressive nature and inefficient system of collecting direct taxes. Real tax revenues tend to decline under inflationary condition.
Ewujowo (1987: 62) attributed the cause of low tax revenue from the private sector to the tax administrators inability to control and protect official documents resulting in high rate of corruption among tax payers and official hence fake tax clearances certificates and lack of encouragement in the new areas of tax through research has been responsible for the inactiveness of the entire taxation system in the developing countries with particular references to Nigeria. It was also revealed that lack of cooperation among the federal and country tax officers aids evaders, hinders development and decreases in tax revenue. A visit to any revenue officer be it federal or country will reveal man power shortage, yet we have millions roaming the street without gainful employment. Olaruko (1988: 201) really said no tax system be it income or property without adequate labor force will ever succeed.
Many companies in recent times have expressed serious concern on the excruciating impact of multiple taxation on their cash flow as well as the method being employed by the authorities. While some country governments require tax consultants and agents with a belief to examine the books of the companies operating from their areas as a compliance with tax decree No. 104 of 1993. Other simply raise tax forces backed by armed security personnel to coax money out of the corporate entities with little regard to taxability.
It appears something is fundamentally faulty in our tax system. Bayo Lawal (1985: 202) in his work on tax system generally in Nigeria, opined that our tax system is completely faulty and that it was too rigid to be effectively used as an instrument of fiscal policy. The tax system, He continued, does not encourage industrial development and economic growth.
Oche (1987: 92) in his contribution said that in Nigeria the introduction stage of taxation dates back to the beginning of the 19th century. In the twenties, he continued, imposition of tax by whatever method or name was resisted sometimes physical in the part of the country. For lack of knowledge in tax experience, the consultants engaged by some countrys to asses, collect and account for tax have been employing extra judicial means to collect taxes from the tax payers to extort money from them; sometimes these monies are not receipted, therefore, defying the taxation principles.
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
INTRODUCTION
Due to the complex nature of this research, it is therefore of paramount necessity that I take time to spell out the sources of data used (upon which the justification of the outcome of the study will be based) the pattern of the responses, sample design and method of data analysis. Based on the foregoing, the under listed design and methodology were used in this study.
RESEARCH DESIGN
Survey research design was adopted through the use of questionnaire, oral interview and personal observation.
AREA OF THE STUDY
The area of the study is Nigerian government and the country board of internal revenue service in the country.
POPULATION OF THE STUDY
The population of workers in the country board of internal revenue is 254. Due to the nature of the research in which experience and educational qualification was needed, the population size of the study was 60 comprising of managers and head of units in the SBIR and the general public comprising other experts in the field.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
DATA PRESENTATION
In this chapter, we are concerned with analysis of the answers to the questions in the questionnaires administered to the respondents. The use of table will be used or adopted to clearly show the responses obtained in each question of the questionnaires and the research hypothesis from chapter one will be use to test hypothesis guiding the study through the use of percentages and chi-square (X2) techniques.
CHAPTER FIVE
SUMMARY, OF FINDINGS, CONCLUSION AND RECOMMENDATION
Introduction
Inline with the objectives of the research, which is essentially concerned with tax administration, the researcher has studied the effects of tax administration on revenue generation to Nigeria government. Findings of the research from previous chapters are discussed in this chapter and the discussion will be discussed be based on the presented and analyzed data from the questionnaire administered and informations gathered.
Summary of Findings
A test of hypothesis was carried out. The following was the result of the test; Mechanical and Outdated system of recording and keeping accounts affects tax administration and collection in Nigeria. Inadequate staff and training of the available tax collector affects tax administration and collection. There is no proper enlighten of the tax payers on the important of tax payments hence it also an effect of tax administration on revenue generation in Nigeria. The government’s negative attitude towards tax education; a kind of enlightenment campaign to change the prejudice of the people about tax payment aid evasion and avoidance.
Tax collection and administration in Nigeria is not effective and efficiently managed. It is found that this practice is prevalent because of lack of proper data on individual self – employed businessman. The bulk of tax collected by the government is pay-as-you-earn deducted at source from
employee’s salaries by government, tax on contracts. It was also discovered that there is inability to protect official documents resulting in high rate of corruption among tax officials and tax payers.
The causes of tax avoidance and evasion ranges from non – acceptance of tax liability by qualified tax payers; low income of tax payers, preference for community development projects within their community that direct benefit to them than paying tax to government where it will not be put to as specific use for their immediate benefits. It was also discovered that wealthy businessman do not pay tax commensurate with their first income. They easily arrange their affairs so well that they pay less tax to the government. Lack of encouragement in the area of research into new areas taxation, rewarding efficient tax officials through adequate incentives all combined to impact negatively on the entire tax system in Nigeria.
CONCLUSION
There many obstacles to tax administration on revenue generation in Nigeria both internally created and external forces ( habits of citizens to wards tax). The tax official should see himself more as one that should assist tax payers so as to encourage them part with their resources in payment of tax.
The tax environment needs to be made better by both the government and it’s agencies. country Board of Internal Revenue should not concentrate effort only on generating more and more revenue but the cost benefit of this should be considered against the future loss of income that will result if marginal tax payers are driven out of existence. Whereas the result of increased tax efforts improves the wealth of the nation, the killing of business by double/multiple taxes(VAT,PAYE,CGT,EDUCATION,CIT) given to some provision of the tax laws may end up with giving one hand and withdrawing with the other therefore evading some taxes.
Recommendation
The effect of tax administration on revenue generation in Nigeria can be improved i.e rebranded by adopting the following measures:
The tax administration in the country should be granted total autonomy. This will make the internal revenue board to recruit the best professionals to manage the professional posts in the country. In this regard, it will be possible for the authorities to attract the best brains and pay them handsomely. It is my feeling that tax officials being at the vanguard of generating revenue and increasing the wealth of the nation should be given full autonomy in tax administration.
More so with the view of this, where every tax office is provided with adequate data processing system, the power generating sets working, then it will be possible for the revenue authority to have complete data about tax payers with a view to generating a data bank with which a proper monitoring of taxes paid, or and to be paid by tax payers can be done.
Recruiting, training and development of staffs, which is essential for effective performance should be embarked upon by the board so as to improve the productivity of the staff.
There should be an efficient information system which will enable tax authorities networking to encamp tax payer that avoids or evades tax. This will help significantly in limiting the incidence of tax evasion.
Government should embark on people oriented project where more than 70% of the tax generated from a particular community should be invested in the area. This will help the community and motivate them to pay their taxes promptly as they are used for community development projects for which individuals are levied. It has been the fault of government by believing that tax education is not necessary and hence no investments into tax matters. So most people has this natural dislike for taxation. If proper tax education is conducted, the tax payer will appreciate the importance of tax and not just its dark side.
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