AN EVALUATION OF THE PROBLEMS AND PROSPECT OF REVENUE GENERATION IN NIGERIA
(A CASE STUDY OF BOARD OF INTERNAL REVENUE NASARAWA LAFIA)
ABSTRACT
This research work is aimed
at finding out an evaluation of problems and prospects of revenue
generation in Nigeria taking Nasarawa state board of internal revenue,
as a case study. The problems which the state is encountering in term of
evaluating revenue generation some how affect the borad and the state
entirely such as tax avoidance and evasion on part of tax payer,
illiterate and ignorance. The research aimed at achieving the following
objectives, to determine effect of tools of generating revenue on
revenue generation. To determine the effect of internally generated
revenue on standard of living. The population of the research is about
136 which the sample size use by the researcher is (40). The researcher
adopted a face to face interview method and personal observation in
collecting relevant data aimed at finding. The researcher came out with
some finding such as there significant effect of tax evasion and
avoidance a revenue generation; there is significant effect of revenue
generation. And revenue generation is a tool toward achieving better
development & improving based on the findings, the researcher came
up with a number of recommendations aimed at curbing problems of revenue
generation. These recommendations include the revenue generating tools
used should be motivated, individuals and companies tax paper should be
aware on the need for payment of tax, to avoid evasion-and avoidance.
Machinery should be set to draft laws with expediency for possible
legislation, training of revenue collectors.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The Nigeria Federal system of government
has three tiers of structures of government. Each of them has the power
to collect revenue for it functions as stated in the constitution of
the federal public of Nigeria.
Also, the Nigerian tax structure
mediates that federal government relies mainly on the external sectors
of the economy for revenue in other to finance their over all expanding
public sector programmes. The Nigeria government is muchly concerned on
spending large amount of tax payers’ money and local rate for
discharging their complex functions. This functions touch the lives of
individuals citizens and vocational educational education, housing,
road, market, law and order health and welfare services to mention a
few.
It is for this reason or direction that
in meeting up these demands, since loans from external source cannot be
equate enough to the demand.
This project examines the sources of
government revenue such as personal income tax, comprising the
self-employed (direct assessment) and the employee pay-as-you earn
(PAYE), capital transfer tax, capital gained tax, stamp duties, toll
gate tax, development levies, withholding taxes fees and charges pools
being taxes to mention but few. These taxes are as direct or indirect
taxes. Direct taxes on different kinds of income (Except death duties)
are levied directly on the person or company receiving the income.
Personal income tax is a component of direct taxation which is a tax in
an individual’s income and it comprises of Pay – as – you – earn. (PAYE)
and direct assessment tax an self employed individual personal income
tax forms a small contribution towards government revenue in West Africa
since only few west African citizens are wage or salary earners.
Moreover, many self-employed person fail to declare their correct income
for taxation while others evade or avoid payment of tax completely. For
the purpose of assessing revenue generation especially on personal
income tax management Act of 1961 (TIMA 1961) was provided and each of
the states in the country has a body charged with the responsibilities
of the assessment and collection of taxes.
This body in Nasarawa state
is called “The Nasarawa Revenue Commission” or “Board of Internal
Revenue Nasarawa.
However, the state has been facing a lot
of constraints coupled with the rapid decline in it internal revenue
most especially through the personal income tax with the separation of
plateau from her. While the government is yearning for more revenue
sources, other citizens are crying of too much tax.
However, the tax payer look at the tax
collectors as their enemies, and trying to avoid and running from them
and on the other hand the government are putting blame on tax collectors
for not carrying out their duties effectively. This project titled “An
Evaluation of Problems and Prospects of Revenue Generation in Nigeria. A
Case study of Nasarawa state Board of Internal Revenue Nasarawa, aimed
at finding out those problem and offering solutions.
Revenue is a very essential element
because it is a source from which government draws its strength for
survival, a propelling ingredient of administration which cannot in any
way be treated carelessly. The Advance English Dictionary (9th
edition) defines revenue as “income especially the total annual income
of the state government department which collects money for public
funds” The Nigeria constitution (1999) on the other hand defines revenue
as:
Any income or return accruing to or
derived by the government of the federation from any source and
includes; any receipts, however described, arising from the operation
of any law; any return, however described arising from or in respect of
any property held by the government of the federation: any return by way
of interest on loans and dividends in respect of shares or interest
held by the government of the federation in any company or statutory
body.
Hence, internally generated revenue
refers to those revenue sources that are generated solely by the state,
local and federal governments in Nigeria.
1.2 STATEMENT OF THE PROBLEMS
Revenue is one of the major source by
which the federal, state and local government generate funds for economy
growth and expansion of public programmes.
The problem on which the state is encountering in term of evaluating the problem and prospects of revenue generation in Nigeria.
The problem are as follows
Illiterate / Ignorance among some tax
payers: Some citizenry of one state that own business centers and
factors are not educated, this seem to influence their level of their
reasoning either negatively or positively as a result of this they find
it difficult to pay their tax and understand the need for payment.
Secondly, tax avoidance: Some tax payer
irrespective of their wealth they voluntarily refuse to pay their tax
reasons best known to them.
Political instability: due to change in
government affect revenue generation. The new government may bring their
own ways or style of governance which may in turn not the same with
previous ones. For instance like our previous government where depending
solely on crude oil as their major source of revenue generation, but
due to change in government, the present government has come with their
own policy of trying to diversify into agriculture and other sources of
generating revenue. This may affect revenue generation either positively
or negatively.
Problem of depending on allocation
rather than generating: Some individual or sector believe on the wealth
of the country without working for it, where some state are struggling
to generate revenue others are busy waiting to share the national cake.
Some state generate their annual revenue below stipulated standard as
require by the Federal government.
Tax payer should be educate and inform
on the essence of collecting and generating revenue for the various
tires of government, and various sector / individual should not just
rely on government alone for revenue generation but it should be all
round pay as when due, irrespective of your status and wealth.
Allocation of revenue should be share base on rate of those who generate
higher revenue so as encourage and stimulate other state that are not
willing to contribute their revenue generated to the country.
1.3 OBJECTIVES OF THE STUDY
In Nigeria, emphasis has been place on
how to boosting local revenue sources, since new ones can no longer be
found nor help the situation of state or the nation. It is discover that
there are Nigerians who are more richer than the state itself. This can
be seen in the asset own by citizenries or a particular individual.
However, the truth remains that it is the poor that pays his tax as at
when due, which the richer evade and avoid tax payment. Thus the primary
aim of this research work is to achieve the following objectives.
- To determine effect of tools of generating revenue on revenue generation.
- To identify effect of tax evasion and avoidance on revenue generation.
- To determine the effect of internal generated revenue on the standard of living.
- To re-examine all sources of revenue available to the state with a view to identify other relevant sources where revenue can be tapped.
- Examine the existing machineries for assessment and collection of all form of revenues with a view to detecting loopholes and suggesting remedies there to.
- To enable tax payer to understand how essential tax is, after seeing the use to which tax is collected and it use.
The study focus on the topic: An
evaluation of problems and prospect of revenue generation in Nigeria is
very necessary and important especially at this era where Nigeria.
Focuses their attention on how allocation are made to their various
state and where almost the average Nigerian finds it difficult to earn a
living. And the multiplication of political offices within all the
three tiers of government which leads to higher wage bills, lack of
enough federal allocation to states and ‘wage war’ facing every state
calls for an improved federal machinery for the assessment and
generation of revenue. It is discovered that federal, state and local
government councils and private individuals are for each of finds for
the implementation of their set goals and objective. The study will
therefore provide the state with the necessary tools for efficient and
effective administration of revenue generation in an effort to assist
the state to generate the required funds to meet the present political
requirements and improve the standard of the society. In addition, the
study provide us with the knowledge, importance and ways of improving
administration of revenue generation in Nigeria.
There is no doubt that the study will
also be of immense benefit for its users as well as other researchers,
scholars, students, government and the society in general.
1.5 RESEARCH QUESTIONS
This study is important as it sheds
light on the revenue generation. The following research questions were
addressed in the study.
- To What extent does revenue generating tool effect revenue generation?
- To what extent does tax evasion and avoidance affect revenue generation?
- To what extent does IGR affect people standard of living?
Hypothesis formulation is not strange to
classic research study. Hypothesis forms the basis for data collection
and relevant research findings. These hypotheses are drawn for this
research work and will be dealt with in the proceeding chapter.
- HO: There is no significant effect of revenue generating tools on revenue generation.
Hi: There is significant effect of revenue generating tools on revenue generating.
- HO: There is no significant effect tax evasion and avoidance on revenue generation.
HI: There is significant effect tax evasion and avoidance on revenue generation
- HO: Revenue generation is not a tool toward achieving better development and improving standard of living of the population.
HI: Revenue generation is the tools toward achieving better development and improving standard of living of the population.
1.7 SCOPE OF THE STUDY
This research study on an evaluation of
the problems and prospect of revenue generation in Nigeria, a case of
Nasarawa State Internal Revenue Lafia. The research therefore, shall not
go beyond the area of the coverage for this project work.
It is therefore expected that the date
necessary for the writing of this project work shall be gather and
collected within the area of coverage stated in this research work.
1.8 LIMITATION OF THE STUDY
It is therefore expected of the
researcher to carry his / her research within this scope. The following
are limitation of the study:
- Time Constraint: There is insufficient time available for the researcher to go round the states government in gathering and collecting all relevant information required for the writing of this project work. In the sense that the research has to attend lectures, do all the necessary assignments and read for examinations as well.
- Financial constraints: This research work is limited to Nasarawa state board of internal revenue due to inadequate funds of the research, such as cost of transportation, purchase of materials such as papers, biros, cost of taping and printing.
- Ignorance of respondents: It is obvious that some respondents are ignorance about what the study is all about. This also caused a limitation to the project writing. Thus, research has to decide to limit her study to those respondents that could give her meaningful and useful information.
EVALUATION: The making
of a judgement about the amount, number, or value of something
assessment or evaluation offer away to determine whether an initiative
has been worthwhile in terms of delivering what is intended.
Or is a systemic collection and analysis of data in order to assess the strength and weaknesses of programs.
REVENUE: This is define as any system in which a government adopts to generate income. It could be a form of taxation and others sources.
TAX: Can simply be defined as a charge on income of individuals and corporate bodies by the government.
Taxation: Is a means by
which government finance their expenditure by imposing charges on
citizen and corporate entities, governments use taxation to encourage or
discourage certain economic decisions.
Income Tax: This is tax
payable, however to various reliefs by an individual who is permanently
resident in a country in all sources of incomes, whether arising in the
country or in another.
Personal Income Tax: Person income tax is levied on the income of individuals, partnership, executors and trustees.
Valued Added Tax (VAT): This is levied on income added during the course of production of goods and services.
Companies Income Tax (CIT):
This is levied on income of limited liability companies. It is
administered by Company Income Tax Act (CITA) 1979 as amended to date.
Tax Avoidance: This is
generally considered as a way of identifying the loopholes in the tax
law and then taking advantage of such a loop-hole to reduce the tax
payable.
Tax Evasion: Tax evasion on the other hand is a deliberate act on the part of the tax payer not to pay tax due.
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