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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 effect of tax administration on revenue generation to the Enugu state government. 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 Enugu 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 Enugu 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 Enugu should be well remunerated and ensure adequate administration of tax laws in accordance with the laid down rules and regulations.
TABLE OF CONTENT————————————————————-vi
CHAPTER ONE: INTRODUCTION
1.1 BACKGROUND OF THE STUDY———————————————1
1.2 STATEMENT OF THE PROBLEM —————————————–8
1.3 OBJECTIVE OF THE STUDY ————————————————9
1.4 RESEARCH QUESTION —————————————————–10
1.5 STATEMENT OF HYPOTHESIS——————————————–12
1.6 SIGNIFICANCE OF THE STUDY——————————————-12
1.7 SCOPE OF THE STUDY—————————————————–13
1.8 LIMITATION OF THE STUDY———————————————14 1.9 DEFINITION OF TERMS—————————————————15
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 GENERAL OVERVIEW ABOUT THE STUDY—————————-17
2.2 ORIGIN OF TAXATION—————————————————–20
2.3 TAX ADMINISTRATION————————————————————-24
2.4 PURPOSE OF TAXATION————————————————————27
2.5 QUALITIES OF A GOOD TAX SYSTEM——————————————–31
2.6 CLASSIFICATION OF TAXES——————————————————-34
2.7 ENUGUSTATE BOARD OF INTERNAL REVENUE——————————46
2.8 THE REVENUE GENERATION IN ENUGU THROUGH TAX ——————-48
2.9 INADEQUATE STAFF AND FACILITIES HINDER TAX GENERATED——–49 REVENUE IN ENUGU STATE
2.10 INCIDENCES OF TAX EVASION AND AVOIDANCE IN ENUGU STATE—-52
2.11 EFFORTS MADE BY ENUGU STATE BOARD OF INTERNAL REVENUE TO IMPROVE REVENUE GENERATION——————————————–56
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 INTRODUCTION ——————————————— 63
3.2 RESEARCH DESIGN ——————————————— 63
3.3 AREA OF THE STUDY——————————————— 63
3.4 POPULATION OF THE STUDY ——————————————— 63
3.5 SOURCES OF DATA COLLECTION——————————————– 64
3.6 DETERMINATION OF SAMPLE SIZE ———————————————65
3.7 METHOD OF DATA ANALYSIS ——————————————— 66
3.8 VALIDITY TEST ——————————————— 68 3.9 RELIABILITY TEST ——————————————— 68
CHAPTER FOUR: PRESENTATION, INTERPRETATION AND ANALYSIS OF DATE
4.1 DATA PRESENTATION————————————————————-70
4.2 DATA ANALYSIS ——————————————————————-70 4.3 TEST OF HYPOTHESIS ————————————————————-83
CHAPTER FIVE: SUMMARY OF FINDINGS , CONCLUSION AND RECOMMENDATION
5.1 SUMMARY OF FINDINGS——————————————————–92
5.2 CONCLUSION——– ————————————————————–94
5.3 RECOMMENDATION ————————————————————-96
1.1 BACKGROUND OF STUDY
In all generation, the problems of personal income tax generation and
administration continues to surface in one form or another in virtually every
society, especially in this part of the world. It is important to point out that
the federal government has taken adequate steps in effective tax
This failure on the part of the federal government is responsible for
poor financial positions of both the state and local government. Besides, this
inadequate planning and absolute laws governing taxation, evaluation and
collection is characterized by chaos.
This chaotic nature of the system can be appreciated by political
influence or interferences in the process of taxation during the civilian
administration in the country which gave rise to untrained and inexperienced
personal being entrusted with the work of collection and administration of
personal income tax.
The important of these issues to tax administration in the developing
countries like. Nigeria, can be seen from the following extract from tax
administration in under developed countries. The tax administration finds
himself working with a staff which is inefficient in experienced, and poorly
BOARD OF INTERNAL REVENUE ENUGU
The board of internal revenue Enugu was established to administer
income tax in Enugu state just as there are likely to states of the federation.
Income tax was first introduced in Nigeria in 1904 by late Lord Lugard.
The introduction of Native Revenue ordinance of 1927 was most difficult in
the Eastern areas of the country, due mainly to absence of recognized central
Authority Resistance to this form of direct taxation in such that it result to
riots notably in calabar, Owerri and the famous, Aba women Riot of 1929
which was so severe that it attracted a probe. Beside, the Native Revenue
ordinance were also Native direct taxation ordinance for the colony and the
Native income tax ordinance.
These ordinance were late modified and incorporated into the Direct
taxation ordinance No 29 of 1940, cap 54 and the income tax ordinance No 29
of 1943 respectively.
The direct taxation ordinance 1940 empowered native authorities to tax
Africans in their areas of jurisdiction while the income tax ordinance 1943
was for the taxation of non-Africans in companies. The two ordinances were
the foundation of our modern taxation which necessitated establishment of
board of internal revenue in each of the states of the federation which Enugu
Board of internal Revenue is one of them.
ADMINISTRATIVE STUCTURE OF THE BOARD OF INTERNAL REVENUE IN ENUGU STATE
The chain of administration in the state board of internal revenue
SECREATARY TO THE BOARD BOARD OF INTERNAL REVENUE
THE EXECUTIVE CHAIRMAN
SPECIAL ASSESSMENT UNIT LEGAL UNIT INFORMATION UNIT
ADMINISTRATION PRS DEPT ASSEMBLY COLLECTION INSPECTORATE FINANCE & SUPPLY DEPT PLANNING RESEARCH % STATISTICS DEPT DEPT DEPT ACCT DEPT
DATA BASE INVESTIGATION UNIT
UNIT PAYE TAX CGT & TAX AUDIT UNIT
SECTION OTHER TAX
OPEN REGISTRY ASSEMENT MOTOR LICENSING STROG ROOM
CONFIDENCIAL REGISTRY AUTHORITIES AUTHORITIES INTERNAL AUDIT
STORES OTHER CHARGES
The zonal tax Authority which Enugu North Board of internal Revenue
belongs to the Enugu Zonal Authority. The highest authority in the Area is the
THE ASSESSMENT AUTHORITY
The assessment officer is the head of the board of internal Revenue in
the area. He is appointed by the Board of internal Revenue, Enugu State. He is
responsible for the assessment of tax and its collection and as well as
accounting for it. He carries out the duty with the help of collection,
Assessment and Administrative officers. He is directly in change of
assessment and administration. He has the power to issue notice to tax
payers to deliver statement of incomes or to finish further returns.
Where there is suspected doubts as to geniuses of returns, he might ask
the tax payer to produce before assessment Authority books and documents
of the tax payer covered by pay as you earn (PAYE).
The Assessment Authority could ask an employer to prepare and deliver
a return on his employees. After assessment and responsibility of collection of
this assessed income rests on the tax collector. He makes use of tax agents, tax
drivers or the workers of the board and other processes which may be applied
from time to time to generate tax in the area.
The structural administration of personal income tax is rested in the
joint tax Board (JTB) under the income tax management Act 1961.
The board is made up the chairman who is appointed by federal Board
of internal Revenue (FBIR) which is the federal body. The personal must be
experienced in tax matters. Also, a secretary and a legal adviser are
appointed, some of their functions are:
To exercise the powers or duties conferred upon them by any express
provision of the Act, and any other power and duties arising under the Act
which may be agreed by the board.
To exercise the powers and duties conferred on them by any enactment of the
Federal Government imposing tax on the income or properties of companies
or which may be agreed by the Federal Board of internal Revenue.
STATE INTERNAL REVENUE BOARD
The administration of the income tax in each states its collection and
administration is vested on the state Board of internal Revenue.
It is headed by a chairman with the Director of Revenue as his Deputy
Chairman and the chief executive of the board. Other members of the board
include representative of specified ministries and from field economics,
accountancy and legal professions.
Their major function includes, to see the retrieval of the revenue
collected by various tax officers in all local government head quarters and
forward it to state government for disbursement.
INSPECTOR OF TAXES
Inspector of taxes are controlled by the Board. They have variety of duties
covering all aspects of taxation some of their duties are:
a. Receipt and examination of tax returns and other information from
b. Preparing and issuance of assessment based on the returns on which
tax is payable.
c. They also employ the best of judgment guesses, if returns were not
received or there is evidence of false information.
They are concerned with the service of
i. Returns of income forms
ii. Notice of assessment
iii. Summonses and affidavits and other sources of information.
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, Enugu state. 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
4. Tax collection and administration in Enugu state is not efficient and
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 asertain the effect of tax
administration on revenue generation in Enugu state, using the state board of internal revenue as a case study.
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
2. To ascertain whether lack of adequate staff in the SBIR affect tax
administration on revenue generation in Enugu 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 Enugu 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 Enugu state.
3. To what extent has lack of improper enlightening of tax payers
has affected tax administration on revenue generation in Enugu state.
4. To what extent has tax administration in Enugu state 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 machnical and oudated system does not affect tax
administration and collection in Enugu State.
Hi: The use of mechnical and outdated system affects tax administration
and collection in Enugu 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 Enugu state.
Hi3: Enlightening the tax payers on the important of tax payments affects
tax administration in Enugu state.
Ho4: Tax collection and administration in Enugu state is effective and
Hi4: Tax collection and administration in Enugu state is not effective and
1.6 SIGNIFICANT OF THE STUDY
The researcher is motivated to study the ways through which internally
generated revenue in Enugu state 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
Enugu man 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 Enugu state government for the past
What are responsible for poor tax collection in the state.
1.8 LIMITATION OF THE STUDY
The study will cover the capital city of Enugu and the remaining two
senatorial zones of the state.
This study would have been extended to the entire South East states of
the Federation but for limitation of resources and time.
Inadequate time due to the combination of class schedule and project
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 DEFINATION 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
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
Revenue Generation: This is systematic gathering / collection of income
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
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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