Format: MS-WORD Chapters: 1-5
Pages: 65 Attributes: COMPREHENSIVE RESEARCH
TABLE OF CONTENTS
Table of Contents
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Scope of the study
1.5 Limitation of the study
1.6 Significance of the study
1.7 Research question
1.8 Definition of terms
2.1 Conceptual Clarification
2.2 Administration and assessment of personal income tax
2.3 The Objective taxation
2.4 Problems of personal income tax in Nigeria
2.5 Difficulties in assessment and administration of personal tax
2.6 Revenue committee
2.7 Rate of Personal Income Tax (PAYE)
3.0 Research methodology
3.2 Design of the Study
3.4 Sample size
3.5 Research instrument
3.6 Method of data analysis
4.1 Data presentation
4.2 Data analysis
5.0 Summary, conclusion and recommendation
For any government
to carryout her functions effectively, it needs revenue. Revenue from the
Federal government in the form of grants and allocations has become grossly
inadequate and is no longer regular. Hence, the emphasise on internally
generated revenue. Personal income is a very important source of revenue to any
state government. This study titled “an Assessment of Personal Income Tax in
the Local Government Council (a Case Study of Dekina Local Government Area,
Kogi State)” identifies the problems associated with tax assessment and administration
and makes useful suggestions and recommendations to remedy taxation defects.
Records show that personal income tax contributed over 50% of the total revenue
generated from taxes. However, the revenue yield of this source is greatly
affected by taxpayers. Based on the findings, recommendations are made that
government should embark on mass enlightenment campaigns to educate people on
the importance of paying tax. All organisations deducting tax from their
employees’ salaries should be monitored regularly to promote efficiency. Also,
sound information system should be implemented to provide complete and
up-to-date information on the income of taxpayers and to identify tax evaders.
Finally, that government should use tax revenue to provide welfare facilities
for the populace so as to encourage them to comply voluntarily.
From individual to organisation, local government collects revenue from various sources, which includes taxes, fines and fees, licences, earnings, sales and rents on government property. Other sources of income are interest repayment and individual reimbursement, profit and gains from sales and services from public economic and commercial activities and statutory allocations for the Federal government.
The purpose of this study however, is to consider in details the assessment and administration of personal income tax in Nigeria, a case study of Dekina local government area in particular. However, Adams Smith (Herber, 1974) postulated the principles that make taxation acceptable and popular. These are principles of equity, convenience, certainly and economy.
Tax administrations have tested and accepted them as good guidelines towards tax policy formulation. Therefore, personal income is the basis of personal income tax. It is made up of wages and salaries, propeirtor’s income, rental income, dividend and interest.
1.1 BACKGROUND OF THE STUDY
Nigeria is a Federal Republic and has her constitution, which share the functions of government among the three tiers of government: federal, state and local government, respectively. The allocation of tax power between these tiers of government is defined by the constitution. The constitution gave the national assembly power to levy all taxes, while it empowers the federal government to assess and collect tax from major sources.
Each local government of the federation empowered to collect taxes arsing from personal income of persons as provided by Decree 21 of 1998. the law governing personal income tax in Nigeria is the income tax management act (ITMA) 1991 as amended to date. Personal income tax is completed as well as other states of the federation the body responsible for the administration of this act in every local government.
At the local government, revenue committee for administration purpose split personal income tax personal income tax into pay as you earn (PAYE) and direct assessment. Under PAYE, employee’s taxes are deducted by their employer and remitted to the revenue committee under direct assessment. Apart from being an important source of revenue, personal income tax also helps to redistribute income of various tax payers.
For any receipt to be tied to income tax, it must be shown to come from a source as designed by law. If the income sought to be taxed does not emanate from the sources as stated by law, then the receipt is not welcome for tax purpose.
1.2 STATEMENT OF THE PROBLEM
For the case of study, the problem will be limited to the problems and prospects of tax in Dekina local government revenue committees. It is a matter of fact that is not very easy to collect tax and even the essentials of tax. This problem varies thus:
- Inadequate Staff: Lack of adequate manpower to carryout the assignment efficiently and this has contributed to the low revenue generated for the local government.
- Mismanagement of Tax Collected: Where taxes collected were not been utilised for the purpose for which it was collected. This makes tax payers not to give out of their wealth to the local government.
- Bribery and Corruption: In these days, tax collectors’ personal interest has over ridden their official interest in the performance of their duties, not to give out their duties. This consequently affects revenue generation for the local government.
- Poor Accounting Record: Most businessmen, traders and professionals do not keep proper record of their income and expenditures.
- Inadequate Facilities: The facilities like motor vehicles and bikes.
2.3 OBJECTIVES OF THE STUDY
It is the aim of the researchers to:
- Find out the solution to inadequate manpower to carryout the collection of revenue generated in Dekina local government.
- Ensure that the officers who are in charge of the revenue are trustworthy, transparent and God-fearing.
- Enlighten the taxpayers on ways of keeping proper record of their businesses.
- Ensure that the local government makes adqiuate provisions of facilities for the collection of its revenue.
- Make recommendations to the local government in relations to tax collection system.
1.4 SCOPE OF THE STUDY
This study shall attempt to analyse the assessment, collection and administration of direct assessment and PAYE in Dekina local government for a period of 2009 to 2010. The study does not include other sources of assessment such as income tax and capital transfer of tax etc.
1.5 LIMITATION OF THE STUDY
This part of the study deals with the constraints, which the researchers encounter within the course of this study that tried to hinder them, probably for fear of divulging government secrets.
This attitude must change if research works are expected to be thoroughly conducted. Another constraints is financial problems as the researchers have to travel to the Board of internal revenue several times to collect information and to gather data. All these make production cost expensive. Hence, it was with great difficulty and took the mercy of God. Also, time was a limited factor which militated against a more detailed study.
1.6 SIGNIFICANCE OF THE STUDY
This study is therefore directed towards identifying those problems that impact on efficient assessment and administration of personal income tax in Dekina local government council and then recommended useful measures to be taken in order to solve them. The application of this study lied on the fact that it seeks to identify the problem of information about tax payers, sources of income, the amount of income and its social standing or social responsibility to the local government in the area of collection and payment of taxes.
1.7 RESEARCH QUESTION
- How is personal income assessment done in Dekina local government?
- How does the government attitude affects personal income tax revenue and its voluntary compliance?
- What is the relationship between cost of collection and yielding of personal income tax?
- What are the effects of tax evasion of personal income tax?
1.8 DEFINITION OF TERMS
- Year of Assessment: This is usually a period of one year that runs from the first day of January to the last day of December during which the taxpayers’ income was earned or received. For example, the 2010 year of assessment (YOA) is between 1-1-2010 to 31-12-2010.
- Basis Period: This is the period by reference to which any assessable income for the year fails to be determined S.23 (1). This in effect means that the preceding year basis rule is applicable to all sources of income. The exception to this rule is in respect of the commencement and cessation of trade.
- Assessable Income: This is the tax payer’s income from the year of assessment. It is the total of al income of the taxpayer from all sources in assessment.
- Financial Year: This is normally a period of twelve months adopted by the company or tax payer for accounting purpose.
- Personal Income: This is a form of tax levies on aggregate person’s income of individual.
- Tax Avoidance: This refers to legal means by which taxpayers minimise their tax ability by finding out the loopholes in existing laws and regulations.
- Tax Evasion: This is a contrary behaviour which entails attempt to minimise a taxpayer’s ability through illegal means.
- Tax Administration: The administration of tax in Nigeria is in the hand of the relevant tax authorities (RTAs). This is the income that accrues to an individual as a result of present or past physical and mental effort.
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