ABSTRACT
The need for this study is based on the fact that
presently revenues from taxes are less than government projections. This is
more important when the tax system in principle has the potential for
increasing revenue at the local government level. Relevant data were collected
from staff of the two case studies (Port Harcourt and Obio/Akpor Local
Government Area). The data collected were analyzed using percentage and
averages. Based on the analysis it was found that a lot of problems militate
against effective assessment and collection of taxes. These problems have
facilitated evasion of taxes. The problems are: identification of the person to
be assessed, identification of income for tax purposes, lack of public
enlightenment, unfaithfulness in tax officials, defects in tax laws and
concealment of profit. The study concluded that there is an involuntary
compliance and low honesty among the tax payers and that high rate of tax has
militated against voluntary compliance. There is mass ignorance on the issue of
tax among the populace. Finally, the study recommends that there should be
public enlightenment, honest and objective tax personnel, judicious application
of tax revenue and reduction of tax rate.
109
Pages
Project Reference Code:
C003
CHAPTER
ONE
GENERAL INTRODUCTION
1.1.
INTRODUCTION
The
international Encyclopedia of social sciences defined taxation as a general
concept for a device used by Governments to extract money or valuable articles
from members of the community and organizations (companies) by the use of law.
In other words it is a levy charged by government either Central, state or
local government. There is no government on its own who can adequately provide
all needs of people, hence to involve the people in the provision of certain
amenities, they are taxed according to their sources of income.
Few
tax payers enjoy paying taxes although many regard it as a public duty to pay
their fair share of money required by the government, which of course comes
back to them in the form of social services. Some citizens admit this duty, but
d not make same view as legislature as to what is their fair share; others have
the simple philosophy that the tax
collector is a public enemy.
In
developed countries, taxation has come to be accepted not only as a necessary
civic responsibility but also a way of life once it involves the generation of
revenue for a common purpose. But unfortunately in Nigeria, taxation is
regarded by the vast majority of the people as an instrument of oppression by
the government. However, this conception has its roots in colonial days when
the local agents of the colonial government forced the people to pay all forms
of obnoxious taxes irrespective of their means. Although this was the situation of things several
decades ago, it traits have stubbornly persisted even till now.
Owing
to the economic situation in Nigeria, there is a conscious drive for getting
the members of the public to be alive to their civic responsibility i.e.
payment of tax. Concerning this in the business community, a combination of
several factors make it possible for many of them to conveniently evade payment
of tax. Surprising also, some corporate bodies evade the payment of tax. This is rather a very serious matter of
concern because corporate tax has come to be one of major sources of revenue in
most countries. A situation like this calls for urgent decisive and for
reaching measure to ensure a long term solution.
1.2.
STATEMENT
OF THE PROBLEM
1.3.
PURPOSE
OF THE STUDY
1.4.
RESEARCH
QUESTIONS
1.5.
RESEARCH
HYPOTHESES
1.6.
SIGNIFICANCE
OF THE STUDY
1.7.
SCOPE
AND LIMITATION OF THE STUDY
CHAPTER TWO
REVIEW OF RELATED
LITERATURE
2.1. INTRODUCTION
Tax according to Agyei (1983) could
be defined as the transfer of resources from the private to the public sector
in order to accomplish some of a nation’s economic and social goals. The
primary economic goal of developing countries is to increase the rate of
economic growth and hence the per capital income which will lead to higher
standard of living. J. F. Duel (1983) recognizes two major accomplishments as
requirements for the attainment of this goal.
1.
Provision of additional
basic governmental services, particularly in education, public health and
transport, which are imperative for the growth of the remainder of the economy.
2.
A higher rate of
capital formation in production facilities, whether undertaken in the
governmental or private sectors. The specific goal, is of course, not the
highest rate of capital formation but the lowest rate that will permit the
maximum rate of growth in GNP regarded as feasible under the circumstances”.
Broadly,
it could be said that there are three main methods of financing economic
expenditure open to most developing countries.
a. Taxes
and other current receipts such as the profits of public
b. Loans;
and
c. Grants
Of
these sources, taxation is perhaps the most important, since the level of
government expenditure is to a great extent dependent on the ability of the tax
system to place the required revenue at the disposal of the government.
Thus
as T.J. Chelliah (1983) asserts, taxation might be used to accomplish the following objectives.
a.
Restraining or
curtailing consumption and thus transferring resources from consumption to
investment .
b.
Increasing the incentives to save and invest.
c.
Modifying the pattern
of investment.
d.
Transferring resources
from the hands of the public of the hands of the state to make possible
investment.
e.
Mitigating economic
inequalities”.
These objective are related to the
ultimate goals of rapid increase in national income and of the direction of
economic development. As already discussed, the various forms of taxation could
be classified under two main headings-Indirect and Direct.
There are five Acts governing the
Nigerian taxation namely:
1.
Income tax management
Act 1961 (I.T.M.A)
2.
The companies income
tax Act 1961 and 1979 (CI.T.A)
3.
Petroleum profits tax
Act (P.P.T.A) 1959
4.
Capital transfer Act
1979 (C.T.A)
5.
Capital gain Tax 1967
(C.G.T.A)
2.2.
TAX
ADMINISTRATIVE MACHINERY IN NIGERIA
2.3.
THE
FEDERAL BOARD OF INLAND SERVICE
2.4.
THE
BODY OF APPEAL COMMISSIONERS
2.5.
JOINT
TAX BOARD
2.6.
STATE
BOARD OF INTERNAL REVENUE
2.7. METHODS OF TAX COLLECTION
2.8
PAYMENT
OF TAXES
2.9
RETURNS
2.10 PENALTIES
2.11
FUNCTIONS
OF THE LOCAL GOVERNMENT COUNCIL
2.12
CHAIRMAN
OF THE COUNCIL
2.13
FUNCTIONS
OF THE CHAIRMAN
2.14 FINANCE AND GENERAL PURPOSE COMMITTEE
2.15. THE LOCAL GOVERNMENT
2.16. HEAD OF PERSONNEL (CLERK OR SECRETARY TO THE
LOCAL GOVERNMENT)
2.17. THE COUNCIL
2.18 BOOKS OF ACCOUNTS
2.19. FINANCIAL MEMORANDA
2.20. SOURCES OF REVENUE AVAILABLE TO PORT HARCOURT
AND OBIO/AKPOR LOCAL GOVERNMENT AUTHORITIES
2.21. TAX EVASION
2.22. LEGISLATIVE MEANING
2.23. JUDICIAL MEANING
2.24 METHODS OF TAX EVASION
2.25. EXTENT OF TAX EVASION
2.26 REASONS FOR TAX EVASION
2.27. THE PROBLEMS OF ASSESSMENT AND COLLECTION
2.28 PROBLEMS OF ASSESSMENT
2.29. THE LEGAL BASE
2.30. DEFECTS IN THE TAX LAW
2.31. PROBLEMS OF ECONOMIC BASE OR TAX BASE
2.32. THE USE OF TAX CLEARANCE CERTIFICATE
CHAPTER
THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
3.1 POPULATION DESCRIPTION
Kinner
and Taylor 91979) have defined the study population as the aggregate of
elements from which the sample is actually selected. The present work is on
comparative study of assessment, collection and evasion of tax in Port Harcourt
and Obio/Akpor Local Government Areas. “Therefore all Taxable individuals and
Tax authority operating within these two local governments qualify as possible
respondents to this study. However, due to time and financial constraints, the
researcher did not find it possible to conduct the study with all taxable
individuals existing in the local governments. But the researcher will still
like to generalize its findings.
3.2 THE SAMPLE AND METHOD OF SELECTION
3.3 RESEARCH DESIGN
3.4 SOURCES OF DATA
3.5 METHODS OF DATA COLLECTION
3.6 METHOD OF ORGANIZING DATA
3.7 METHODS OF DATA ANALYSIS
CHAPTER
FOUR
ANALYSIS
OF DATA AND DISCUSSION OF FINDINGS
4.0 INTRODUCTION
The
major purpose of this research was to assess the operation of the tax system of
two Local Government Areas. To facilitate the accomplishment of this objective,
two sets of questionnaire were designed. One was addressed to the Tax authority
and the other to the Taxable individuals. There were thirty- two questions in
the one addressed to the Taxable individuals and the one addressed to the Tax
authority had forty-two questions. Some of the questions required a YES OR NO
answer, while others asked for a detailed explanation in the space provided.
There were also a multiple choice questions in the questionnaire.
This
chapter is divided into:
(i)
Analysis and
interpretation of data; and
(ii)
Discussion of findings.
4.1 ANALYSIS AND INTERPRETATION OF DATA
A
total of forty copies of questionnaire were distributed to the two categories
of respondents and the same number were dully completed and returned and were
used as sample size for the conclusion drawn in this study. The forty completed
copies of the questionnaire constitutes 100% response. A break down of the
respondents are shown in table 4.1 below:
TABLE 4.1: BREAKDOWN OF RESPONDENTS
CHAPTER FIVE
DISCUSSION
OF FINDINGS
This
research work bothers on the assessment, collection and evasion of tax in Port
Harcourt and Obio/Akpor Local Government Areas. The survey has identified some
inherent problems associated with the operation of taxation system in the
sampled areas.
The
analysis revealed that the administrators of taxes were unable to cope with the
situation or they do not realize enough revenue as a result of attitude of
Nigerians in paying tax. The nonchalant attitude of the people in the two Local
Government Areas in disclosing the true position of their income through proper
record keeping has contributed to low revenue from tax. “This corroborates the
view of Oladunjoye (1995) which says the degree of voluntary compliance with
tax laws in the Country is as low as the degree of dishonesty in the financial
matter. You find person liable to tax hiding from the tax authority.
The
ready willingness of many tax officials to be bribed asserts a domineering
influence on tax evasion. This corroborates the view of Salawu (1998) when he
said “unfaithfulness and corruption in tax officials also contributes to low rate
of tax return, some went to the extent of printing receipts for themselves.
Another
revelation was that high tax rate and arbitrary imposition of levies by
government. The respondents are of the opinion that the very high rate of tax
has contributed greatly to tax evasion in the two Local Governments concerned
coupled with the imposition of all sort of levies on the citizenry. The
taxpayers are compelled to be unnecessarily aggressive to the tax officials.
The
information obtained from interviews conducted with most company’s officials
and tax authorities revealed that there was no proper record kept. This is
particularly very common among sole-traders that are not obliged under the law
to prepare a published account. Many traders do not even maintain any set of
accounts, not even a cashbook. This makes it difficult for tax authorities to
determine their total taxable income. This is why CAMA has made it mandatory
for limited liability companies to publish their accounts. Others may prepare
their financial statements fraudulently in a bid to deplete the profit or
conceal some items of income. This enables them to evade tax.
The
view of Salawu (1998) that says public belief that revenues collected would not
be properly utilized and in some cases it is assumed that the collector would
convert it for personal use. It is also supported by the outcome of this
research. Personal interviews conducted with some of the taxable adults from
the two Local Government Areas revealed that some of them see paying of tax as
waste of money and resources since sometimes the money is not properly utilized
for the masses.
Provision
of social amenities by the government from tax revenue will go a long way to
motivate tax payers to voluntarily discharge their civic responsibility. Some
of the communities are not having good roads; potable pipe-borne water,
incessant power failure and absence of medical facilities have militated
against willingness of people to pay tax.
Lack
of awareness by eligible tax payers due to improper enlightenment by relevant
authorities also constitute a drawback in achieving desired revenue targets
accruing from taxes. Some part of the town and villages are not well planned,
which a times have street numbers, even some houses maintain similar street
numbers, also tax payers sometimes don’t bother to notify the tax authorities
in their areas on their new address, therefore when tax payers move from one
town to another the change is not easily noticed. This view is also supported
by Olatunjoye (1995) when he said “the fact that most of our urban centres are
not planned, and that street names and numbers are either not existing or
difficult to find give ready excuse to the unwilling postman to trace tax
payers and deliver letters to them. All these compound the work of the tax man
who is determine to trace his tax payers”. Many businessmen and women do
successful business without any fixed addresses.
Another
revelation from our study is that an additional impediment to the revenue yield
to the two Local Governments are the problems of complexity in tax law. This
facilitates escape routes to the tax payers. Nigeria transplanted the
sophisticated British tax legislation to Nigeria, though it is modified, it
does not reflect the needs of the Nigerian.
BIBLIOGRAPHY
Allen, F. and Gale, D. (2003) “Competition and Financial Stability”. Journal of Money, Credit, and Banking,
36, Pp. 433-480. And Acquisition in
Nigeria – Analysis of Performance Pre-and-Post Consolidation’’, Lagos
Journal of Banking, Finance and Economic, Vol; 1, Pp.
Allen, F& Gale, D. (2000) Comparing Financial Systems,
Cambridge and London: MIT Press.
Amel,D., C. Barnes, F. Panetta, And C. Salleo (2002)
“Consolidation And Efficiency In The Financial Sector; A Review Of
International Evidence,” Journal Of Banking And Finance, Vol 10,No2,.
Athanasoglou, P.P., Brissimis, S.N. & Delis,
M.D. (2005) “Bank-Specific, Industry-Specific And Macroeconomic Determinants Of
Bank Profitability”. Bank Of Greece
Working Paper, No.
Berger A. N., R. S. Demsetz and P. E. Strahan (1999)
“The Consolidation of the Financial Services Industry: Causes, Consequences,
and Implications for the Future,” Journal of Banking and Finance 23,
135-194
Bichi, K., (1996). ‘The Genesis of Banks Distress’,
Credit News Magazine, 7(1&2), February- March, Pp. 28 – 29.
Bourgeois, L. J. III. 1980. Performance and
Consensus. Strategic Management Journal, 1:227-48.
Project Reference Code:
C003
The COMPLETE version of this
project requires payment of N3500
only
If you like to ORDER the COMPLETE
version please contact us on: 0803-544-6622
Via Call
or WhatsApp for
instructions on how to make payment
The project will be sent to you via
E-mail or WhatsApp
within ONE HOUR of confirming payment
OR
No comments:
Post a Comment