ABSTRACT
The purpose of this research work is to describe the practical approach to an appraisal of the pay-as-you-earn system of taxation with the referee to Nssuka local government area. To guide this study, two hypotheses were formulated. A review of the literature was down to ensure a solid conclusion for the study. A structural questionnaire was developed and administered by the analysis adopted in this research work was chi-square, this method by the researcher to ensure that results obtained were real and not by chance. Based on the above statement some of the major findings include the presentation of data and their analysis. Chapter five is discussing the findings made by the researcher and recommendation as well as the conclusion. Conclusively, the researcher will add to the existing literature on an appraisal of the pay-as-you-earn system of taxation. Scope of study and limitation talk about the areas the researcher is going to touch when discussing on the appraisal of the pay-as-you-earn system of taxation system are place or area that have been unable to buy researched upon to time.
CHAPTER ONE
INTRODUCTION
The global economic recession, which started in 1980’s as a result of decline in the economic growth of industries nation, high rate of inflation,  dramatics rise in price of crude oil, increase cost of importing a massive building-up of liquidity in the international capital market and unusual fluctuation in commodity prices was not fully felt in Nigeria until 1982, when the developed countries applied a series of restructuring monetary and fiscal policies to curtail the afore-stated problems. Seventeen years ago, precisely in 1983, the world bank report that the continuing recession in the industrial world several constrained developed country’s growth in 1982. Weakness in the price of oil created difficulties for oil-exporting developing countries. Reporting specifically on Nigeria, the bank stated that“ foreign exchange resource declined in 1982 from a level equivalent to the three-month worth. Investment, equal to about a third of gross domestic product (GDP) in 1980 –1981, has been radically reduced as both foreign exchange and government resource contracts (85% of government revenue, both federal and states are directly generated from oil export). An attempt to wriggle the country out of its financial predicament led to the initially of series of belt-tighten measure from 1982 to date. These measures include, ban on import of a large number of goods, specially taxes on luxury goods, enforcement of trick exchanges control reputation liberalized during the earlier boom, wages and ban on employment in the public sector, increased external borrowing in anticipation of oil income and of late the introduction of value-added tax (V.A.T). The impact of the dwindling revenues to the federal government and this ever-decreasing portion of statutory allocation to states has aroused tremendous interest in another source of revenue. Therefore, the hitherto relaxed tax laws are vigorously being enforced while levies of various descriptions are also being in various states of the federation. Nsukka’s local government area of Enugu state is not exempted from this nation’s economic recession. One of the major sources of revenue to the local government, second to statutory allocation from the state and federal government, is the personal income tax (PIT) impose on all taxable persons in the local government. The personal income tax is allocated either through the Pay-As-You-Earn (PAYE) system in which employers of labor deduct tax due to the income of their employees and remit it to the division In this study, my interest lies in appraising the effectiveness and efficiency of Pay-As-You-Earn (PAYE) as a system of tax collection. The examination of the weakness interest in the system will be carried out and based on empirical observation, make suitable recommendations as to how loopholes in the system could be plugged especially at this time of widespread awareness of the great potentials of internally generally revenues.
STATEMENT OF THE PROBLEM
The expectation of the public from governments (local, state and federal) in the developing countries are such that the later are saddle with responsibilities for the provision of various services. The 1979 Nigeria constitution sec.16 (a) state. Quite clearly that “the state shall control the national economy in such manner as to secure the maximum welfare, freedom, and happiness of every citizen as the basis of social justice and equality of status and opportunities’’. It is in an attempt to fulfill these expectations and sometimes constitutionals requirement that government rely on, among either source, the imposition of various taxes, whether direct or indirect on the defined taxable persons in their territory. Such as tax and the poll tax. These taxes are collected at the source include taxes on dividend interest and rates. Also; induction is tax on personal income tax through the Pay-As-You-Earn (PAYE) system has been effective in achieving its objectives of minimizing collection costs and reduce tax evasion while increasing revenue to the local government. We will all look into the problem of the pay-As-You-Earn system and suggest measures to solve such problems that might be identified.
PURPOSE OF THE STUDY
The purpose of the study can be broken down as follows:
To ascertain the impact of Pay-As-You-Earn system effectiveness on personal income tax revenue over a period of ten years.
To educate the truthfulness of the data provided by taxpayers in their tax return and ascertain the percentage of those who do not provide the information therein.
To find out whether there is any relationship between the truthfulness of the information provided by taxpayers in their tax returns and their age.
To identify the problem (if any) encountered by the internal revenue division and the employers of labor in the application of the PAYE system.
To find out how the employers perceive the PAYE system and the likely improvement that they would recommend.
RESEARCH QUESTIONS
What is the impact of the Pay-As-You-Earn system’s effectiveness on personal income tax revenue over a period of ten years?
What is the percentage of those who do not pay their tax?
Is there a relationship between the truthfulness of the information provided by taxpayers in their tax returns and their age?
What are the problems encountered by the internal revenue division and the employers of labor in the application of the PAYE system?
How do employers perceive the PAYE system and the likely improvement that they would recommend?
RESEARCH HYPOTHESIS
Ho:Â The effectiveness of the Pay-As-You-Earn system has not affected personal income tax revenue.
Hi: The effectiveness of the Pay-As-You-Earn system has affected personal income tax revenue.
SIGNIFICANT OF THE STUDY
The significance of adequate revenue for a developing economy such as that of Nigeria cannot be overemphasized. This study is being conducted with a view to exposing the inherent weakness in the Pay-As-You-Earn system of taxation.
The suggestion and recommendation made on how loopholes in the system could be plugged. Especially at this time of widespread weakness of the great potential of internally generated revenue would be very beneficial to the governments.
The local government will find it very useful in drawing up revenue and other methods of taxation which will, in turn, check the ever-dividing revenue to the government.
SCOPE OF STUDY
The study shall be confined to an examination of the Pay-As-You-Earn system as in weather it is an efficient and effective method of personal income tax (PIT) collection in Nsukka local government. It thus excludes any other system of tax revenue through the Pay-As-You-Earn system with other tax revenue shall be evaluated only for the purpose of comparison.
LIMITATION OF THE STUDY
The study was limited by the following constraints:
There was a shortage of relevant texts journals and documentaries on the subject of the Pay-As-You-Earn system. Some of the answers give opinions expressed in response to questions were subjectively based due to different personal experiences. A study of this nature requires a longer period of time than was actually available to me. There is this general problem that many in Nigeria does not like to disclose their earnings. Finance available for this study was inadequate considering its scope and my financial standing as a student.
DEFINITION OF TERMS
Basis Period:Â the period in which the income of a taxpayer is assessed for the purposes.
Assessable Income:Â income of a taxpayer from all sources in a given basis period less all allowable deductions and nontaxable income.
Preceding Year Basis: A basis period by which income of a taxpayer in the year proceeding the year of assessment is assessed.
Actual Year Basis: A basis period by which income of a taxpayer in the year preceding the year of assessment is assessed in that year.
Year of Assessment: the government financial year in which the income of a taxpayer is assessed for tax purposes.
Chargeable Income:Â assessable income less all reliefs.
Reliefs:Â deductible allowance granted to a taxpayer by the law in a relevant year of assessment.
Tax Evasion:Â An illegal act of paying less tax than ought to pay.
Tax Avoidance: A legal act by taxpayers to pay less than he ought to pay.
Tax Returns: Relevant data supplies by a taxpayer for the purpose of assessing income.
Tax Deduction Card:Â A document used in the Pay-As-You-Earn scheme in which total allowed reliefs are stated.
Tax Emergency Card: the card temporarily used before the tax deduction card is made available to the employer by internal revenue division.
This material content is developed to serve as a GUIDE for students to conduct academic research
Project 4Topics Support Team Are Always (24/7) Online To Help You With Your Project
Chat Us on WhatsApp » 09132600555
DO YOU NEED CLARIFICATION? CALL OUR HELP DESK:
09132600555 (Country Code: +234)
YOU CAN REACH OUR SUPPORT TEAM VIA MAIL: [email protected]
09132600555 (Country Code: +234)