ABSTRACT
This research work “A Critical Appraisal of the Nigerian tax laws “ A case study of Enugu State Board of Internal Revenue (1998-2007) is based on the fact the Act 104 of 1993 creates a distinct legal regime for the taxation of personal income Tax in Nigeria. However inspite of that the Act made generous provisions as to the income to be assessed on the hand of the tax payers, the tax yield does not reflect these generous provisions. The government has not achieved its targeted revenue, hence has not been able to meet the needs of its subjects since the Act came into operation. In view of this comes the need of this work to critically re- appraise the Act (as amended) with the intention of introducing reforms where necessary. Such that the Act shall meet, as much as possible the classical cannons of a good tax system as well as the development needs of the economy. The findings, conclusion and suggestion(recommendations) was drawn, on the study. The findings high lighted the problems inherent in the Tax laws and administration such as flaunts in the laws, loopholes, Ambiguities, insufficient, provisions for enforcement, conflicting, provisions as well as problem of judiciary interpretation of Tax statues. Also absence of specialized revenue court among others. Administratively, the tax officials do not receive adequate remuneration and training. Moreover, they are not involved in the policy making. Valuable solutions were adduced, which if, implemented would remedy the situations and increase the revenue generation as expected of the Act. Such recommendations as.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND AND THE NEED FOR THE STUDY
Capital forms an important factor in production processes, as well, essential ingredient in furthering economic growth and development.
Infact, without adequate financial resources no business enterprise or government (federal state or local government) can function effectively and efficiently (Adetunji 1997:16).
Government like an individual or business organization require funds for its day to day activities however, unlike these other bodies or persons it has the primary objective of raising the standard of living of the citizens through the provision of such amenities and services as education, public health, good roads, potable water supply, electricity, market, defense etc. hence, Paul Eriliri (1987:14) expressed “one of the basic function of the protection of the property and the basic function of the state as seen by the natural law theories is the protection of the property and the property owners should therefore pay for the state expenses. Similarly, services that tend to increase the value of property must also be compensated.
Accordingly, government therefore, gives serious attention in discovering means of raising revenue to meet these responsibility (Olusanya 1978:206) In the words of Adentunji (1997:16) though such funds can be generated from taxes and royalties, there is a limit to the extend to which this can be done to avoid over burdening the citizens. Sharing the same view with Eriliri, Adam Smith in his famous book “the wealth of the nation. “Every subject has to contribute to the coffer of the state. These contribution according to Omeje (1992:16) have been with a lot of resistance, creating evil passion and mortification of the honourable poverty. Hence the need for a self rules and regulation that would guide the assessment and collection of the contribution (tax). Therefore, president Esuhere during his budget speech to the American Congress had this to say “we shall develop a tax system that would encourage, savings and investment for the economy which is ours” the above statement is saying nothing short of tax law that would be used to attain government policies.
The legal regime that governs the tax system in Nigeria is the tax laws as amended. There is no gain saying that once, rules and regulations are formulated to guide a system, there is the need to appraise the provisions of the laid down rules in order to ascertain whether or not set rules and regulations are formulated to guide a system, there is the need to appraise the provisions of the laid down rules in order to ascertain whether or not the set rules meet its goals and objectives.
According to Ochei (1987:19) in the United Kingdom, the tax laws are consistently, being tasted in the law court and at the end of each fiscal year, a finance act is issued, up dating by addition or amendment, the existing tax laws. Comparing the Nigerian tax law and systems with other developed countries he further added. It seems clear that our income tax rates, relief and allowances should be reviewed to reflect, money values, earning capacity and additional responsibilities which the present economic situation has imposed on the struggling population.
Considering the widespread criticism of the existing Nigerian tax laws coupled with the persistence calls by the Nigeria tax consultants tax administrators and the existing laws, the need therefore arises for a work of this nature to critically appraise the laws with particular reference to the personal income Tax Act as amended. This is to ascertain the effect of the laws and the consequent amendments on the revenue generation is south east of Nigeria. If there is a considerable positive change in the revenue generation since the law and the amendment took effect, compared with the set target, then there may be no need for over hanling the existing laws but if the other way, then the laws should be critically reviewed in order to achieve the set out government policies.
1.2 STATEMENT OF THE PROBLEMS
The best quality any personal income tax system should adopt will be such that will be fair to the tax payers and at the same time be able to achieve the intended objective of the government. The essentials of good tax system, otherwise known as common of taxation was first propounded by Adam Smith and include – Equality –certainty, convenience and economy. From 1940, when Direct Taxation ordinance was enacted in Nigeria, the Nigeria Tax Laws have undergone series of amendment.
The purpose of the amendment were to maximize the revenue of the state with less incident on the taxpayers.
Since the creation of Enugu State in, 1991, the internal generated revenue from sources absolutely controlled by the state
government has not been encouraging, consequently, the revenue does not adequately carter for the need of the state government.
The income tax laws as provided by the presence income Tax Act as amended made a lot of provision as to income taxable in the hand of the tax payers but even at that, the tax yield on personal income does not reflect the extended personnal income laws.
Some questions readily come to mind at this unction.
i. Why do people not want to pay adequate tax?
ii. Are the provisions of the tax laws not inefficient
iii. Are tax laws full with flaunts
iv. What are the biggest obstacles in personal income tax administration in Enugu State?
v. Do the personal income tax law made adequate provision for its enforcement?
vi. Has the frequent changes in the tax law any negative impact on the revenue generation in the state.
vii. Do tax payers and officials exploit the loopholes in the law to their own advantages.
viii. Are tax officials adequately reinunerated?
ix. In formulating tax policies are tax administrator not involved.
This study shall try to find a way out of the core problems. In addition it shall try to provide answer to the following basic question.
a. Will further review of the laws being about voluntary compliance of the tax payers.
1.3 PURPOSE OF THE STUDY
It is the disposition of this work to critically appraise the personal income tax Act 1993, as amended in relation to the question of revenue collection of Enugu state since the Act came into effect, with the intention of introducing reforms where necessary such that the Act shall meet as much as possible the classical common of good tax system as well as the development need of the economy.
The personal income taxes are gaining ground in Nigerian taxing system in term of revenue yield since the emergency of internal politics in the international oil market which has consistently crushed the oil price since 1980’s therefore, there is the need to review regularly the tax laws to meet government fiscal objectives specifically, this work will endeavour to identify the policies, administrative, legal and other factors inhibiting the smooth tax administration in the state. It shall look into the efficient and effectiveness of the state before the amendments. This is to ascertain whether there is any positive coloration between the revenue generation and the set out revenue target of the state within the period 1998-2007, finally, how the performance of the duties of the Board of internal revenue officials affect the personal income tax payers and the yield from the income tax.
1.4 THE HYPOTHESIS
There are allegations that the yield from personal income tax in the state does not reflect the generation provisions made in the Income Tax Act and yet the state Expenditure has been increasing astronomically.
This unhealthy practices because of certain identified and unidentified problems in the system such as loopholes in the tax laws, inconsistence tax policies, inadequate training for tax officials among others the following hypothesis are therefore formulated.
H01. The incidence and amendments of the Nigerian tax laws has impacted negatively on the question of revenue generation in Nigeria.
H1. The incidence and amendment of the Nigerian tax laws has imported positively on the quantum of revenue generation in Nigeria.
1.5 SIGNIFICANCE
The researcher is motivated to critically appraise the personal income tax act as amended with the intention of finding the impact of the act on the revenue generation in the state, also to introduce reforms where necessary such that the act shall meet as much as possible the classical common of good taxation, particularly now that the Nigerian economy calls for self reliance self sufficiency, inculcation of maintenance culture and restriction in sorting external borrowing so as to manage the national debt problems.
This work therefore shall be of great interest to the following parties.
a) The government and her agencies federal, state and local government.
b) The academicians
c) The general public.
It will reveal the lapses or short comings in the tax laws and other factors inhibiting effective administration of the law in the state. Whether the personal income tax laws since its commencement had made any positive impact on the revenue generation in the state. Its recommendation will attempt to bring more income tax payers into the tax net for an improved internally generated revenue.
1.6 THE SCOPE/DELIMITATION OF THE STUDY
Consciously aware of the limiting factor, the researcher work “A critical appraisal of the Nigeria tax laws as being administrated by the Enugu state government (A case study of Personal Income Tax Act 1993 as amended) is restricted as follows:-
The purpose of personal income tax, qualities of good personal income tax system, the development of personal income tax in Nigeria, other tax laws existing in Nigeria, the activities of the joint tax board, the activities of the state board of internal revenue, failures of tax administration in Nigeria, tax law review
and amendments, the use of consultants in revenue collection and assessment.
The role of the judiciary in interpreting tax laws, the court that exercise jurisdiction over tax matters, burning issues in the Nigerian tax system.
The effect of constitutional provision on tax laws. The effect of taxes and levies (approved list for collection).
This work however did not cover critical appraisal of other tax laws like: the company Income Tax Act, the property Act, the value Added Tax Act, the capital Gain Tax, the stamp Duty Act, among others. In addition to the above structural limitation, the work is restricted to Enugu State alone. This is the considered opinion of the researcher since the cost in term of time and finance can hardly permit a nation wide survey. The researcher nonetheless believe and strongly too that the result and findings assessing from the cluster sample would not differ materially from what it would have it would have been had the entire nation been surveyed. It is important to note that a work of this nature did not receive a warm reception because of the adherence people have for tax. More so, the respondents felt the researcher was prying into their personal life.
This material content is developed to serve as a GUIDE for students to conduct academic research
CRITICAL APPRAISAL OF THE NIGERIA TAX LAWS AS ADMINISTRATED BY THE ENUGU STATE GOVERNMENT 1998-2007 (A CASE STUDY OF ENUGU STATE BOARD OF INTERNAL REVENUE
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)