INCOME TAX ADMINISTRATION

ABSTRACT

Tax policy administration and implementation have been a great problem to the third world countries, which Nigeria is one.  This research work, “income tax administration in Abia State, a critical evaluation of the problems and prospects.  Thereafter, suggests ways of minimizing the effects of the following problems.  Avoidance and evasion of tax, waiting the taxpayers, initial tax payer compliance, resolution of controversies between tax payer and tax officials and collecting of taxes etc. These problems have affect on the income tax revenue base of the government, which will in its totality have adverse effect on its capital expenditure.  To enable the researcher find solution to the problem of this study, some questions were raised in form of hypothesis, which was developed into null and alternative hypothesis.

H0:    There is no relationship between income tax revenue and government capital expenditure.

H1:    There is a relationship between revenue from income tax and government capital expenditure.

H0:    No relationship exists between revenue generated from income tax and the government recurrent expenditure.

H1:    There exist a relationship between revenue generated from income tax and the recurrent expenditure of the government.

H0:    There is no problem confronting tax administration.

H1:    There are problems confronting tax administration.

As a result of detailed analysis, the study has revealed so many important phenomena in revenue generation in this state which in-adequacy of staff, inefficiency and ineffectiveness of tax assessment authorities due to heavy work load, miss appropriation of collected funds just to mentions but a few. The method of data collection was through primary and secondary sources. The secondary source, which involves the analysis of vital documentations available at the state library ministry of finance and board of internal revenue.  Data collected were analyzed by simple Pearson’s  correlation co-efficient and chi-square. With respect to the research findings, the following recommendation are made to a successful use of improved income tax administrations to enhance development.

–                     Government should provide conductive working environment for the tax authorities and also adequate funding and provision of operational facilities.

–                     A high standard of literacy among taxpayers.

–                     The absence of political influence to tax measures.

–                     Prevalence of accounting records honestly and reliably maintained.

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The tax system is often identified as one of the most powerful levers available to the government to move their economic state from a pitiable condition to a happier position.  According to Anyanwu (1999) taxation can simply be seen as “a compulsory transfer of money from private individuals, institution or groups to the government”.  On another note Agolu (2001) says “taxation may be defined as a compulsory levy by the government through its various agencies in the income capital or consumption of its subjects. These levies are made on personal income such as salaries business profits, interest, dividends commission royalties or rests.  It may also be levied on capital gains and petroleum profits.  All of the above are taxes levied on income”.  Income tax is one levied on the income after allowances have been granted what remains taxable. The questions then arises as how efficient is the administration of income tax in Nigeria and Abia State in particular.  This is the questions this research work tries to provide an answer to.  It is important to note that during colonial period, income tax administration was placed on the shoulders of colonial masters according to the orders of the governor general.  After independence, the government of Nigeria took over administration of taxes, especially, income tax. Consequently, board of internal revenue were established in the different regions and states of the federation.  These states were charged with responsibility of income tax administration.

THE BACKGROUND OF BOARD OF INTERNAL REVENUE

Section 85A of PITD provided for the establishment of a state board of internal revenue to be known as “the state service” to comprise of:

–                     The executive head of the state board as chairman who shall be a person experienced in taxation and appointed by the governor of the state from within the state service.

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