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THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA
A CASE STUDY OF LAGOS GOVERNMENT
BY ND/14/ACCT/FT/002
S...
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IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN N IGERIA

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IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN N IGERIA

  1. 1. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 1 IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA (A CASE STUDY OF LAGOS GOVERNMENT) BY IYANDA ABDULWASIU AHMED ND/14/ACCT/FT/002 BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF ACCOUNTANCY INSTITUTE OF FINANCE AND MANAGEMENT STUDIES (IFMS), KWARA STATE POLYTECHNIC, ILORIN
  2. 2. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 2 IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF NATIONAL DIPLOMA (ND) IN ACCOUNTANCY JULY, 2016
  3. 3. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 3 CERTIFICATION This project has been read and approved by the undersigned on behalf of the Department of Accountancy, Institute of finance and Management Studies (IFMS), Kwara State Polytechnic, Ilorin as meeting the requirement for the Award of National Diploma in Accountancy. MR. ABOLARIN A.F DATE (Project Supervisor) MR. SA’AD TUNDE DATE (Project Coordinator)
  4. 4. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 4 MR. ABOLARIN A.F. DATE (Head of Department) MR. TIAMIYU FATAI A. DATE (External Examiner)
  5. 5. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 5 DEDICATION This project is fully dedicated to Almighty Allah, the author and the finisher of our faith for making this possible for me up to this moment. Also my parent Mr. and Mrs. IYANDA AHMED and ALHAJA RIHANAT OLAJIDE I really appreciate your support and Prayers throughout my academic session and to all OLAJIDES family for their support.
  6. 6. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 6 ACKNOWLEDGEMENT The laying of an egg signifies hope. The cracking of its create an anxiety, a long time preparation then the new chicken appear to soft, tender, delicate and harmless yet expose to this word of sin……………. It takes God guidance, luck and destiny to see this chicken grow up one day to call a lien or a cock. All praise is due to Allah, the lord of the world “is the first and the last, the evident and hidden, he’s the beginning and the end, he has full knowledge of all things. May the peace and blessing of Allah be upon prophet Mohammed (saw) the faithful, the imam of pious, the leader of the righteous strivers.
  7. 7. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 7 I also which to express my profound gratitude to my supervisor and at the same my HOD Mr. Abolarin A.F and MR RAUF for his guidance and support more than the job of supervisor that make this project to be successful, and entire staff of accountancy department. May I see this opportunity to tender greatest appreciation to my parents Mr. and Mrs. Iyanda Ahmed for their Support and encouragement during the tenure of my course and for the great influence of their struggle to my life. May Allah bless them in all their undertaking and give them long life to reap the good fruit of their labour(Ameen). My deep appreciation goes to my benefactor Alhaja Rihanat OIajide for her care and support , given to me morally spiritually and financially I pray for long life and good health for her. My profound also goes to the Engr. Olajide Kamaldeen, Mrs. Badmus Bukola (FCA), Mrs. Olushekun Titilola (FCA), Engr. Suleiman Olajide, DR.Lukman Olajide,DR. Yusuf Fatima Folarshade, Isiaka Abdulganiyu, Mr.Olawuyi (my account and commerce teacher in senior secondary school),Mr, Rotami (my economics teacher in senior secondary school), A J ADISCO(C E O OF A J ADISCO MOTORS NIG.LTD), SULIU ABDULLAHI,ABDULWASIU ADISA,ADISA KAZEEM, TAIWO OGUNTOYE SUNDAY . All the name mention above have assisted me colossally from the inception to completion of my programme. A big thanks to my lovely friends and colleges Reshidat Olayiwola,Tinuoye Fatima ,Lutoguy (gallant solider), Adeleke John, Gholahan Ogunwuyi, Adebolwale, sodiq (aka shoki),mayowa,onifade jamiu, saka jamiu,
  8. 8. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 8 fumilayo esther,mariam,Reshidat salami,segun(my 001), Abiodun (biomight),Yusuf Ajide, Mathew Akande, and many more. Lastly, I ‘m using this opportunity to thank all well wishers whom their name could not appear due to lack of space and also pray to Almighty Allah continue to assist us all (Ameen)
  9. 9. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 9 TABLE OF CONTENT Title Page i Certification ii Dedication iii Acknowledgement iv Table of Content v CHAPTER ONE 1.0 Introduction 1 1.1 Background Of The Study 1 1.2 Statement Of Research Problem 2 1.3 Research Question 3 1.4 Objective Of The Study 3 1.5 Research Hypothesis 4 1.8 Significance Of The Study 4 1.9 Scope Of The Study 4
  10. 10. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 10 1.10 Plan Of The Study 4 1.11 Definition Of Terms 5 CHAPTER TWO 2.0 Literature Review 7 2.1 Historical Background Of Taxation In Nigeria 7 2.3 Concept Of Personal Income 13 2.4 Relief Available To An Individual 16 2.5 Minimum Tax 18 2.6 Table Of Personal Income Tax Rate 18 2.7 Method Of Assessing Personal Income 19 2.8 History Of The Current Tax Reform 23 2.9 Problem Of Personal Income Tax In Nigeria 30 CHAPTER THREE 3.0 Research Methodology 40
  11. 11. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 11 3.1 Introduction 40 3.2 Research Design 40 3.3 Sources Of Data/Method Of Data Collection 40 3.4 Statistical Techniques 40 3.5 Population And Sample 41 CHAPTER FOUR 4.0 Analysis Of Data Presentation Of Finding 43 4.1 Introduction 43 4.2 Analyzing Of Data Base On Research Questionnaire and Hypothesis. 43 4.3 Testing Of Hypothesis 52 4.4 Interpretation Of Result 54 CHAPTER FIVE 5.0 Summary, Conclusion and Recommendation 55 5.1 Summary 55 5.2 Conclusion 56
  12. 12. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 12 5.4 Recommendation 58 References 60
  13. 13. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 13 CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUD OF THE STUDY In the conceptual framework of economics revenue is describe as the aggregate amount of income of the government within a financial year. Government all over the world as numerous source of revenue to meet theirs constitutional obligation to the masses and one of the prominent source being taxation. According to ALATISHE 9(2008) taxation is describe as a form of compulsory levy imposed by the government on the people ,corporate bodies, goods and services in other to finance its (government) expenditure and create condition for economic well being of the society. Dalton (1997) define taxation as “a compulsory contribution imposed by a public authority, irrespective of the exact amount of services rendered to the tax payer in the return and not imposed as penalty for illegal offences. However, because the complexity of tax system as to the tax policies, tax law and ministration .the tax system was reorganized at both federal and state level for easy collection of tax ,effective administration ,voluntary compliance by people and to reduce tax evasion .This given raise to the establishment of federal inland revenue service (FIRS) and state broad of internal revenue (SBIR) at federal and state level respectively. The personal income tax is the most prominent source of internally generated revenue of the state which is received through PAYE system. The PAYE system (pay as you earn) is a situation where by a legally specified fraction is deducted from the total income of an individual by the employer at the point of preparation of the employment and their remit to the aggregate amount to the state board of
  14. 14. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 14 internal revenue services and attached it with the list indicating the employee on a monthly, weekly basis, in a modern day economy, government constitute the largest single business entry,so therefore Everyone lies on the government for the provision of most of the public amenities which bring better life with high standard of living to the masses. However, the social facilities including the motor able road pure drinkable, constant electricity supply, functional and educational system, ensive social goods etc. Among other provided by the government comes from personal income tax (mostly of people in employment which in return reduce their tax home) so therefore ,all effort made by government to maximum generated revenue the greatest income but pays stall of tax avoidance and tax evasion which as a result have a negative universe on the income/ revenue to the generated by the government which is to be redistributed Tax payment is therefore part of price to be paid for living in an organized and orderly society, if this not done , the miscreant produce of through inequality irritation to the well being of those who even have. A system of taxation carry (even slightly ) from country to other country because it is a sociological and economic model representing society social .Because of this Nigeria tax system is dynamic and is continually changing to meet the needs of the constituent of the society. 1.2 STATEMENT OF RESEARCH PROBLEM Generally, citizen find the it very difficult to give some proportion of their earning to the government when tax mostly in a country like ours(Nigeria) when political instability on the fact that government is an unknown abstract and such not their business rather it is the concern of certain imaging citizen.
  15. 15. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 15 In this aspect , therefore taxation become difficult to comply with since it involve giving out a percentage of ones income to the government consequently, upon that the problem inherent in PAYE system of taxation include the following:- 1, Reluctant of self employed to come forward to declare their income to the authority for assessment 2, Hostile attitude of some rural tax payer to the tax agent 3, Inability of some employer to remit deducted taxes on time to the tax authority. 1.3 RESEARCH QUESTION i. i, How does the establishment of joint construction forum between the representative of rural dwellers any help to the parties involved. ii. How does personal income tax contribute to economics development in Nigeria? iii. Can new system (computerize tax collection system) solve the problems of tax evasion iv. Does PAYE system serves as the highest medium revenue generated for the economy 1.4 OBJECTIVE OF THE STUDY The main aim of this study is to assess the impact of personal income tax on revenue generation in Nigeria. Other specific objectives are to: i. I, determine whether personal income tax contribute to economic development in Nigeria. ii. Examine whether new computerized tax collection system has help to solve the problem of tax evasion. iii. assess whether PAYE system serves as the highest medium of generating in Nigeria.
  16. 16. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 16 1.5 RESEARCH HYPOTHESIS The hypothesis of these study are: Ho: the paye as you earn (PAYE) system of taxation does not generate the highest percentage of revenue for the state government. Ho: the new tax collecting system does not curb the problem of tax evasion and tax avoidance. 1.8 SIGNIFICANCE OF THE STUDY The significance of this research is in fact that it will reveal the highest percentage of income generated by the government through personal income tax. The study will also enable tax collector to know how to prevent tax avoidance, tax evasion and the effectiveness of the new collective system (computerize tax collecting system). Furthermore, the study will server as a reference material for both scholar and student who may want to research deeply in to the effectiveness of personal income tax . Finally, it will give the tax payer knowledge how their money (tax paid) is been utilize by the government. 1.7 SCOPE OF THE STUDY This research work is on the impact of personal income tax on revenue generation in Nigeria, a case study of Lagos state board of internal revenue (LSBIR).it is a very wide and important field of study .Therefore, scope of the will be limited to Lagos state board of internal revenue Agege revenue office 1.8 PLAN OF THE STUDY The study covers five chapters, where chapter one comprises of the introduction, background to the study, statement of the problem, research question, objectives
  17. 17. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 17 of the study, research hypothesis , significance of the study and scope of the study, definition of key terms and organization/plan of the study. Chapter two discussed the literature review, historical background of taxation , genesis of taxation, evolution of personal income tax legislature in Nigeria, concept of personal income tax, sources of income generated by the state government through personal income tax, classification of income, table of income from investment, non taxable income from employment, unearned income, relief available to an individual, PAYE system, history of the current tax reform, significance of taxation and the new adopted tax clearance by Lagos state government. Chapter three deals with research methodology, research design, source of data, statistical technique, research tools, sampling of population and limitation of the study. Chapter four is base on data presentation, analysis and interpretation, test of hypothesis, and interpretation of result. Chapter five comprises of summary, conclusion and recommendation and reference to the study. 1.9 DEFIINITATION OF TERMS i. Direct tax:- this is a tax imposed in every individual and cooperate bodies . such tax include personal tax ,company tax ,capital gain tax, capital transfer tax etc. ii. Employee:- is a person in employment of another person (employer)to either as clerical officer or as the contract may applied. iii. Indirect tax:- the tax is imposed on goods and service produce locally or imported such as import duties ,export duties, mineral royalty, airport tax, value added tax(VAT).
  18. 18. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 18 iv. Paye:- is system when a certain amount id deducted from employee salary at the point of emolument . v. Person in employment:- this is a taxable persons under personal income tax. Is a person working or rendering service in establishment but different from his own. vi. Self employed:- this is regarded as a sole trader who set up his own personal trade or business. vii. Revenue:- this is a total amount generated by government as income . viii. Taxation:- this is a mandatory levy imposed by the government on every individual and corporate bodies in order to finance government expenditure.
  19. 19. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 19 CHAPTER TWO 2.0 LITERATURE REVIEW 2.1 HISTORICAL BACKGROUD OF TAXATION IN NIGERIA At the beginning of human occupation of this planet of earth men lived in a small roaming bands food gather and family were free from tax. It was what men learned to plant grain that the situation of land ownership develop. The land ownership organized themselves in to communities in self defense predatory animals as a contribution to comfort their community. This lead to the transfer of authority in the expected remuneration ,which was paid inform of goods “ISAKOLE” to the chief and consequently develop to “TAX” which was later imposed on the member of the community for the support. With the admit of the year and subsequent growth of communities, there emerged a class of land owner demanding their tax from the number of communities .And as civilization became more and more complex so did the tax changes that were paid to the chief and landlord; landlord .Subsequently as the ruler became greedy for powers therefore they imposed so heavy tax which a man often paid with his labour and still when currently was scare commodity. Today, the complexity of taxation system comes in the form of licensed ,sale taxes(value added tax), withholding tax ,road tax ,and above all is the prominent tax which cause concern to the ordinary citizen of a country which is “INCOME TAX”. 2.2.1 GENESIS OF TAXATION Prior to the unification of southern and northern system as it is suited the local people was already in operation in the northern originating under the regime of the “Fulani Emirs in the pre colonial days.
  20. 20. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 20 As the colonial government is firmly rooted in the country the needs for adequate financial resource for the smooth administration of the colonies become manifested .This spread the colonial government headed by Lord Lugard in to imposing tax on the people having discovered the natives in the north at that time ,the government merely modified the system in order to suit the colonial purpose .According to OVE (1963) , on the other hand ,define tax system in the south ,particular the east.The government therefore had to extend the same modified system to enactment of the native ordinance act to the give the action a legal backing according to Ola C(1971) .The original internal revenue department during that period and membership drawn from the following areas. a) Head of the department known as the “resident” was appointed by the government general to be in charge of the overall administration of the department b) Village head, chief alders, and other prominent and influential person in the district from the villages such as cattle taxes from the rural tax payer and semi-urban dwellers. Penalty were imposed on the appoint agent for non accountability of taxes collected ,also a time of (#400) four hundred naira or two years imprisonment or both was imposed on tax evaders. A lot of benefit were derived from the engagement particularly in the appointment of indigenes to server in the actual collection of taxes within locality could find it very convenient to perform. This is because name of taxable adult in the area were known to them. Secondly most importantly the incidence of murdering tax against agent by tax payers in one way or the other may be related on the other hand, if such atrocity
  21. 21. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 21 were been being committed the murder would easily be identified and appropriate punishment would be melted out by the community. The system however, had some draw back as prominent against the agent and the local chiefs is using the opportunity to motivate their enemy even it seems obvious that could not afford tax were been harassed by the agent. Evenly, the system became achieve and had to be abolished some year after the country attained independent in 1960. With the increase in paid employment many taxes payer got drawn in to the government .But the problems of late or non remittance of deducted tax by the employers. Any system which the government want to device should have a monitor scheme to check the excess of some enforcement by the state administration, COL.OGUNSOYE OYINLOLA during his tenure emphasis that carriage of tax card by the taxable citizen of the state will soon be developed by this method , a good member of taxable adult will be trapped in to the system ,enough control measure to check the excess of some inscription tax agent should be put in place. Also during one of the new employee broadcast on radio Nigeria on the night of every February some years back, titled state government and revenue generation efforts. The important of state creation is to bring government nearer to the people. The multiplicity of the state government and their revenue to meet their obligation to the people caused the ability of the federal account to satisfy all the financial needs of the state government present the greater percentage of tax return to government is mainly from pay as you earn (PAYE) deduction and statutory corporation .However ,the benefited taxes from self employed taxable citizen of the state is yet to be realized.
  22. 22. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 22 2.2.2 EVOLUTION OF PERSONAL INCOME TAX LEGISLATURE IN NIGERIA Nigeria was under the colonial rule until 1960 when it become an independent country. Before independence, the colonial rulers treated Nigeria as an extension of British territory applied the British tax legislature to Nigeria. It was Lord Lugard ,the government general who first introduce income tax in 1904 in the northern Nigeria when community tax became operative through the revenue ordinance of 1904. Native revenue of 1917 reflect changes to 1904 ordinance in 1918, provision of 1917 ordinance was amended and the extended to southern Nigeria ,first to Abeokuta in western Nigeria and to Benin city in mid- western Nigeria and the extended to eastern Nigeria in 1928. The provision of native revenue ordinance has accepted by the government relating to income tax, was the basis of section 70 of the Nigeria (constitution) order in council 1960. After registration ,a registration is given that will be quoted correspondent and dealing with the tax authority. From G tax remittance card to used in card remittance issued to employer with the registration , an employer is now authorized or empowered to deducted tax from employee at source and to remit the tax so deduction to in kind revenue. The organization will be required to file annual return on the prescribed form H2 and used the tax deduction card form F3 for each employee. All employee are expected to complete , once in a year ,the return of income forms, this can be filed directly by the employee or through the employer . Allowance and the chief due to the employee are computed by the form. The lnland revenue is free to question any information supplied if not satisfied . The
  23. 23. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 23 total allowance are then divided in to 12 equal part in order to determine monthly tax –free pay, these are entered in tax deduction card, which is then send to the employer along with the total fee pay. Usually, at the end of each assessment year , the taxable are used to ensure that the correct amount of tax has been deducted ,where there is over payment of tax, the excess of refund while any short fall or under payment of tax is recovered, through it tax was imposed upon the total income and or through assessable income of native resident in the township of Lagos and non-native resident in Nigeria. A more progressive income tax ordinance NO 29 OF 1993.CAP.92 under which Europeans all over the country and African resident in Lagos were assessed came in to operation on 1st of April 1945. In 1954,Nigeria became a federation of three region. North ,East, and West by the Macpherson constitution there three regional jurisdiction of the personal income of Africans the eastern region passed the finance law NO 1 OF 1956 by which people above aged 16 were to be assessed to tax. The western region followed suit passing its own “income tax law” to place the direct tax ordinance in 1956.The northern region on its own passed northern Nigeria personal income tax law in 1962. The Nigeria tax ordinance of 1943 remained in force in the federation territory of Lagos until 1961 when the personal income tax(Lagos) Act (PLTA) was enacted by the local government. The root of the present law of personal income tax in Nigeria can be traced to the fiscal commission set up in 1957 which considered of SIR Jeremy lies man as the chairman and professor L.C tress as member .The purpose of establishing the
  24. 24. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 24 commission was to examine the jurisdiction and purpose of various tiers of government in Nigeria independence. The recommendation of the commission was discriminating in its application. It applied to “native” in Nigeria elsewhere than in the township of Lagos .The original Inland revenue department or those who determine the taxable income where:- a) The resident officer appointed by the governor general to be charger of the administration and with any other administration officer than resident officer . b) Chiefs ,Elder and other persons of influence in each district. c) Any native authority, which by native law and customers was recognized as the tax collection authority. d) A village council, district head and other suitable or group of persons appointed by the governor. The history appointed by the personal income is in complete without the due consideration to he role played by local government or native administration as they were then called . Personal income tax, as now known in Nigeria, was first name of direct tax. Under the direct taxation ordinance 1940,the assessment on collection of tax was the primary responsibility of the native administration throughout the country and the tax so called was their chief course revenue. The direct taxation on ordinance was a poll tax, the assessment and profit of all natives residents in the protectorate and elsewhere other the township of Lagos.
  25. 25. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 25 Income tax ordinance of 1943 was an administer of poll tax and income tax. 2.3 CONCEPT OF PERSONAL INCOME TAX TAXABLE PERSONS Person liable to personal income tax means any individual or body of individual including family or any corporation sole(sole trader),trustee or executor having which is chargeable to tax under the provision of personal income tax(PITA). 2.3.1 SOURCES OF INCOME GENERAATED BY STATE GOVERNMENT THROUGH PERSONAL INCOME TAX. 1. Employment: - this is an income generated by the government on an employee through pay as you earn system. 2. Professional or vocation ;- it is an income generated by any professional services such as (accounting services, legal services) etc, or any vocation set up to make profit. 3. Investment :- any return generated investment is subjected to tax and become sources of income to the state government. 4. Pension and annuities ;- since all income generated from employment is subjected to personal income tax, then pension and annuities is subjected to tax and become sources of income to state government. 5. Trade and business :- this is an income generated from trade and business by the proprietor or a firm from a trade activities and which is subjected to tax and become source of income to the state government. 6. Royalty and rents :- this is a return from the property of government (such as oil, palm, sea, building etc) which is been used by private firm.
  26. 26. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 26 2.3.2 CLASSIFICATION OF INCOME Income may be classified under two (2) groups which is follows:- 1. EARN INCOME:- these are income derived from a trade, business, profession, vocation or employment carried on or exercise by the individual and a pension derived from previous employment. 2. UNEARN INCOME:- these is derived from other source not include in earn income sources .They are mainly income from investment e. g dividends, investment, royalties, partnership income of a sleeping partner 2.3.3 TAXABLE INCOME FROM INVESTMENT i. Salaries and wages ii. fees and allowance iii. gratitude paid from employee who are server less than 10 years (prior to 1986 gratuities in private sector who subject to tax ) iv. Gratuities in access of #100,000 300%of employee terminal annual salary v. Bonus, commission, premium vi. Benefit in kind (BIK) vii. Income from employment who duties is perform outside Nigeria and is exempted from tax in the country where the duties were performed. viii. Remuneration from duties wholly or mainly exercise in Nigeria (even if the money is paid abroad) 2.3.4 NON TAXABLE INCOME FROM EMPOLYMENT i. Medical or detailed expenses ii. Re-imbursement to the employee of expenses. iii. Incurred by him in the performance of his duties iv. Leave traveling allowance. v. Entertainment allowance maximum of #6000
  27. 27. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 27 vi. Utility allowance maximum of #10,000.If the amount is received exceed #10,000 per annum the difference is subjected to tax. vii. Meal allowance maximum of #5000 per month, where the amount received is in excess of #5000, the difference is subjected to tax. viii. Touring allowance ix. Gratuity payable to a public officer (with effect from 1996 all gratitude are not taxable ) x. Wound and disability granted to member of armed forces. xi. A sum received by way of death gratuities . xii. The income of any local government or government institution 2.3.5 UNEARN INCOME Dividends, interest, royalties and rent are subjected to withholding tax at source. However such income must be brought in to the assessment of the individual beneficiary at gross through the liabilities of the tax payer. However, with effect from January 1996, withholding tax became a final tax, hence income tax at source will be excluded from the general tax computation. Generally income taxable in Nigeria are those derived accrued or brought to Nigeria. The position has further been changes as withholding tax and is now regarded as an advance payment with effect of 2001 .Interest is deemed to be derived from Nigeria where:- a) There is liability to payment in the Nigeria of the interest, regardless of what form the payment takes and whatever the payment is. b) The interest accrued in Nigeria to foreign company or person regardless of which ever way the interest may have accrued.
  28. 28. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 28 2.3.6 DIVIDENDS EXEMPTED FROM TAX a) Dividends paid out of pioneer profit b) Dividends paid by the issues of bond share c) dividends from small company (turnover less than #2 millions) d) dividends paid by company assessed under petroleum tax e) dividends from company in petroleum and liquefied nautral gas. 2.3.7 CHARGEABLE OR TAXABLE INCOME This is the amount available in the hand of tax payer to be subjected to tax. Its is the net difference between the total income and the relief available to such an individual. 2.3.8 FAMILY INCOME The income accruing to a family may be subjected to tax by the territory in which the member of the family receiving the income are resident where the several interest of the individual member are indeterminable or uncertain. VILLAGE OR COMMUNITY INCOME The basis of subjecting a village or community to tax is to established the total income of all the member, estimate the total income of member whose income is impracticable to assess and the amount of communal income that can not be specifically apportioned to individuals. 2.4.0 RELIEF AVAILABLE TO AN INDIVIDUAL The following relief may be claimed by an individual under the personal income tax decree 1995 as amended to date. 2.4.1 PERSONAL ALLOWANCE This is limited to #5000 plus 20% of earn income, this is be claimed by all tax payer .
  29. 29. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 29 2.4.2 CHLIDREN ALLOWANCE This can be claimed at #2500 per annum per child up to maximum of four children .For the claimed to be successful the following condition must be met:- i. I, the child must not exceed the age of sixteen (16) ii. the child must be unemployed iii. Where the child exceed the age of sixteen he must either be apprentice to a trader or he must be attending a full time education. iv. The child needs not belong to the tax payer. 2.4.3 DEPENDENT RELATIVE ALLOWANCE This is to be claimed at #2000 per annum per dependant for a maximum of two dependant .For the claimed to be successful, the dependant annum income should not exceed #600 per annum must either be windowed or infirm. 2.4.4 LIFE ASSURANCE This is claimed on a life policy take on tax payers life or the life of his spouse. The release to be granted shall be the lowest of; i. the actual premium plus any pension fund contribution ii. 10% of capital sum assured iii. 20% of statutory total income 2.4.5 DISABLED PERSON ALLOWANCE This is available to a disable person who uses special equipment or engage the services of an attendant in the course of employment .The rate allow is the higher of 20% of earn income or #3000 per annum. Note that it is not an alternative to the personal allowance he is entitled to but an addition.
  30. 30. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 30 2.4.6 INVESTMENT IN RESEARCH AND DEVELOPMENT COMPANY ALLOWANCE When can individual invest in the equity of a research and development company, he is entitled to allowance which shall be the lower of; i. the actual value investment, or ii. 25% of the total income . Where the allowance claimed in any year is less than the actual investment, the balance shall be carried forward indefinitely until the investment is recouped against income. 2.4.7 DONATION IN RESESARCH &DEVELOPMENT COMPANY ALLOWANCE Where an individual makes a donation to a research and development company, he will be entitled to allowance which shall be the lower of; i. The actual donation made, or ii. 10% of the chargeable income Where the allowance is lower than the actual donation, then balance is lost as it cannot be carried forward. 2.5 MINIMUM TAX Where the total relief granted are more than the total income, the tax payer is chargeable to minimum tax usually called “guarantee minimum tax” at the rate of 0.05% (1/2) of total income. 2.6 TABLE OF PERSONAL INCOME TAX RATE FROM 2001 FRIST #30,000 at 5% NEXT #30,000 at 10% NEXT #50,000 at 15%
  31. 31. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 31 NEXT #50,000 at 20% ABOVE #160,000 at 25% Between 1995 to 1997 FIRST #10,000 at 5% NEXT #10,000 at 10% NEXT #20,000 at 15% NEXT #20,000 at 20% ABOVE #60,000 at 25% Between 1998 to 2000 FIRST #20,000 at 5% NEXT #20,000 at 10% NEXT #40,000 at 15% NEXT #40,000 at 20% ABOVE #60,000 at 25% The new rate based on personal income tax amendment Act, 2011. First #300,000 at 7% Next #300,000 at 11% Next #500,000 at 15% Next #500,000 at 19% Next #1,600,000 at 21% Next #3,200,000 at 24% 2.7.0 METHOD OF ASSESSING PERSONAL INCOME 2.7.1 PAY- AS –YOU- EARN (PAYE) SYSTEM Taxation of employee is carried out under the pay as you earn system .The basis period of assessment is not actual year basis but operated on monthly basis throughout the year. PAYE is a scheme whereby employee income are deducted
  32. 32. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 32 in source by the employer and remitted to relevant tax authority within 14 days after the end of the month. All employers with 5 employees and above are expected to register with relevant tax authority. Incident of tax evasion is not only reduce under the PAYE scheme, a scheme constitute a very efficient method of colleting tax without unnecessary administration burden for the tax authority. The following have been identified as problem associate with the PAYE scheme:- i. Employers go through many difficulties in implementing the scheme without compensation from the government. ii. Incompetence of some employer in handling of the scheme iii. Fraudulent handling of the PAYE scheme by some employers HOW PAYE SCHEME OPERATES Employer either applies in writing to the authority of the intention to operate the scheme or the local tax officer in the course of existence of the business in the area bring the issue to it s attention. The relevant tax authority will then issue a notice authorizing the employer to deduct the tax at source information normally demanded from the employee before registering the company as an operator of PAYE scheme includes:- i. Name of the employer and the certificate of incorporation ii. Name and other relevant information about the employees. DEVELOPMENT OF PAY –AS-YOU-EARN IN Nigeria During the period of three regional government with the company was segmented in to northern, eastern, western regions and the federal government bring the income tax administration to four different fields. The federal board of inland revenue department is charger taxation of all incorporation companies while the regional government are responsible for the
  33. 33. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 33 taxation of individual tax resident but the responsibilities for the formula general guidelines of tax structure throughout the federation lies with the federal board of inland revenue department, hence, the services is responsible for the design and printing of tax forms among government enacted the income tax management. The first region to commence the pay as you earn system of taxation was the eastern Nigeria during the earlier stage of the system only a small percentage of employee were involved .The reason were because the number of people in where offer government was Nigeria negligible. The administration of system went thus the employer would go to tax card of this employee with amount duly deducted from the their emolument as the employer pay the employees the election machine would print the record of payment on to the card, when can employee changes his/her place of work, the card move along with him, this system work perfectly because the number involve was small. Following the eastern region in order to introduce the system at April 1901-1962, the western region two rated was applied to the income less than or equal to three point. Similarly some earning below four hundred pounds in the north uses the PAYE system, comparing to the rate of taxable employee to taxable self employed one would expect that a large proportion of government revenue would come from the self employed people but on the country the revenue from the direct assessed personal tax is disappointingly low. MERIT AND DEMERIT OF PAYE SYSTEM TAXATION As the name implies, pay as you earn is based on earning, merit and demerit must be examined for the point of view of both individual and government, for the individual the system enable him to perform his/her
  34. 34. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 34 responsibilities , in a system where all most every transmission require evidence of tax payment there by making responsible citizen. TO TAX PAYER Although, the money realized from taxation is used to provide social facilities to the public (including the tax evaders). However, the tax payer has no control over how much is to be deducted over tax that is because as an employee, there are four items expecting to be qualified as an expense but are disallowed, also working taxpayer borne the tax that is supposed to be paid by self employed, taxable adult, who are tax evaders as the income of the self employed is subjected to heavily taxation. TO THE GOVERNMENT The government whose major source of fund for financing its social obligation is income tax, see the system as an easy way of collecting tax, also it is economic, as the cost of collection is reduced. While the government hails itself for generating more revenue through the method of tax collection it has to content its critism. From working populace who pay rates of tax to their employer, who will slow the exact amount of tax deduction by the employed as a tax collection. However, shortly after independence on October 1st 1960, the rate of paid employment increase automatically thus making the old system of administration, PAYE system by various system should be cumbersome and arctic, then the need for uniform structure to be applied throughout the country aroused. Hence, the federal government provide the income tax management, act (ITMA) in 1961 and signed the PAYE system for administering personal income tax for individual member of public which include the organized private sector employee and public servant and civil servant .
  35. 35. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 35 According to Adam Smith “wealth of nation” it says the key stone of the system of income tax collection is deducting at the source (PAYE system). The systems make it possible for installment payment of tax and also indicate a tax payer collection on monthly. 2.7.2 DIRECT ASSESSMENT OF TAX The other method collecting personal income tax is through direct assessment by tax officials. Under this method, the tax payer deals directly to the tax authority in a assessing the personal income by filling the necessary form required to obtain. 2.8 HISTORY OF THE CURRENT TAX REFORM The current tax reform process commence on August 6, 2002, after series of proposal forwarded by an institute to the federal ministry of finance. Study group was eventually inaugurated to examine the tax system and make appropriate recommendation to the government, on way to entrenched a better tax policy and improve tax administration in the country. It is instructive to note that the study group on the review of the Nigeria tax system was inaugurated with the following terms of reference:- i. To reposition the FRIS for greater effective and efficiency in meeting the demand revenue of government ii. The administration objective:- All aspect of capacity building at all level of tax administration, such as managerial and technical skill development, career path that are intended to attract and retain high quality of staff. Modern organization structure that is tax payer focused on and IT driven. iii. Improved integrity and ethical standard iv. Reasonable financial and administrative autonomy.
  36. 36. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 36 v. Protection of the tax payer right through professionalism payer education vi. Fear hearing and adjudication of cases and prompt refund mechanism other reason include vii. In most economics, tax is major source of income for national development while the contribution to total revenue in Nigeria is still lower than the desired especially with regard to non-oil taxes. viii. To achieve other fiscal objectives and improve services delivery to tax payer. ix. Expand the tax net x. More service –education, consulting, counseling etc . xi. Linkage to (CAC) other stakeholders. xii. Improve policy regime xiii. Scope of tax exemption/wavers xiv. Build the FIRS institution xv. Right selection / posting of staff xvi. Right system xvii. Right controls xviii. Formulate a national tax policy. A comparative analysis show that of references of the 2002 study group was broader in scope than that of 1992 set up by the government, in that while, the letter exercise covered the review of direct tax and jurisdiction of federal and state revenue service, the 2002 exercise was more comprehensive as it cover the entire garment of taxes at federal, state, and local government level. In all about 39 taxes as fees including 8 federal, 11 state, and 20 local government taxes and capture in the taxes were thoroughly appraised by the group consequent upon which study
  37. 37. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 37 recommendation were made to the federal government, some of its recommendation includes:- i. Nigeria to have a 24 clause of national policy ii. Complication of register of individual and corporate tax payer and also issuance of smart tax identity card for all tax payers. iii. Raising of the threshold of personal income tax free allowance for a single bulk of 40% of assessable income and the highest and the highest income rate should be 20%. iv. Limitation of special tax incentive such as tax holidays and import duties waiver to only industries located in rural area, fully export oriented industries solid mineral production companies and oil and gas operation. v. Reduction of company income tax rate to 20% from the rent rate of 30% vi. A company should make profit before exposed to company income tax in any year of assessment. vii. Speedy constitutional amendment to confirm the legality of value added which should be share among states after 30% had been deducted as part of its administration cost nationwide. viii. Local government should permanent rate and capitation rate and other clear cut charge for services directly beneficial to the citizen only. As noted above, Nigeria tax law is purely statutory, thus the need for the amendment. The benefit of the new tax authority of government recently pass by national assesmbly of federal republic of Nigeria and sign by President Goodluck Ebele Jonathan, under the current amendment to the
  38. 38. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 38 provision of personal income tax acts, cap p8.LFN 2004, the following section were amended as follows:- 1. Section 2 ”collect” in the marginal note since state of the federation do not have power to imposed income tax but only collect. 2. Section (2)c the phase ‘’or any other act’’ is deleted because an amendment to a section cannot override another exiting Act. 3. Section 2(8): amendment of section 2(8) is to include ‘’ benefit in kind” as part of emolument . 4. Section 3: amendment of section 3 is to make temporary causal worker pay tax on their endowment. 5. Section 10: amendment to entire section 10 is a new insertion of a loophole exploited especially be expatriates. 6. Section 33: amendment to section 33 is to increase the threshold and to consolidate all the relief. 7. Section 33: amendment to section 33 is a new insertion to introduce a presumptive tax regime to bring in those in the formal sector to the tax net. 8. Section 37: amendment to section 37 is a new insertion to increase the minimum tax rate from 0.05% to 1% since the threshold has increase from #30,000 to #300,000 conformity with the tax table in the schedule to the bill. 9. Section 38: amendment to section 38 by substituting the double taxation agreement with avoidance of double taxation agreement and to provide for ratification by the national assembly before any treaty can come in to effect.
  39. 39. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 39 10. Section 44: amendment of section 44 is the strength of self assessment procedure empower the ministry to come up with regulation giving self assessment. 11. Section 47: the new insertion in the section is to enable labour to provide information about their members. 12. Section 52: amendment to section 57 is to introduce spate and stiffer penalty for corporation body. 13. Section 57: amendment to section 57 is to make carrier services and electronic made valid means of delivering assessment notice. 14. Section 60: amendment to section 60-67 is to repeal body of appeal commissioner consider not active and allow appeal to go to tax appeal tribunals established under section 59 of federal inland revenue service (establishment).Act 2007. 15. Section 73: amendment to section 73 is create a refund mechanism. 16. Section 74: amendment to section 74 is to make penalty for non- remittance stiffer and to given the accountant general power to deduct if un-remittance taxes at sauce. 17. Section 85: amendment to section 85 is to strength TCC and provide for time for failure to demand TCC. 18. Section 86: amendment to section 86 is to strength joint tax board, by making the chairman of state board of internal (SSIR), member of joint tax board. 19. Section 87: amendment to section 87 is to make a position of chairman of SBIR more professional.
  40. 40. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 40 20. Section 88: amendment of section 88 is to provide for cost of collection and administration to SBIR at 5% have been recommend since some get 10% presently. AMENDMENT OF THE SIXTH SCHEDULE The principle act is amended in the sixth schedule by substituting the existing sixth schedule for the following new sixth schedule as follow “SIXTH SCHEDULE’’. Income taxable A consolidated relief allowance shall be granted on income at a flat rate of #200,000 plus 20% of gross emolument ( total amount of earn income of that individual). TAX EXEMPT The following deduction are tax exempt i. National housing fund contribution ii. National health insurance scheme iii. National pension scheme iv. Life assurance premium v. Gratuities After the relief allowance and exemption has been granted in accordance with paragraph 1 and 2 of this schedule, the balance of income shall be taxed as specified in the following tax table. TAX INCOME RATE Graduated tax rate with consolidated allowance of #200,000 of gross emolument, subject to a minimum tax of 1% of gross income whichever is higher, as follows: i) First N 300,000 @ 7 % ( Seven per cent)
  41. 41. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 41 ii) Next N 300,000 @ 11% ( Eleven per cent ) iii) Next N 500,000 @ 15% ( Fifteen per cent ) iv) Next N 500,000 @ 19% ( Nineteen per cent ) v) Next N 1,600,000 @ 21% ( Twenty one per cent ) vi) Above N 3,200,000 @ 24% ( Twenty four per cent ) SUMMARY OF THE AMENDMENT i. Removal of pension from chargeable income ii. Replacement of relief and allowance with consolidate ones. iii. Deletion of various obsolete provision iv. Replacement of federal civil service with joint tax board as appointing authority for secretary to joint tax board (JIB). v. Inclusion of courier service as well as electronic mall as means of serving assessment. vi. Amendment to interpretation and other relevant selection of the law relating to income tax table. vii. Increase in penalty rates for violation of Laws. viii. Provision of power to the minister in making regulation for the administration of the act. ix. Provision relating to person eligible for appointment for chairman of SBIRS. x. Provision relating to obtaining and verification of tax clearance certificate (TCC). xi. Provision make the president, vice president, general and deputy governor to pay tax on their official emoluments.
  42. 42. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 42 xii. Accountant – general of the federation now have power to deduct at source unremitted tax and remit to SBIR. 2.9.0 PROBLEM OF PERSONAL INCOME TAX IN NIGERIA It has long evident that personal income tax in Nigeria has remained the most unsatisfactory, disappointing and problematic of all taxes in the Nigeria tax system today. This is in spite of the fact that the tax reform has a recent been a key element in economic reform which the country had undergone. It is therefore felt that personal income taxation in Nigeria today require radical handling tom ensure that a large chunk of taxable population in Nigeria does not escape tax. Personal income tax in Nigeria is closely to what the government to the peace of development and growth of the economy. AN effective tax system ought to satisfy the twin purpose of raising maximum revenue and at the same time encourage production. In an effectively managed tax system, the two purpose are not irreconcilable provided of course that the beneficial effects of government expenditure and incentives for production exceed the unFavourable effect of taxation. An effective tax system, aside from maximizing revenue for development, ought to, if well structured and managed elicit a feeling of common purpose joint responsibility or obligation amongst the taxable persons in a country. TAX COLLECTION THE PROBLEM OF TAX COLLECTION The assessment and collection of personal income tax from taxable individual shave been difficult in this country. There is apathy not only on the part of the educated but also the uneducated. While the illiterates refuse to pay because they are unaware of the purpose of taxation and therefore regard a tax collector or rather a tax officer as an instrument of oppression, the rich ones refuse because
  43. 43. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 43 they are not encouraged not only by the Government which wastes taxpayer's money on white elephant projects but also by the tax official who lives above his means. Having suggested that tax collection is one of the fundamental problems in income tax administration, the question then is how can this problem be surmounted ? While some have advocated a more positive role for the Joint Tax Board to tackle the problem emanating from tax collection, others have suggested an enlargement of the tax base to include other sources. In the rural areas for instance, it has been recommended that an innovation where the Obas, Obis, Emirs, Chiefs and heads of the various communities and towns would act as official tax collectors on behalf of the Government should be adopted. The call for the hitherto forgotten traditional methods of tax collection may have some merit especially with regard to rural peasants who are self employed. If adopted, a lot of revenue from rural areas will accrue to the government. That apart ,such an innovation would go a long way in solving the problem of absence of adequate structure and organization of the body charged with the responsibility for assessment and collection of income tax. But before venturing further, it is important to again clarify the fact that personal income tax deals with direct taxation, and as such the citizens who fall under the direct assessment are the self- employed and workers who come under the PAYE (pay as you earn) system of tax. It is thus important to note that the problem of tax collection lies more with the self employed rather than those under (PAYE). Thus, the self employed is difficult to pin down. Where he is skillful and manipulative or has the services of a knowledgeable tax lawyer, he may devise or arrange his financial affairs so as to avoid or reduce the appropriate tax payable under the circumstances". Thus the problems of tax avoidance and evasion are
  44. 44. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 44 more common with the self employed such as, distributors of manufactured goods, petrol dealers, contractors, doctors, and lawyers and other professionals in private practice ,rather than those that derive their income from rents, dividends, interests, and properties. Generally, these are obvious and perplexing difficulties inherent in the assessment of the self-employed to tax. The reason is not far-fetched. The direct method of assessment requires the self employed to collected return of income form ,fill and submit to the relevant tax office. This method, it is submitted is subject to abuse, for, it provides the tax payer the opportunity to under-assess his income due either to the inherent loopholes in our system or the manifest dishonesty and disloyalty of most self-employed tax payers. Moreover, the level of voluntary compliance amongst the category of tax payers is abysmally low. 2.9.1 NEED FOR EFFICIENT TAX ADMINISTRATION A tax administration is the whole organizational set-up for the management of the tax system. The tax administrative set-up is a department of government and of course works under regulations prescribed by tax legislation. Tax administration is the process of assessing and collecting taxes from individual and companies by authorities in such a way that correct amount is collected efficiently and effectively with minimum tax avoidance or tax evasion. The broad objectives of a tax system is to guarantee the long-run fiscal soundness of the policies and programmes of government while the purpose of tax administration is to fully implement the tax system, that is, to ensure that tax payers comply with the provisions of tax laws and that the funds derived from tax source are paid into the government purse.
  45. 45. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 45 The most important need for any government that intends to realize the minimum revenue from taxation is to established an efficiency means of collecting tax as the government as a whole depend solely on the availability of adequate financial resources to provide all the public goods. It became comparative that the government that expand all effort instituting efficient tax collection. This lead us to review of RABIU S.A (1981) page 27 that “every national government at one time or the other is concern about it revenue stricture and the efficient of its tax administration. The important drawback to establishment of efficient tax administration is that good number of large uniform citizen do believe that the government has enough money to provide these amenities after all, Nigeria is rich in petroleum, therefore there is need for tax authority to educate the masses about the fact that the greatest revenue of government come from personal income tax. The attitude of some officials help to increase the evasion tax by people, how can one explain a situation where by the internal revenue officials would invade the rural communities that have not get any visible government presence. It becomes very difficult to convince such people to pay tax that will be embezzle by government officials. Approach of many taxable adult particular in the rural area to tax is all over his face, his who later divert it in to their private purse. The board of internal revenue performs the following basis function:- A, Undertaking the proper assessment of the total taxable population . B, Ensuring effective and optimum collection of taxes assessed. C, Carrying out proper accounting for the taxes collected in the manner to be prescribed by the commissioner of finance. Analysis the function of the board, it became clear that the primary aim of any revenue department is assessment which start from estimating the total
  46. 46. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 46 number of taxable population from time to time, means that an annual determination of total number of persons liable to assessment during a financial year is largely link to a regular review of a taxable population. According to Professor R. H WRITTAM in Rabin S . A (1981) page 27.The accounting function has two prospective .The first types of accounting function as a situation where tax is paid to agent who in turn pay collection to revenue officials, the later then pay to the government treasury and therefore reconcile, the account with reassure officials. Here the problems of prompt and correct accounting to the treasury became obvious. The second type arise from situation where the tax payer pay directly to the treasury. In this case, the reconciliation account is done with the treasury . Lack of proper and accurate assessment makes it difficult for the government to estimate the assessment. Government should establish a policy where by tax assessment from a given out to usual and prospective tax payer on annual basis. The effort of government to achieve a reliable assessment as some problem militating against it. Such problem include general apathy of most self employed effective and the low degree of awareness of civic duty by employed taxable adults, while the people allow the government officials of fraudulent practice, in the other hand contributed to the problem working against the system. Some tax payer after paying taxes and issue with tax clearance certificate give the certificate to friends and relative for their presentation of demand to the tax agent. The practice debus government the fund which could have been realized from the these people, consequently upon the fraudulent practice, the tax drive cooperation show your tax clearance system was established .
  47. 47. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 47 2.9.2 SIGNIFICANCE OF TAXATION AS A MAJOR SOURCE OF REVENUE TO THE STATE GOVERNMENT. Tax as a major source of revenue in Nigeria content calls for greater attention in both state and federal government budget. The tax collected from all source comes back to tax payers in form of social amennties provide for them. Income tax has definitely private sector depending upon weather the policy of the government is gingered towards discouraging or encouraging such companies. It reduce the net return on investment and also decreased balance available for unnecessary private saving. Taxation is an all-pervading subject which affects the lives of nearly everybody and no major accountancy or legal problem can be satisfactory sowed without consideration of it tax aspect. The state government in addition to its federal allocation (Federation account) from the federal government has many independent source of internally generated revenue. The viable sources here is the personal income tax; previous study has confirm the fact the largest percentage of the state government revenue comes from the personal income tax via the pay as you earn sources. The source of internal revenue has therefore become the most reliable revenue of the government. Hence the state annual budget rules to very large extent of revenue from the personal income tax re-organize the important position of this source of revenue. OLA.C.S declare that; Income tax is ones of the major source of revenue of all government in Nigeria and its is factor to be reckoned with both state and the federal government budget. The national revenue collected taxes from the citizen on behalf of the government are used to provide public amenities characterized by their indivisibility and application of exclusive principal.
  48. 48. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 48 Therefore, all the tax collected if judiciously and prudently utilized come back to tax payer and non-tax payer alike inform of all these seasons motor able road, drinkable water , constant electricity supply, efficient education system, decent and safe foot bridge (pedestrian bridge) across all multiple carriage motorways etc, boast their activities of the cooperate bodies that is liable to pay tax , the federal government uses tax income management act to discourage or boost their activities, if the tax rate are increased , the net return on investment and balances available for private saving will go down. Simon .H.C. (1993) page 41 quoted. Taxation is a proper means of monitoring inequality and instrument of economic control”. The government with the society native of infrastructure and development with his lack of fund and regular basis to satisfy the appreciation of the people sees tax and other fees collected from the people by various level of government as the inevitable sacrifice of the people to the development of the nation. However, the success of the system (PAYE) largely depend on efficiency assessment which can only be achieve through correct evaluation to declare income. However, if taxable individual declare false income to tax authority, it will reduce the rate of source provide by the government even though these under PAYE system when given the opportunity to choose either to pay tax or not will avoid tax as even the public service employee and organized private sector company find one way or the other to evade tax. One of the strategy tax evasion arise as a result of one provision of civil service rules which require the civil servant to engage in private business and therefore refuse to declare the acquire income because of fear of contradictory government order.
  49. 49. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 49 Despite the increase in the number of employee under the PAYE system who boene the body over tax , naturally see the system as not only inequality by highly discriminating. The PAYE system also encourage tax evasion through compulsory information that are spread thus leading to efficiency implementation and consequently shortfall in revenue generated. Some employer of labour through PAYE system whom the tax of remittent rest upon also constitute to the problem by not remitting the deducted tax in time and other to increase their cash at hand at that point in time and consequently denying the government the needed fund for their services. 2.9.3 NEW ADOPTED TAX CLEARANCE BY LAGOS STATE GOVERNMENT The coming together of the world as global village which as a result of technology advancement had also promoted the Lagos state government .The computerized of income tax was adopted in order to reduce the stress of tax officers in the state and to capture as many as possible tax payer in to the tax paying circle. To achieve this the government has dividend the income tax in to three group below:- I. Electronic tax clearance certificate in circulation (ETCC) II. Notified tax clearance certificate (N-TCC) III. Company tax clearance certificate (C-TCC) ELECTRONIC TAX CLEARANCE The E-TCC is a new smart card based way of using tax clearance certificate in Lagos state .The reason for the introduction of this include the following
  50. 50. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 50 i. There are lot of tax clearance certificate ii. Delay in obtaining tax certificate . iii. Poor identification of the real tax payer. OBJECTIVES OF ELECTRONIC TAX CLEARANCE CERTIFICATE (E- TCC) i. Increase the internal generated revenue of the state through PAYE system ii. Serve and encourage direct assessment of individuals. iii. To capture more tax payer in the net of the state tax payer. BENEFITS OF ELECTRONICS TAX PAYER 1. Tax payer can now be identify, this is because the tax clearance certificate will show the recent passport photograph of the tax payer, thereby making it not useful to any whose identify is not recognize through the certificate. 2. Medium of advertising or creating awareness and to capture more people in to the state tax net. 3. For easy reconciliation of tax return since this is now computerize, it will be easy to get reconciliation rather going through the formal manual method.(files and paper) 4. Elimination of fake tax clearance in circulation .This is because the E- TCC will carry a code and security information and identification which will make it difficult to duplicate. 5. Increase in revenue generated through PAYE system as the E-TCC system will ensure total return of all remittance of all taxes collected.
  51. 51. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 51 BENEFIT TO THE TAX PAYER i. It server as personal identity card as it can be carried without fear or easy destructing. ii. It gives the tax payer the assurance that all tax deducted are remitted in government pocket. iii. It provide easy trace to the history of the tax payer iv. Tax payer will no longer experience delay in tax clearance certificate collection. v. Information provided on electronic tax clearance certificate (E- TCC) is secure with cold hence ensure integrity and privacy. vi. The card can be verify online. vii. It allow direct assessment. MODIFICATION TAX CLEARANCE CERTIFICATE (M-TCC) This is vibrant of E-TCC and is made through completion of form for self employed obtain from designated place in state or at the tax revenue center office known ‘’ board of internal revenue” (BIR) rather than website ( www.lasg.org) photocopy of assessment notice receipt of part remitted and passport photography are also need and card are issue to applicant after seven days. COMPANY TAX CLEARANCE CERTIFICATE This is a variance of E-TCC which is issue to company who are satisfy their PAYE system and withholding tax obligation for the year of assessment.
  52. 52. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 52 CHAPTER THREE 3.0 RESEARCH METHODOLOGY 3.1 INTRODUCTION This project is an organization of personal income tax in Nigeria. The objectives of this chapter basically to present a comprehensive presentation of the means by which necessary data are drive and subsequent analysis of the project data. Also explain here are the research instrument. Which are questionnaire, oral interview, and visual observation. 3.2 RESEARCH DESIGN This chapter discussed the method use in the collection of data administration of questionnaire and interview where use to obtain data as a guard to identification of the problem militating against tax assessment and collection, and also the way forward of personal income tax in revenue generation in Nigeria which Lagos internal revenue service of the chosen as the case study. 3.3 SOURCES OF DATA/MATHOD OF DATA COLLECTION The method used in the collection of data was through questionnaire, verbal interview and visual observation. A copy of questionnaire will be attached to this project. 3.4 STATISTICAL TECHNIQES In order to achieve the aim of the project, it is necessary to analyes the various data and information collected from the field survey to carried out, which is responsible in order to replicate and come and reconfirm earlier and way toward of personal income tax on potential individual and companies in Nigeria in which the Lagos state internal revenue service has been chosen as a case study.
  53. 53. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 53 The type of statistical representation that was employed to analyse this data and information gathered are the use of table and other statistical tool as may be deemed fit or necessary during analysis. The statistical method that was employed in testing the hypothesis is chi-square. 3.5 POPULATION AND SAMPLE Sampling is a technique of a scientific process used in selecting a sample from the entire population to draw a relatively valid conclusion about its attribute .This will enable the researcher to reduce the population to management size of the purpose of the study random sampling as been persistently used in this study that deserver some justification. According Taylor (1988), random sampling is that portion of drawing a portion (or sample) of a population or a universal so that each member of the population or universe have an equal chance of been selected. In other words, in a random sampling, all possible sample of fixed size has the probability of being selected. A sample drawn at random is un biased in the sense that no member of population has any chance of been selected than any other member. Random sampling techniques like any other viz stratified sampling ,systematic sampling , quota sampling, as its own weakness, greatest of this random error, which by itself reduce by increasing the sample size. DECISION UNDER METHOD OF DATA ANALYSIS These hypotheses are formulated under “null and alternative” hypothesis so that “alternatives will be accepted if the null is rejected. The researcher will however be very objective to commit type one error or type two error in the process of testing the hypothesis ( I e I will reject when I supposed to accept and vis-versal).
  54. 54. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 54 The hypothesis will be tested using two in 5% level of significance or 10% confidence internal under the following condition:- 1, Accept if 2 fall outside the range of 1.96 to +1.96 ( I e 1.96<2>1.96) 2, Reject: if 2 fall outside the range of 1.96 to 1.96 in other words, the set of 2 score under the range -1.96 contribute the region of acceptance while that which fall outside contribute to the region of rejection.
  55. 55. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 55 CHAPTER FOUR 4.0 ANALYSIS OF DATA PRESSENTATION OF FINDING 4.1 INTRODUCTION This chapter consists of the result of the study carried out using questionnaire. This chapter also helps in drawing conclusion to the research work. To arrive at a decision on which to choose the likely option of the question in the questionnaire, the research will use the mean in analyzing the data. This is will enable him to make a decision among the option. 4.2 ANALYSING OF DATA BASE ON RESESRCH QUESTIONNAIREAND HYPOTHESIS. A total of 60 questionnaires were distributed but only 48 were obtain and interpretation were based on 48 respondents, to aid the analysis and interpretation of the result of the research findings, the demographic background on the respondent was tested and some of the statement in other section of the questionnaire. AGE Table 4.2.1 CATEGORY UNDER 30 YEARS NO OF RESPONDENT PERCENTAGE (%) 31-35 12 12.5 36-40 18 29.6 41-45 9 18.75 46-50 5 10.42 51 and above 2 4.17 Total 48 100% Source: Researchers survey 2016
  56. 56. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 56 From the above analysis, 6 respondent are under 30, 12 are between 31-35, 18 are between 36-40, 9 are between 41-45, 5 are between 46-50, and while 2 are between 51 and above. 4.2.2 LEVEL OF QUALIFICATION CATEGORY NO OF RESPONDENT PERCENTAGE (%) PRIMARY SIX GCE/O LEVEL/SSCE 15 31.25 OND/NCE 5 10.42 HND/B.SC 20 41.62 Other qualification 8 16.6 Total 48 100% Source: researchers survey 2016 From the above table,15 respondent are GCE/O LEVEL/SSCE, 5 respondent are OND/NCE , 20 respondent are HND/B.SC, 8 respondent are other qualification and none of the respondent are primary six pupils. 4.2.3 LENGTH OF EXPERIENCE CATEGORY NO OF RESPONDENT PERCENTAGE (%) Under 5 years 8 16.67 6-10 years 10 20.83 11-15 years 15 31.25 16-20 years 8 10.42 21-30 years 7 9.42 Total 48 100% Source: Research survey 2016 The above table show the length of experience acquired by the respondent, 8 respondent are under 5 years of experience, 10 respondent are 6-10 years of
  57. 57. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 57 experience , 15 respondent are 11-15 years of experience, 8 respondent are 16-20 years of experience,7 respondent are 21-30 years of experience. 4.2.3 ANALYSIS OF RESPONDENT DATA BASE ON THEIR DEMOGRAPHIC INFORMATION QUESTIONNAIRE SEX DISTRIBUTION CATEGORY NO OF RESPONDENT PERCENTAGE (%) FEMALE 25 52.1 MALE 23 47.9 TOTAL 48 100% Source: Researchers survey 2016 From the analysis, it can be seen that 25 respondent are female I e 52.10% while 23 respondent are male I e 47.9%. CATEGORY NO OF RESPONDENT PERCENTAGE (%) Single 15 31.25 Married 20 41.67 Window 8 16.66 Separate 5 10.42 Divorced - Total 48 100% Source: Researchers survey 2016 From the above analysis, it can be concluded that 15 respondent are single, 20 respondent are married, 8n respondent are window, 5 respondent are separate and none are divorce.
  58. 58. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 58 ANALYSIS OF DATA PESPECT OF RESERCHER INTREST 1: There are loopholes in the personal income tax which can be exploited. Table 4.2.1 CATEGORY NO OF RESPONDENT PERCENATGE (%) Strongly agree 20 41.67 Agree 20 41.67 Disagree 1 2.08 Strongly disagree 2 4.17 Indifference 5 10.42 Total 48 100% Source: Researcher survey 2016 It is seen from the analysis that 20 respondent strongly agree given 41.67, 20 respondent agree given 41.67 also, 1 respondent disagree given 2.08, 2 respondent strongly disagree given 4.17, 5 respondent are3 indifference given 10.42.It can be seen from the analysis that there bare loopholes in personal income tax which can be exploited. 2: Internal control system will be needed in the board of internal revenue in relation to keeping of record. Table 4.2.2 CATEGORY NO OF RESPONDENT PERCENTAGE (%) STRONGLY AGREE 30 62.5 AGREE 18 37.5 DISAGREE STRONGLY AGREE INDIFFERENCE TOTAL 48 100% Source: Researcher survey 2016 From the above , it can seen that the respondent agree to the fact that a good internal control system will be needed in relation to proper record keeping,
  59. 59. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 59 because 30 respondent strongly given 62.5% and 18 respondent agree given 37.5%,none of the respondent disagree, strongly agree and indifference. 3: people in the rural area should be subjected to the same tax burden compared to those in the urban area? Table 4.2.3 CATEGORY NO OF RESPONDENT PERCENTAGE (%) STRONGLY AGREE 6 12.5 AGREE 7 14.5 Indifference DISAGREE 15 31.25 Strongly disagree 20 41.67 TOTAL 48 100% Source: Researcher survey 2016 From the above ,6 respondent strongly agree,7 agree , none in difference , 15 respondent strongly disagree, 20 respondent strongly disagree. It can seen that people in the rural area should should not be subjected to the same tax as people in the urban area. 4. the process of collecting tax clearance certificate is encouraging in the state. Table 4.2.4 CATEGORY NO OF RESPONDENT PERCENTAGE STRONGLY AGREE AGREE INDIFFERENCE 5 10.42 DISAGREE 18 37.5 STRONGLY DISAGREE 25 52.02 TOTAL 48 100% Source: Researchers survey 2016
  60. 60. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 60 From the above, it can be seen that none of the respondent strongly agree,agree,5 respondent indifference, 18 respondent disagree, 25 respondent strongly disagree .It can be seen that the process of collecting TCC is not encourage in the state. 5: if the ability were to be instrumentally, do you think people would be willing to pay regular? Table 4.2.5 CATEGORY NO OF RESPONDENT PERCENTAGE STRONGLY AGREE 20 41.67 AGREE 15 31.25 INDIFFERENCE DISAGREE 8 16.67 STRONGLY DISAGREE 5 10.41 TOTAL 48 100% Source: Researcher survey 2016 From the above, 20 respondent agree, 15 respondent agree, none are indifferences, 8 disagree, 5 strongly disagree. It can be seen that if the ability are instrumentally, people would will to pay tax regular. 6: If the revenue collection from tax is used to improve the standard of living of people, will they be willingly to pay tax? Table 4.2.6 CATEGORY NO OF RESPONDENT PERCENTAGE STRONGLY AGREE 25 52.08 AGREE 20 41.67 INDIFFERENCE DISAGREE 3 6.25 STRONGLY AGREE TOTAL 48 100% Source: Researcher survey 2016
  61. 61. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 61 From the above, it can be seen that 25 respondent are strongly agree, 20 respondent agree, none are indifference, 3 disagree, none of respondent strongly disagree, that if the revenue tax is to improve the standard of living of people, they will be willingly to pay tax liability. 7: the ideal of taxable person without tax clearance certificate being derived government percentage? Table 4.2.7 CATEGORY NO OF RESPONDENT PERCENTAGE STRONGLY AGREE 5 10.42 AGREE 8 16.7 INDIFFERENCE 10 20.85 DISAGREE 15 31.25 STRONGLY AGREE 10 20.83 TOTAL 48 100% Source: Researcher survey 2016 From the above, it can seen that 5 respondent strongly agree, 8 respondent agree, 10 respondent indifference, 15 respondent disagree, 10 respondent strongly disagree that taxable person without tax clearance being derived by government patronage. 8: Adequate payment of personal income tax increase the government revenue. Table 4.2.8 CATEGORY NO OF RESPONDENT PERCENTAGE STRONGLY AGREE 15 31.25 AGREE 15 31.25 INDIFFERENCE 12 25 DISAGREE STRONGLY DISAGREE 6 12.5 TOTAL 48 100% Source: Researcher survey 2016
  62. 62. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 62 From the above, it can seen that 15 respondent strongly agree,15 respondent agree, 12 respondent indifference, none disagree, 6 respondent strongly disagree that adequate payment of personal income tax increase the state government revenue. 9: what are the rate of return(gain) do you expect from the tax you pay? Table 4.2.9 CATEGORY NO OF RESPONDENT PERCENTAGE (%) Provision of infrastructure facilities Creation of employment opportunities Increase in standard of education All of the above Total 48 100% Source: Researcher survey 2016 From the above, it shows that all the respondent, expect good infrastructure ,employment opportunities and increase in standard of education from the tax paid. 10: Government should improve the standard of living of tax officials so that tax collection will improve. Table 4.2.10 CATEGORY NO OF RESPONDENT PERCENTAGE (%) STRONGLY AGREE 48 100 AGREE INDIFFERENCE DISAGREE STRONGLY AGREE TOTAL 48 100% Source: Researchers survey 2016
  63. 63. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 63 From the above, it show that none of the respondents agree, Indifference, disagree, strongly agree but all the every respondent strongly agree. 11. The increase in tax relief will affects the attitude of the people towards payments Table 4.2.11 CATEGORY NO OF RESPONDENT PERCENTAGE (%) STRONGLY AGREE 25 52.08 AGREE 15 31.5 INDIFFERENCE 5 10.42 DISAGREE 3 6.25 STRONGLY DISAGREE TOTAL 48 100% Source: Researchers survey 2016 From the above, 25 respondent strongly agree, 15 respondent, 5respondent indifference, 3 respondent disagree and none respondent strongly disagree. It can be seen the increase in tax relief will make citizen to pay tax. 12: personal income tax server as revenue backbone to the state government. Table 4.2.12 CATEGORY NO OF RESPONDENT PERCENTAGE (%) STRONGLY AGREE 21 43.75 AGREE 21 43.75 INDIFFERENCE DISAGREE 6 12.5 STRONGLY DISAGREE TOTAL 48 100% Source: Researcher survey 2016 From the above, it can be seen that 21 respondent strongly agree, 21 respondent 21, none of the respondent indifference, 6 respondent disagree, none of the respondent strongly disagree.
  64. 64. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 64 13: do you think Lagos state board of internal revenue has an effective procedure for collecting personal income tax? Table 4.2.13 CATEGORY NO OF RESPONDENT PERCENTAGE (%) STRONGLY AGREE AGREE INDIFFERENCE 5 10.42 DISAGREE 18 37.5 STRONLY DISAGREE 25 52.08 TOTAL 48 100% Source: Researcher survey 2016 It can be seen that none of the respondent strongly agree, agree, 5 respondent indifference, 18 respondent disagree, 25 strongly disagree. 4.3 TESTING OF HYPOTHESIS The hypothesis that are formulated are: H0:- the pay as you earn (PAYE) system of taxation does not generate the highest percentage of revenue for the state government. H0:- the new collecting system does not curb the problem of tax evasion and tax avoidance. Testing the hypothesis using table 8 of this project, using chi- sequare. CATEGORY NO OF RESPONDENT PERCENTAGE STRONGLY AGREE 15 31.25 AGREE 15 31.25 INDIFFERENCE 12 25 DISAGREE STRONGLY DISAGREE 6 12.5 TOTAL 48 100%
  65. 65. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 65 E(oi-ei)2 ei Where o- observed e- expected frequency 0 E Oi-ei (oi-ei) (oi-ei) ei 15 15 0 0 0 15 15 0 0 0 12 12 0 0 0 6 6 0 0 0 31.25 31 0.0625 0.0625 2.016 31.25 31 0.0625 0.0625 2.016 25 12.5 25 12.5 0 0 0 0 0 0 4.032 X square=ca X square tab=(r-1)(c-1) (5-1) (2-1) 0.5 4 1 0.5 X square cal =4.032 X tab= 14.860 DECISION: X square tab is greater than x square cal, therefore we will accept the claim.
  66. 66. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 66 4.4 INTERPRETATION OF RESULT Recent studies had shown that the personal income tax has helped in necessitating the economy from its depressed state to level in which the country want, the role of taxation as a revenue generator is important. The government development emphasis include health and teachers such as borehole water to the urban and rural communities, rural need road and electricity. The economy structure of the state, is designed around the mixed economy, philosophy nut like in other parts of the federation, it is unique I e different from the mixed economy system operation in the united kingdom. I n Lagos state runs as a socialist structure in the sense that itn provide virtually all social servers, where as the private sector controls the profitable means of production and make profit through economic activities largely supported by government and gives no social service to the people. The presentation of data is target at the public on the existence of the personal income impact to the Lagos state government.
  67. 67. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 67 CHAPTER FIVE 5.0. SUMMARY, CONCLUSION AND RECOMMENDATION. 5.1. INTRODUCTION In the previous chapter, the data collected were subjected to an in depth analysis, from various findings were shown, this section of this research study, however present the study of the findings, out of which recommendation were made and conclusion, the government gains sight in to what can also bring development in to the society at large through a proper administered personal income tax. 5.2 SUMMARY A recurring problem with the personal income tax is the non compliance of employment to regular their employee reunite such taxes to relevant authorities to address this, in 2002 the government amended the 1993 personal income tax act to make non-compliant employers liable to penalties up to #2500, as well as liable for the payment of tax on arrears. Employers failing to keep proper records would also face a penalty of #5000. A five this small tends to encourage tax evasion since the penalty for being caught is lower the cost for non-compliance. Personal income tax failed in Nigeria for lack of equitability. In spite the fact that the self employed outnumber paid workers and that they earn as much as four times that of the formal sector employees, the bulk of personal income tax is paid by employees whose salaries is deducted at sources. Inadquates monitoring by tax authorities, the dominance of informal sector activities and that many Nigerians lives in rural areas make the coverage self-employed workers difficult. Althought regulation were enforced in PIT Act.NO.104 OF 1993, amendment are still made on a yearly basis. Inaddition to the fact that amendment are not adequately informed to the public nor incorporated in the relevant legislation, the
  68. 68. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 68 legal language is also ambiguous, confusing and unprofessional. There is very little tax education in Nigeria, taxpayers are ignorant of the laws, regulatory their taxation, and this makes disclosure difficult. The research study is made in finding out the extent to which personal income tax server as a source of revenue to Lagos state government, it also asses critically through properly administered questionnaire to solicit for responses as to the impact personal income tax as the revenue backbone of the state government. In the course of writing this project, attempt have been made to identify, various sources of income available to various citizen, how they are been assessed to tax. The tax rate, the relief and the general effects on the standard of living of the citizen. Investigation of this study was based on the few people selected within Lagos state internal revenue as the case study, two these local government ,as well as staff of the state tax office, hypothesis was made and analysis based on the collected information were obtained from both primary and secondary sources. Textbooks, journal and other relevant document obtained, information were used in compiling the historical background, literature review and data analysis techniques. Analyzed data from the basis for our conclusion and recommendation. 5.3 CONCLUSION Tax evasion avoidance is a very serious societal problem that is causing much concern and major setback on remove collection in Nigeria. From all indication it is show clear that if government engages in Nigeria a complete re- organization of the tax administrative machinery, the twin problem of tax evasion and avoidance will be reduced to a tolerable limit. It is equality important for the various state governments to make Frantic efforts aimed at educating the tax illiterates of their civic responsibities.
  69. 69. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 69 It can be inferred from the project that were importance of levying tax on income that can not overemphasized because of the large ratio of income , it contributed to the revenue of government ,moreover, money collected from taxes is used in providing social benefits for the citizens and server as means of distributing income between the rich and the poor. In spite of thid justification, personal income tax inflicted upon individual citizen such as reduction in purchasing power. (which led to tax invasion and tax avoidance by the citizen in the state), decree in investment, low standard of living, high cost of living, high cost of living, unemployment and low attitudes towards establishing enterprises. All these constituted bad effect of personal income tax on the economic well being of citizen. Thus , it be concluded that taxation as an agent of social justices is not justified. However, to reduce these and tax payer certain factor can be manipulated, these include reduction in tax rate, view of available personal granting of subsidy to citizen by government to encourage investment and the like of all these factor can be manipulated, these include, reduction in tax rate seen most critically because of the amount deducted by tax directly depend on the applied. In conclusion, for the foregoing analysis have to some extent revealed that result of the study and subsequently the recommendation which should be critically considered by the government, who will see the government development project as a collective effort that should be jointly upheld and supported , so that state will continue to be the heartbeat of our great nation Nigeria.
  70. 70. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 70 5.3 RECOMMENDATION The following recommendation, which may go along way to help the government reduse the body of personal income tax on the purchasing power of individuals and the standard of living and also taxes from the citizens. It is however important to stress that the recommendation here are by no means to exhaustive instead they are meant to enable government take critical look at important things with a view in implementing some, if not all the suggestion listed as follows:- 1) The problem of multiple taxes also needs to be urgently addressed. This can be done by precluding states and local governments from imposing more levies on companies and individual earnings outside those prescribed in the statute books. 2) The setting up of Revenue Courts should be embraced by the various state governments. These Courts should be made to impose heavy monetary penalties and criminal sanctions. 3) A corrupt-free and efficient administrative machinery with personnel who are adequately trained, well-equipped and motivated would enable Nigeria to make appreciable progress in revenue diversification. Tax administration machinery should have an effective redress and refund system so that disputes can be settled easily and corruption checked. 4) Need to review the tax law:- Despite several effort by the government to amend certain provision from the tax decree 1993(PTTD) which replace TMA 1961. 5) The need to club inflation:- In spite of every effort of taxation there has been an increasingly decrease in comes to galloping inflation in the economy. Hence, government aim, at increasing the purchasing power can
  71. 71. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 71 not be fully accomplished unless the inflationary trend of the economy controlled.
  72. 72. THE IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN NIGERIA A CASE STUDY OF LAGOS GOVERNMENT BY ND/14/ACCT/FT/002 SUPERVISED BY: MR. ABOLARIN .A.F 72 BIBLIOGRAPHY Abdulganiy Alashe (2011) the benefit of the amendment to personal income tax acts, Lagos learned journal. Adebisi A.(2005) companies taxation in Nigeria including petroleum profit tax.(4th edition), Jaa Nig.Ltd, Lagos Nigeria. Adepoju Tejumaiye (2003) introduction to research: Sceptre print limited Ibadan Nigeria, Oyo state Nigeria Ande C.E (2005) essential government for senior secondary school Tonad publisher limited, Ogun state Nigeria. Akuntola willams Delliote (2011) “guide to the new personal income tax, consult Nigeria Institute of chattered accountant of Nigeria (ICAN) study pack (2006) tax management and fiscal policy. Vi publishing limited Ibukun Alatishe (2008) advance taxation revised edition: Olas venture, Lagos state Nigeria Lekan Sohyede and Sunday O. Kajola (2006) taxation principle and practice in Nigeria. Silican publishing company, Ibadan Nigeria Seyi Ojo (2011) fundamental principle of Nigeria tax. Sagriba tax punlican Lagos. Seyi Ojo (2006) student companion on Nigeria tax, publication Nigeria Sola Abisola (2002) Nigeria taxation in focuses. Rakson Nig.Ltd.

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