CRITICAL ANALYSIS OF PERSONAL INCOME TAX AS A TOOL TO ECONOMIC DEVELOPMENT
(A CASE STUDY OF BOMADI LOCAL GOVERNMENT AREA)
ABSTRACT
The Critical Analysis of Personal Income Tax as a Tool for Economic Development, being a project topic, was discussed using Bomadi Local Government Area as a case study. The main objective of this project is to examine the objectives of individual taxes and the relevance in macro economic of Nigeria. In achieving the objectives of this topic various methods of data collection were used, which includes the use of questionnaire and interview. Theoretical analysis of a lot of findings. Having done series of analysis, recommendations were made that those people in the age between 18-39 years are to be given some tax relieve in order to encourage them for tax payment. While those of age between 40 and above are to be given incentives. And the use of appropriate tax agent should continuously be encouraged.
TABLE OF CONTENTS
CHAPTER ONE - Introduction
Background of the study
Statement of the study
Objective of study
Scope of the Study
Significance of the Study
Research Question
Limitation of study
Definition of terms
CHAPTER TWO - Review of Related Literature
Introduction
Historical Background of the Nigeria Tax System
Review of some major Nigeria Tax System
Problems of Collecting Tax Revenue in Nigeria
Direct Assessment
Administration of Personal Income Tax in Nigerian and Legal Basis
Composition of the Administration of Tax Authority
CHAPTER THREE - Research methodology
Research Design
Population of the study
Sampling Technique
Sampling Size
Research instrument
Questionnaire Design
Administration of Questionnaire
Reliability and Validity of Research Instrument
Method of data Collection
Method of Data Analysis
CHAPTER FOUR - Presentation and Data Analysis
Analysis of Personal Data
Analysis of Research Question
CHAPTER FIVE – Summary, Recommendations, Findings, and Conclusion
Summary
Bibliography
Appendix A
Questionnaire
CHAPTER ONE
INTRODUCTION
Background of the Study
A taxpayer paying his tax regularly should see it as an essential sacrifice one can make towards the upliftment to his county’s economy. Revenue accrued from government to discharge it enormous responsibilities, which include uses taxes: execution of capital projects, National defense, administration of law and order, settlement of recurrent expenditure etc. Eligible taxpayers should therefore pay their tax to enable government acquire the human and material resources.
For the purpose of the study, the researcher would be concern with the Nigerian Economic Development Revenue in this modern Nigeria. Different tax law under the administration of some organized and well constituted bodies regulate these taxes.
These tax laws are reviewed from time to time in Nigeria. They include, Income Tax Management Act (ITMA) 1961, Companies Income Tax Act (CITA), which was established by section 37 the Tax Management Act of 1962, was charges with the duty of initiating and administering tax laws.
Statement of the Problem
There is no tax system practiced in the world that can succeed without the cooperation of the taxpayers. In most developed countries like USA, England etc, the idea of paying taxes to government is very welcome. Unfortunately, the reverse is the case in developing countries. In Nigeria (irrespective of the state) for instance, the issue of taxation is regarded by many as a means by which the government arbitrarily and exploitatively raises revenue. The question that could be asked includes;
What makes taxation a difficult issue?
Why are people reluctant to pay their tax liabilities?
How can the contribution of taxes towards the economic development of Nigeria be assessed?
In this research work, the researcher will also focus on the problem that may have affected the successful operation of tax system in Nigeria and the recommendations for active and efficient operation of the tax system in Nigeria.
Objectives of the Study
The objectives of this study is trying to:
Examine the objectives of individual taxes and their relevance in the macro-economic of Nigeria.
Assessing the contribution of the various taxes towards the development of Nigeria economy.
Exposing the problems that may have affected the successful operation of the Nigeria tax system.
Making recommendations for effective and efficient operation of the Nigeria tax system.
Scope of the Study
This research work focuses particularly on taxes being levied and collected by state government from 2006-2010 in Delta State. Although the study may slightly look at taxes at the federal level, this generates most of the country’s income. However, at the state level, it will also examine the assessment and collection machinery of the state government taxes.
Significance of the Study
There are several literature on taxation as a source of government revenue. They cover taxation in all ramifications and some even appraises the problems of tax administration in Nigeria. In spite of the appreciable efforts, much has not been done to quantify the contribution of taxes towards the Nigeria economic development. This state of affairs coupled with the recent call by Nigerian to abolish taxes in the country has served as an inducement for undertaking this research study. So in order to bridge the gap in our knowledge on the impact of taxation as a tool for national economic development in Nigeria, the researcher therefore made an empirical study of the various existing taxes in Nigeria as means of government revenue. This it is believed will:
show the contribution of taxes towards the Nigeria economic development
suggest better ways for effective and efficient administration of tax system in Nigeria.
Stimulate further research into other function areas.
Research Questions
In the course of my study, the following questions shall be answered;What make taxation a difficult issue?
Why are people reluctant to pay their tax liabilities?
How can the contribution of taxes towards the economic development be assessed?
Do the taxpayer declare the income when completing the tax form?
What are the major problems encountered by the tax agents/tax collectors?
Definition of Terms
The following terms are defined as they reflect the use in this study.
Tax:- A compulsory levy in the individual and corporate bodies by government as means of generating revenue for development purpose
- A process of imposing tax on taxpayers by government.
Impact and Role of Taxation:- the word impact and role means effect and contribution of tax.
Economic Development:- Is defined in term of elimination or reduction of poverty. Inequality and unemployment in the country. Also it embodied the improvement of economic growth rate of income per capital, of the citizenry of the country.
- This is any person or corporation chargeable to pay tax to the government.
Tax Evasion:- Tax evasion is a deliberate act by the taxpayer to illegally exempted him or herself from tax liabilities through cheating, frauds of all kind, or failure to pay in time.
Tax Avoidance:- This is an attempt of trying to comply with the law but smartly arranging affairs in a way that are pays little of net tax.
