Appraising The Impact Of Tax Assessment Collection And Administration Method In Nigeria

Project and Seminar Material for Accountancy / Accounting

Abstract

Tax revenue collection is one significant issue of economic development among others. Taxation is defined as government revenue to fulfill public necessities. That is for social, economic and political aspect of the society.

The purpose of this study is to assess tax revenue and collection problem on akwa-ibom. The study is guided by two research questions which seek to answers whether tax payers and tax Administration problems that causes for poor tax revenue collection in akwa-ibom state.

These are equity and fairness of tax system, attitude towards the government, social factors, culture and social norms, organization strength of the authorities, awareness of taxpayer education. Other factors such as taxpayer’s attitude and honesty/ loyalty of taxpayers are the result of lack of awareness. The result shows that taxpayer’ education was found to be the main explanatory factor in determining tax assessment behavior. Finally, based on the findings possible recommendations were given. These include, maintaining tax fairness and equity, building capacity of tax authority, conducting extensive awareness creation programs, and providing social services to the general public.

Chapter One

Introduction

1.1 Background of the Study

The system of tax collection and administration in Akwa Ibom State has been carryout towards the socio economic objective of the state. Tax could be defined as the public sector in order to accomplish some of the nation economic and goal. The primary economic goal development countries is to increase the rate of economic growth and hence the per capital income which will lead to the higher standard of living. Every tax imposed on an organization changes everyday as new court rulings are announced and as lows made that every entity transaction must therefore be alert to such charge. Since it inception taxation of corporate income has been a pervasive force tending to influence the economic development of the entities. Taxation is not the only sources of internally generated revenue of the state, other as shown in the approval recurrent and capital expenditure estimates of Akwa Ibom State (official document no.7 and 8 of 1993 -1994) include such source as fine and fees, license and sale read from government property interest receipt and dividends as well as other sources. Other major sources of revenue available to Akwa Ibom State as documented in the state, in other words any rational economic development should be on after tax consideration basic, they are taxed heavily, sometime double taxation and one wonders whether their problem of management and development attributed to high rate of tax on investment in efficiency of the investor. Tax Assessment

This is because the double taxation on such cooperation as limited liability company will continue to effect the residual profit made. Tax Assessment

It is therefore much interested in such constraints taxation has posed to the investor and how it can be reduced. However income tax rule and regulation are such that informs, investors reduce the amount of their tax ability through various proper and timely actions. It is therefore the research aspiration to find a way of breaking through this concentration. Tax Assessment

1.2 Research Problems

In Nigeria, tax collection and administration is said to be the most variable source of revenues to the nation and therefore foster the economic development of the nation. It is also difficult to ascertain what impact or effect, if any dose tax collection and administration has to do with developing the economy considering greater diversities in government management abilities. All government including developed and under-developing countries in the world still impose different kind of tax on her citizens not withstanding the fact that there are several other sources in which revenue are accrued. Tax Assessment

1.3 Objective of the Study

To find out government development on economy using the proceeds of tax collection and administration of Akwa Ibom State.
To find out the various income tax rule and regulations Akwa Ibom State and their profit.
To identify the steps to be adapted to increase tax yielding sources of Akwa Ibom State.
To the recommendation and suggestions on economic development through tax collection and administration.

1.4 Research Questions

Does the government develop our economic using the proceeds of tax collection and demonstration?
What are the steps to be adopted to increase tax yielding sources of Akwa Ibom State?
Is there any main source of revenue available to the government of Akwa Ibom State?
Does the proceeds derived from tax collection and administration have any impact on the economy development either positively or negatively?

1.5 Research Hypothesis

Ho: There is no significant relationship between tax collection and administration on economic development in Akwa Ibom State.
HI: There is significant relationship between tax collection and administration and economic development of Akwa Ibom. Tax Assessment
Ho: Government does not develop our economy using the proceeds of tax collection and administration.
HI: Government develops our economy using the proceeds of taxs collection and administration.

1.6 Significance of the Study

It would provide the necessary information about how taxation implication on effect of economic development should be managed and controlled

It would also help the potential investors to remedy the problems associated with taxation of corporate income. The management of UYo Local government can also use it as a guide effective, some student can also use it as guide while research on this same topic.

1.7 Scope of the Study

The scope of this study was centred in one local government council, Uyo Local government council with effect of tax collection and administration on the economic development of Akwa Ibom State.

1.8 Limitation of the Study

One of the major limitations of this study is the security of data in terms of secondary information, some are the respondent were reluctant to attend to the researchers on the oral interview.

Also were limited financial resources in terms of transportation, photocopy and as well as time constraint. Given this reason, the researcher had to share the available time between his routine domestic work and other casework.

1.9 Definition of Terms

In order to entrance quicker conception the following terms used in the study has been defined:

Taxation:

Is one of the instruments of fiscal policy in a capitalist economy.

Administration:

As the management of public or business affairs the day to day administration in accordance with established rule and regulation (Parest, 1999).

Assessment:

Is the process of valuation of properties for taxation, it is valued as determination of the amount of money as a taxs of their fine or person properly (Kindles Degar, 1981).

Economic Development:

Is defined as improvement in material welfare especially for person with low income (Degar, 1981).

Tax Authority:

Defined as detects of federal level charge with the administration of certain kind of taxs (Davids, 1981).

Tax Evasion:

Is defined as the deliberate act by a taxs payer to illegally reduce or totally escape his or her taxs liabilities and relevant taxs duties (Eskastaing 1961).

Income Tax:

Income is defined as amount of found goods or services, received by an individual cooperation or economic in a given period (Pearce, 1985).

Tax Sharing:

Is defined as a practice where by the level of government such as state levies taxs and share the proceeds with a lower level of government such as country or town (Greant, 1985).

Chapter Five

Conclusion and Recommendation

5.1 Conclusion

The results of this study support the phenomenon of attitude being affected by better tax knowledge and demonstrate that this holds true for other attitude dimensions. Tax knowledge and tax compliance are positively related and helps in increasing taxpayers’ awareness. In this study lack of awareness was cited as the major and leading reasons for tax evasion and the respondents strongly agreed and commented that great effort has to be employed in this area.

Tax authority is the responsible body for encouraging compliance of taxpayers by changing their attitude. Tax payer education using different mechanisms is one way of conveying information for taxpayers regarding how, when, why and where to pay taxes and this will have an influence in the taxpayers attitude. The authority has tried to convey information for taxpayers once a year in each woreda, but this would not be sufficient to change their attitude. The survey result also showed that tax authority has been the main responsible body for the prevailing poor compliance and tax payers believes that the authority did not play well in improving the tax administration. In light of this the tax authority of the region is not efficient and effective in providing taxpayers educations regarding tax. It can be concluded that, so long as this is a fact it is not easy to bring taxpayers in to the track and narrow the compliance gap.

An effective compliance program requires that the tax administration has a sufficient power that enables it to in force non compliance. The amount of revenue collected is directly dependent on the efficiency and effectiveness of the authority. In regards to this fact the survey results showed that the tax authority of the region is not efficient and effective in service delivery, tax collection efficiency, law enforcement and awareness creation and tax payers’ education. It means that the authority is weak in regards to these parameters. There has been a change in the tax authority in terms of staff composition and quality. The authority has recruited many professionals to fill human power gap especially at regional level. But still there has been shortage of human power at woreda level where the tax collection and assessment is undertaken. This has directly related with efficiency and effectiveness of the organization in providing satisfaction for the tax payers at required level. With this perspective it would be difficult for the authority to bring about voluntary compliance and narrow the gap.

5.2 Recommendation

Any strategy to prevent tax evasion should begin with a theory of why people cheat on their taxes. Economists the question of why people to comply with the tax laws begin by constructing a theory based upon the assumption about human behavior that underlies all of economics, namely individuals generally act rationally in evaluating the cost and benefits of any Chosen activity.It might be argued that proper compliance means that taxpayers meet their tax obligation willingly. Without the need for enquires obstructive investigations, remainders or the threat or application of legal or administrative sanctions. Successful tax administration requires taxpayers to co-operate in the operation of a tax, rather than be forced to undertake every aspect of their obligations unwillingly.

Based on the study conducted using survey method, factors that determine taxpayers voluntary compliance were identified and possible recommendation are forwarded so that it may help the tax authority and other policy makers to approach this issue accordingly. Multiple approaches are needed to reduce the tax gap. No single approach is likely to fully and cost –effectively address noncompliance, since; it has multiple causes and spans different types of taxes and taxpayers.

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