An Evaluation Of The Relationship Between Literature And Practice Of Tax Revenue In Local Government Of Nigeria (A Case Study Of Isin Local Government Area Of Kwara State)
Table of Content
- Title page
- Table of Contents
- 1.1 Background of the Study
- 1.2 Statement of the Research Problem
- 1.3 Objective of the Study
- 1.4 Significance of the Study
- 1.5 Research Questions
- 1.6 Scope of the Study
- 1.7 Limitation of the Study
- 1.8 Study Plan
- 1.9 Definition of Key Term
- 2.1 Definition of Local Government
- 2.2 Reason for the Creation of Local Government
- 2.3 Function of Local Government
- 2.4 Sources of Revenue of Local Government in Nigeria
- 2.4.1 Definition of Taxation
- 2.4.2 Characteristic of Tax
- 2.4.3 Types of Tax
- 2.4.4 Effects of Tax Evasion on Local Government
- 2.5 How tax Awarded and Evaded
- 2.6 Reason for Infective Tax Collection
- 2.7 Importance of Prompt and Efficient Tax
- 2.8 Taxes and Levies Collected by Local Government
- 3.1 Brief History of Local Government in Nigeria
- 3.2 The Historical Background of Isin Local Government
- 3.3 Research Procedure
- 3.4 Method of Data Collection
- 3.5 Population and Sample Size
- 3.6 Research Instrument
- 3.7 Sampling Techniques
- 3.8 Method of Data Analysis
Data Presentation and Analysis
- 4.1 Discussion of Analysis
- 4.2 Hypothesis Testing
- 4.3 Interpretation
Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendations
1.1 Background of the Study
The socio economic and political well beings of individual in the society are the responsibilities of government for any government to achieve this aim effectively, there is need for such a government to decentralize its administrative system on this: federal government state government and local government different taxes are assigned to different levels,
The local government has been change with the administrative and development responsibilities of the grassroots level; while valuable literature and practice has developed over the years on these issue according to Framecinwa (2001) local government is define (in a democracy) as a government of the local people (community) by the local materials and resources e.g taxes, rates, donations, grant from federal government e.tc for the benefit of those leaving in a particular local area from this defination one can deduce that a government authority was local materials and reource to finance its projects. These local material and resource include the various from of taxes available to the local government authority. Because of the peculiarity of the local government authority to the welfare of the people at the grass roots, that is only some functions are delegated to the local government in order to enhance distribution to local resources for rapid growth and development some of the function include: establishment and maintenance of markets, motor park and public convenience e.t.c
Oyebanji (2005), defines taxation as a compulsory levy by the government of any country through and appreciate agency, on all incomes, good services and property of an individuals partnership, executor trustee and corporate body. It can also be define as a compulsory payment imposed by individual with uniform economic frontiers for legitimate functions for various legitimate function of the state.
Government imposes taxes on its citizens to enable it obtain the required tax revenue to finance its activities, such as payment for public service and other social responsibilities, once it is levied on the tax payers, they must pay it and if anyone should default, there are some tax offenders. Taxes are not imposed purposely for contering upon; rather a tax payer has special benefit for providing the local government with fund necessary for general administration of the country.
Rather than the tax payers paying promptly the taxes variously due on them, most of them engage in tax evasion which consequently learning about a drastic fall in the tax revenue generated the local government and this invariable has some adverse economic implication in the financing and administration of the local government.
Evasion (illegal methods of reducing ones tax liability, this posse a great threat and effects development these ugly trends, the authority of local government must be prepared to fight the massive tax evasion among he indigenes.
1.2 Statement of the Research Problem
There is nothing that has merit that will not have demerit. As a result of this, efficient tax collection has effects in local government. The no payment of tax revenue to local government (i.e revenue due to a tax payer) was a significant implication in both the people of the local government in question terms of development and also hinders the local government authority in carrying out its responsibilities. In every local government, a very small amount is collected as taxes.
It is therefore, obvious that in most local government, people are just evasion without knowing the implications. The tax payers are not conscious of their duties and obligations by evading taxes some of them believed that they are paying the money for nothing or to one particular person (i.e either the tax collectors to the local government chairman). No there are many derivatives benefits. These people are not award of the benefits they will derive from pay tax. The money (revenue) realized from the taxes is being using to provide social and basic amenities general administration and to stimulate growth and development of the local government.
1.3 Objectives of the Study
The objective to achieve at the end of this study include primary and secondary objective viz: the primary objectives evaluate the relationship between literature and practice of tax revenue in local government of Nigeria and to determine various ways of improving the efficient and effective means of tax revenue collection due to the local government.
The secondary objectives are as follows:
- To identify the various taxes sources that are available to the local government authority to identify those one usually collected by the local government authority
- To examine the importance of tax revenue according to the local government authority.
- To ascertain the financial implication on the current situation
- To make recommendation from the funding realized in the course of carrying out the project work.
1.4 Significance of the Study
The essence of this research work is to evaluate relationship between literature and practice of the revenue in Isin local government area of Kwara state and to identify the various types of taxed and levies being collected by the local government. Although, various researchers had been carried out in the past to uncover the various problems encountered by the local government in terms of problem associated with efficient collection of tax revenue, tax evasion as well as tax avoidance by the local people (tax payers) which has significant effect on the local government. It is hope carryout the research the aforementioned problems identify by the last researcher and to explore every avenue on how to sensitize or enlighten the tax payers at the grassroots on the importance of tax revenue an how to ensure prompts collection as well as to make recommendation from the finding realized in the course of carrying out the project work that will be assistance to both present and future chairman and to staff especially tax collectors and officers to Isin local government authority and other authorities throughout the federation.
1.5 Research Question
In other to provide solution to the research problem identified to achieve the purpose of this study; the following research hypothesis are formulated:
- H0: Null hypothesis
- H1: Alternative hypothesis
- H0: There is no significant relationship between literature and practice as regard tax revenue to local government of Nigeria.
H1: There is no significant relationship between literature and practice as regard tax revenue to local government of Nigeria
- H0: Tax avoidance constitutes constraint to the proper collection of tax revenue acruning to the local government
H1: Tax avoidance constitutes constraint to the prompt collection of tax revenue accruing to the local government.
1.6 Scope of the Study
The research work is focused on local government administration in terms of relationship between literature and practice tax revenue as an important source of local government income.
Furthermore, this research is focused principally on the office of the chairman of the local government (Isin), the finance department, the tax revenue collectors department the civil servant, the market woman and men and other people between year 1999 -2005.
1.7 Limitation of the Study
The researchers were faced with some constraints the chief among them is time constraint. The time scheduled for the national economy. Another problem that was encountered was financial constraints. Researchers were faced with serious financial constraints due to the huge amount involved to get the primary data hence, eventually resulted inadequacy of the primary data.
Also there was reluctance from the tax officials to part with their taxed and other revenue data. Lastly the response rate of the questionnaire that was the response rate of the questionnaire that was administrated to the local government staff more so, it is fundamental to state clearly here that whatever suggestion that come up as a result of this research work is expected to be used by the local government that deals and provides services to the rural dwellers who are majority of the nation’s populace.
1.8 Study Plan
The study is divided into five chapters as follows
- Chapter One: there is a general introduction of the topic, background to the study, significant face of the study, research question, and scope of the study, limitation of the study, study plan and definition of key terms.
- Chapter Two: this chapter contains the literature review definition of local government reason for the creation of local government function of local government sources of revenue for local government in Nigeria, definition of taxation, characteristic of tax, types of taxes, effects of tax evasion on local government, how tax are avoided and evaded, reason for ineffective tax collection, importance of prompt and efficient tax and taxes and levies collectible by local government.
- Chapter Three: the chapter three explains brief history of local government in Nigeria the historical background of Isin local government, research procedure, method of data collection, population and sample size, research instrument, sampling techniques and method of data analysis.
- Chapter Four: this chapter contains discussion of the analysis hypothesis testing and interpretation.
- Chapter Five: this chapter contains the summary of the funding conclusion; recommendation bibliography which believe would improve the evaluation of the relationship between literature and practice of tax revenue of local government in Nigeria.
1.9 Definition of Key Terms
This can be defined as a compulsory payment imposed by government on income, capital and consumption of individuals within a nation economic frontier for various legitimate function of the state (Abdulraheem 2006)
This is a system raising money by taxes (Ariwodola,1999)
It is in body of rule under which the government of a country has right to chain part if a tax payers income (Fumakiunta, 2000)
Tax Avoidance (Tax Mitigation):
This is a legitimate and legal ways of paying less tax or not paying and legal ways of paying less tax or not paying at all (Oyebanji, 2006)
This is the person who with pay the tax to the appropriate tax authority (Ola, 1999).
This is an illegal method of reducing one’s tax liability, such as declaring lower income or refusing to pay all together, (Ishola, 2002).
Summary, Conclusion and Recommendations
In this study the evaluation of the relationship between literature and practice of tax revenue was explained in details with Isin local government area of Kwara state serving as a case study. Relevant literature were reviewed with the objective of identifying various sources of tax revenue suitable to the local government and it was also discovered that in every local government and it was also discovered that in every local government and it was also discover that in every local government a very small amount is collected as taxes as a result tax evasion and avoidance on part of the taxpayers, which constitute a constraint to the revenue generated by the local government if was discovered that the local government official and council official are the major course of ineffectiveness of tax revenue payment because if adequate training incentive and emohiment were adequately provided there would be a drastic reduction in tax evasion and avoidance there are many derivative benefits if tax is paid promptly. The result obtained justified that there is a significant relationship between literature and practice of tax revenue is Isin local government Area of Kwara state.
Based on the previous analysis and review of literature the following conclusions are draw. To start with the local government could generated much of its revenue from taxes. Les effort was made by the local government to generate fund internally. This can be deduced from the fact that less income were generated from taxes; rents license, fee and fines considering the population and location of the local government.
Also, the internal control system in place of the local government council is not very effective in checking mismanagement and embezzlement of fund in the part of the officials of the local government and tax revenue collectors and this is threat to the growth and economic development of the camel. The rate at which Nigerians especially those under local government evade is pitiful. Tax evasion is on illegal ways of avoiding tax responsibility by tax payers, and it reduces the internally generated tax revenue. Which makes the local government to sources for funds in order to meets it financial obligation.
The problem of collecting tax revenue was compounded by the under developed nature of economy and in accessibility of some area. Effective contract could not be made to educate the tax payer at the grassroots.
The effect of tax evasion in Isin local government can never be over emphasized. It is particularly rampant amono middle and upper class of people especially the new bread or self employed class, besides limiting the government revenue, it places unnecessarily hardship on the other group and those under payee scheme people license they hold any provision that will lessen their burden.
Finally the key to success on my local government availability of fund, if the local government (especially new and rural ones) must succeed in their responsibility, they should be property funded
Based on the finding above the following recommendation are pruf forward to improve the tax revenue to the local government council
- Most taxpayers in local government area are ignorance of the role of tax revenue in modern society. We therefore recommend that public enlightenment programmes be embarked upon to educate the taxpayer at the local government or grassroots on the needs to pay taxes. This enlightenment could be through television, radio, and mutual cooperation. The people should be made to be aware of their contribution the purpose for which their contributions are utilized and how their obligation are to be discharges.
- Operation by law should be initiating in the local government to give the revenue collections strong legal backing so that they can arrest, detain and prosecute tax evaders or defaulter who failed to honour his her civic duty to his /her local government. The fraudulent act is to be eliminated or minimized all most the tax collectors. Staff of proving honesty and integrity on the collection of tax revenue should be engaged in the exercise.
- There should be supervision or monitoring team to effort control over the field officers the authority should provide the resources to obtain fidelity of any loss. Or misapprehend tax revenue. The authority should also avoid can trusting revenue collection in the hand s of commission agents. Their fraudulent act arise in line of temporary appointment since they are aware that they are not permanently employed
- Local government should always look into the problem of mobility in as mush assist is significant factors in revenue generation car loans or motor cycle should be given to the tax officers to this enhance the effective and efficient tax revenue generation as this will afford them the opportunity of covering a large proportion of the area assigned, other incentives that will in due and encourage tax revenue collectors to do their work while heatedly should also be provided in order to assist them in carrying out their job effectively.
- Adequate training should set a minimum qualification of west African examination council (WAEC) as a basis minimum requirement for tax officers. This is because some first school leaving certificate holders employed by the local government can either write neither names nor making an error free sentence.
- Adequate training should be given to the personnel to improve income generation and effectiveness of local government services; regular workshop, seminar and lecture should be organized for tax collections and accounting staff.
- Promotion should be made regularly to the efficient deserving and outstanding staff within the economic capability of the local government. This is to stimulate career prospects, devotion and dedication to duty.
- Finally management areas of coverage should be assignment to tax collectors to ensure efficient and effective operations.
An Evaluation Of The Relationship Between Literature And Practice Of Tax Revenue In Local Government Of Nigeria (A Case Study Of Isin Local Government Area Of Kwara State)
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