The Problems Of Tax Collection And Effects On The Revenue Generation In Nigeria
The essence of this research work is to critically evaluate the problems of tax collection and their effects on the revenue generation. A study of Orumba South Local Government Council. In spite of the recent drawn in successful government administration in the state make general revenue through taxation, fine, levies etc. One amongst has been a continuous sub optimal realization of the project figure as the study revealed. This is due to the tax collection procedure, inappropriateness of the rates used, incomprehensive of the tax system and non-adequacy of the control system in various tax offices in the local government council. Data for the study were collected from two main sources; primary and secondary data. A descriptive designed was adopted for the study
1.1 Background Of The Study
The importance of revenue generated to the Local, States and the Federal Government cannot be overemphasized. Its importance to the Federal and State Government in recent time promulgated and introduced policy reforms in the country through taxation laws and policies which is our major source of revenue generation. This can be seen not only in the introduction of new tax, the Value Added Tax (VAT), but also in the improvement of the administration of non-oil taxation with the main objective of substantially improving the generation of revenue and sources as well as to reduce to the barest the nation’s (the local, the state and federal government minimum inclusive) dependency on the oil sector and sources of revenue generation.
According to Ola (1984), income tax is one of the major sources of Revenue to Government in Nigeria and it is a factor to be reckoned within both the local, state and the federal government budget, the primary purpose of taxation is to raise revenue to finance government capital and recurrent expenditure. Furthermore, Ayua (1999) noted that “There is hardly any government today that does not relay on taxation as a measure not only to provide for the much needed revenue for socio-economic growth and development but also to reduce the inequalities of wealth in the society. Taxation be it capital gains, tax or petroleum profile tax, personnel income tax, levies, fines etc as a source of generated revenue in the hands of government is used to achieve economic growth, fight depression and inflation in the economy, achieve equitable distribution of income and wealth, allocate resources in a socially and desirable manner so as to ensure that the balance of payment of the country, (the federal, states and local government) are in a healthy position. In Orumba local government there was an increased enlightenment on the need for citizens to pay their taxes promptly as a means of revenue generation in state, the state government during the last military regime took steps further to institute a task force to accelerate revenue generation in the state, all in a heel to raising revenue to budget standard which has always been falling below measure or budgeted.
1.2 Statement Of The Problem
The ever increasing cost of running government expenditure on revenue generation in terms of the provision and maintenance of utilities and amenities coupled with the dwelling national economy due to inflation and pressure on existing infrastructure facilities such as school, hospitals etc. due to population increase has left government with no other option but to source for and raise fund internally or within the areas of jurisdiction and the only way of doing this successfully is through taxes from every taxable audit and sources; imposition of fines and levies.
1.3 Objectives Of The Study
The major objective of this study is to find out the problems of tax collection and their effect on the revenue generation.
Their objectives can be summarized as the following:
- To review the collecting procedure of taxes, levies fines, rate e.g. in Orumba Local Government Council.
- To find out the problems of tax collection and its effects on Local Government revenue.
- To find out the revenue collectors and the taxable adults and business in terms of actual income and from all sources, profits and accountability of low much was actually collected or realized as against the expenditure.
- To review existing literature and collect information on demanded revenue report.
- To make recommendation based on the finding.
1.4 Research Hypotheses
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
- H0: there are no problems of tax collection and its effects on Local Government revenue
H1: there are problems of tax collection and its effects on Local Government revenue
- H02: there is no procedure collecting of taxes, levies fines, rate in Orumba Local Government Council.
H2: there is procedure collecting of taxes, levies fines, rate in Orumba Local Government Council.
1.5 Significance of the Study
The essence of this research is to thrown more light on the problems facing tax collection and it effects on Local Government revenue with a study sample of Orumba Local Government Area. The outcome of this research will hopefully help to proffer possible solutions to these problems. It is also expected that result will be useful to policy makers in this country. The researcher intends to stimulate the students of public administration in particular and other studies in general to desire and discover what their various local governments have accomplished towards revenue generation.
It is also intended to be beneficial to the residents and indigenes of Orumba South Local Government Area in Anambra State who are the target group of the tax generation.
1.6 Scope and Limitation of the Study
The scope of the study covers the problems of tax collection and effects on the revenue generation in Nigeria. The study is limited to Orumba local government council of Anambra state. . The researcher encounters some constrain which limited the scope of the study;
a) Availability of Research Material:
The research material available to the researcher is insufficient, thereby limiting the study
The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
c) Organizational Privacy:
Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.
1.7 Definition of Terms
A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law.
Revenue generation is complete amount of money that is generated during a specific time period. The money is used to calculate business profits. Media houses make their money through Direct Payment and Indirect Payment.
1.8 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows
- Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
- Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion, and recommendations made of the study
Summary, Conclusion and Recommendation
It is important to ascertain that the objective of this study was to ascertain the problems of tax collection and effects on the revenue generation in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of tax collection and effects on the revenue generation in Nigeria
This study was on the problems of tax collection and effects on the revenue generation in Nigeria. Five objectives were raised which include: To review the collecting procedure of taxes, levies fines, rate e.g. in Orumba Local Government Council, to find out the problems of tax collection and its effects on Local Government revenue, to find out the revenue collectors and the taxable adults and business in terms of actual income and from all sources, profits and accountability of low much was actually collected or realized as against the expenditure, to review existing literature and collect information on demanded revenue report, to make recommendation based on the finding. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Orumba local government council of Anambra state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made of directors, administrative staff, tax collectors and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Having tested the hypotheses and discussed the findings, the study concluded that tax administration in Orumba local government council of Anambra state has no significant relationship with the revenue generation. It also emphasized that tax evasion and avoidance significantly affected revenue generation in Orumba local government council
In view of the findings and conclusion, the following recommendations were made:
- The government in Anambra State should re-address its administrative structures.
- Government should create public awareness for the tax payers.
- The tax regulations should be redesigned so as to prevent evasion and avoidance.
- The assessment mode should take care of the principles of a good tax
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