TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVES OF THE STUDY
1.4 RESEARCH QUESTIONS
1.5 RESEARCH HYPOTHESIS
1.6 SIGNIFICANCE OF THE STUDY
1.7 SCOPE OF THE STUDY
1.8 LIMITATION OF THE STUDY
1.9 DEFINITION OF TERMS
CHAPTER TWO
LITERATURE REVIEW
2.1 Overview of Taxation System in Nigeria
2.2 Relevant tax Regulations in Nigeria
2.3 Implication of Multiple Taxation in Nigeria
2.4 The Tripartite Structure of the Tax System in Nigerian
2.5 Challenges Facing Tax System, in Nigeria
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 INTRODUCTION
3.2 RESEARCH DESIGN
3.3 STUDY POPULATION
3.4 SAMPLE AND SAMPLING TECHNIQUE
3.5 DATA FOR THE STUDY: INSTRUMENTATION
3.5.1 INSTRUMENTATION
3.5.2 VALIDITY OF INSTRUMENT
3.6 METHOD OF DATA ANALYSIS
CHAPTER FOUR
4.0 DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 INTRODUCTION
4.2 DATA ANALYSIS (QUESTIONNAIRE)
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATION
REFERENCES
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Currently in Nigeria, the responsibility of tax administration lies on the federal, state and local governments. Each of the three tiers of the government has her own tax laws and authority formed by the federal laws.
The Nigerian tax system is designed as a means of income generation and it is based on the 1948 tax laws of the British during the pre-independence government legacy (Ekeocha et al., 2012). And since then the Nigerian tax system has not been left without reforms. The tax system in Nigeria has undergone several significant reforms. The reforms are aimed at making the main laws simple and preventing out dated provisions of the tax laws.
Though several improvements have been made to reposition the Nigerian tax system, the system is still facing numerous challenges. That is, there are still the existences of many contending issues requiring immediate attention despite the improvements (Is-haq, 2011). The tax system in Nigerian is not well and as a result confronted with many challenges (Mba, 2010) and the country has not advanced a tax system that is effective and efficient.
Nigeria is a federation with three tiers of government namely; Federal, State and Local Government. These tiers of government have their different expenditure responsibilities and taxing powers (fiscal federalism).
This has serious implications on how the tax system is managed in the country. The Nigerian tax system is lopsided and dominated by the oil revenue. It is also characterized by unnecessarily complex, distortionary and largely inequitable taxation laws that have limited applications in the informal sector that dominates the economy (Odusola, 2006 and Jibrin, et al 2012). The system is concentrated on petroleum and trade taxes while direct and broad-based direct taxes like the value added tax (VAT) are neglected. This is a structural problem for the country’s tax system.
The Nigerian tax system favours the federal government since it controls the buoyant tax components while the lower tiers have jurisdiction over the less profitable ones (Odusola, 2006). In most instances the federal government taxes the corporate bodies while the state and local governments tax individuals. In the areas of concurrent taxation such as the personal income tax, capital gains tax and stamp duties, the federal government retains the legislative power while sharing administrative capacity with the states.
The Nigerian tax system is sick and faced with many challenges. The country is yet to develop an effective and efficient tax system despite the fact that the enforcement machinery of our tax laws is porous that anybody can go against it without being punished and this does not augur well for our economy (Ogbonna
2010).
Those who are charged with administration of tax are not empowered with state of the art equipment to perform. They are not often than not so ill-equipped, so ill-trained and so neglected that they become disillusioned, discouraged, frustrated and therefore hardly give their best services. Therefore, from indications, tax administration in Nigeria is generally poor and inefficient.
The administration of tax in Nigeria is vested in the various tax authorities depending on the type of tax under consideration. Such authorities are the Joint Tax Board, which is the apex unifying body for all tax authorities in Nigeria. It is established under section 85 of the Personal Income Tax Act, (Amendment) 2011,
Federal Inland Revenue Service (FIRS) established by Section 1(1) of Companies Income Tax Act (CITA) 1990.
It is charged with the powers of assessment, collection of and accounting for all the taxes which the federal government is empowered to collect. The State Board of Internal Revenue in each state is another tax authority vested with the administration of tax in each state. It is established by Section 85A of the Personal Income Tax
Decree (PITD), 1993. The Local Government authorities in the state also have specific tax functions. They are established by Section 85E of the PITD, 1993. It is the responsibility of these bodies to ensure that tax administration is strengthened in such a way that no leakage or loopholes of collectible tax is allowed. Contrary to this expectation, there are some administrative problems giving rise to such leakages and loopholes. Therefore, the study focuses on the Challenges often faced by tax department in the collection of tax and its implication towards the economic growth of Nigeria.
1.2 STATEMENT OF THE PROBLEM
Tax administration is all about the machinery put in place to determine, monitor and enforce the collection of taxes by government of a country. To Kiabel (2011) and Soyode and Kajola (2006), tax administration is “the process of assessing and collecting taxes from individuals and companies by the relevant tax authorities, in such a way that correct amount assessed is collected efficiently and effectively with minimum tax avoidance or tax evasion. Ogbonna (2012) noted that tax administration “involves all the principles and strategies adopted by any government in order to plan, implore, collect, account and coordinate personnel charged with the responsibility of taxation”. It also includes the effective use of tax revenue for efficient provision of necessary social amenities and other facilities for the taxpayers.
Tax administration and collection is a major problem facing taxation in the world (Jibrin, et al 2006).
According to them, bad administration and collection of tax has led to tax evasion. According to Udabah (2002), the problem of collection and administration are the major issues facing taxation. Tax administration is problematic because of high rate of illiteracy, poor tax awareness and inadequate orientation (Ogbonna, 2010).
According to the National Tax Policy (2012), leakages in any tax system makes up for significant drain on government’s revenue and affects efficient tax collection. Series of questions have been asked as to how the incoming administration at the Federal, States and Local Governments levels will tackle these problems and close the existing gap. Reflecting on the imminent economic challenges which governments at all levels will be facing; due to dwindling oil revenue; weak value of Naira, and in addition to the change of batons in governance, the challenges are becoming more pronounced and require immediate attention to fully exploit alternative revenue sources. It is against this background that, this study is undertaken to examine and identify the Challenges often faced by tax department in the collection of tax and its implication towards the economic growth of Nigeria.
1.3 OBJECTIVES OF THE STUDY
The general objective of this study focuses on the Challenges often faced by tax department in the collection of tax and its implication towards the economic growth of Nigeria, a case study of Lagos state. The specific objectives include the following:
1. To ascertain if there are challenges often faced by tax department in the collection of tax in Lagos state.
2. To find out if poor Tax Administration is a challenge often faced by tax department in the collection of tax in Lagos state.
3. To determine if inability to Prioritize Tax Effort is a challenge often faced by tax department in the collection of tax in Lagos state.
4. To examine the influence of on availability of Tax Statistics on the collection of tax by tax department in Lagos state.
5. To investigate the impact of the Challenges often faced by tax department in the collection of tax on the economic growth of Nigeria.
1.4