ABSTRACT
Since advent of the oil boom in Nigeria, taxation as the major source of public finance was neglected. The Nigerian major source of revenue became proceeds from crude oil Now that there is imbalance in allocation of revenue from oil sales by the federal government to states and local government. Government and people now seek alternative or ways to augument the insufficient amount received as their share of federal allocation. This now leads to taxation as an indispensable tool in economic planning and development of any nation. This study is therefore aimed at critical appraisal of Nigerian tax laws as administered by Enugu State government. To carry out the study, data for research were collected based on secondary data (Time series data) from staff of Enugu State board of internal revenue in Enugu, supplemented by personal interview. Data collected were analyzed using Z-tests which are two sample Z-test used for 2000-2005 and one sample Z-test used for 2006-2010 which led to rejection of null hypothesis in chapter one.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Tax is an important factor in economic planning and development of every nation, also it is an important agent of social change.
Taxation as defined by Ogundele (1999), is the process or machinery by which communities or groups of persons are made to contribute in some quantum and method for the purpose of the administration and development of the society. It can be inferred that the payment of tax will in turn be beneficial to the entire citizenry. This view is also similar to the definition of Soyode and Kajola (2006) who defined tax as a compulsory exaction of money by a public authority for public purposes. Nightingale (1997) described tax as a compulsory contribution imposed by the government on the citizenry. These various authors concluded that it is possible for tax payers not to receive anything identifiable for their contribution, but that they have the benefit of living in a relatively educated, healthy and safe society. However, the infrastructure which tax payers are supposed to enjoy is in a deplorable condition (Fa Funwa, 2005), educational system is in disarray (Obajo .2005) and the health system is in a worrisome condition (Lambo 2005).
Tax is an instrument of fiscal policy, which plays a leading role in every organized society irrespective of the political or constitutional structure. Once a society becomes stabilized, civilized or law abiding the functions of government becomes enormous resulting in heavy expenditure and necessitating tax payments by its subjects. Tax as the transfer of resources from private sector to public sector in order to accomplish some of the nation’s economic and social goals.
Further more, tax is a compulsory levy imposed on the payer by a legal authority or recipient public authority. Throughout the history of mankind, the right to raise tax has been one of the principal features of political authority. For a country like Nigeria, the primary economic goal is to increase the rate of economic growth and hence the per capital income which will lead to higher standard of living, through the provision of based infrastructure which is quite necessary. This perhaps explains why the government shows great concern for a medium through which fund can be made available to achieve their set goals for the society. Government needs money (fund) to be able to execute its social obligation to the public, these social obligations include the provision of infrastructure and social services. According to Murkur (2001), meeting the needs of the society calls for huge funds which an individual or society could not contribute alone. It becomes the responsibility of government to source for the funds to enable her provide these basic amenities to the citizenry who are the beneficiaries. One of the medium through which fund is derived is through taxation. Therefore, the citizenry are expected to discharge their civic responsibility by paying their taxes as these contributed to the development and administration of the society at large.
1.2 STATEMENT OF THE PROBLEM
There have been a heart provoking outcry by various government in Nigeria over their poor financial base (Ogundale 1999) The situation is becoming even more compounded by the obvious demanding feature of our oil economy. Moreover, inspite of broadness and the comprehensive nature of our tax system, tax avoidance and evasion are on the increase. The ugly development has placed most state government in situation where they can not cope with their civic responsibilities to their citizen, hence a compelling need to put an end to this unwholesome circumstances through proper problem identification.
Much has been published about the inefficiency of Nigerian tax laws, multiple taxes, excessive tax rates and poor tax administration (Soyode and Kojola 2006). A more fundamental problem that needs to be addressed if our tax system is going to attain optimally efficient however is the unwillingness and refusal of Nigerians to pay tax. The unwillingness to pay tax could be a universal phenomenon yet the Nigerian situation is some what peculiar. In most jurisdictions, especially in developed countries, income earners still pay their taxes because there are obvious reasons to justify the payment of such taxes.
The recent U.K budget demonstrated that there is a link between taxation and benefits derived from the populace via the national health scheme. The problem in Nigeria is that even though the constitution imposes the duty to pay tax, Nigerians do not see a moral ground to pay taxes, neither are they inspired nor encouraged to do so. After all, to what extent has government fulfilled its constitutional obligation to provide security and welfare? Many are of the opinion that the amount that they expend on regular basis on alternative means of power and water supply, the high cost of transportation, telecommunications, private medical and educational bill already constitute a tax. Government should not dismiss these argument or consider them frivolous. Rather they should act as a catalyst for a major reform of our tax policy.
1.3 OBJECTIVES OF THE STUDY
The main objective of this study is to critically appraise the Nigerian tax laws as administered by Enugu state government specifically, the study intends to achieve the following objectives.
1. To determine whether there is any significant difference between the mean targets and mean actuals of tax collection in Enugu state between 2000-2010.
2. To determine the level of compliance on tax collection from 2000-2010
3. To recommend policies that will help in effective tax administration in Enugu state
1.4 RESEARCH QUESTION
Based on the objectives of the study, the following research questions were formulated.
1. Is there any significant difference between the mean targets and mean actuals of Tax collection in Enugu state between 2000-2010?
2. What is the level of compliance on tax collection?
3. What policies or measures could be adopted to improve the tax administration in Enugu state?
1.5 RESEARCH HYPOTHESIS
In consistence with the statement of the problem, the research objectives, and research questions, this study formulates the following hypothesis.
Ho: There is no significance difference between the mean targets and mean actual of tax collection in Enugu state.
H1: There is significant difference between the mean targets and mean actual of tax collection in Enugu state.
1.6 AREA OF STUDY
This study covers two big organizations in Enugu state, Federal Inland Revenue Services Enugu and Enugu State board of Internal Revenue Enugu.
1.7 SCOPE OF THE STUDY
A study of this nature ought to be carried out in all the states of the Federation in Nigeria. However, given the limitations experienced by the researcher, in form of inadequate fund to execute the study across all the states, the study scope was limited to Enugu State. This study looked at critical appraisal of Nigeria Tax laws as administered by Enugu State government.
1.8 LIMITATIONS OF THE STUDY
As part of the research experience by the researchers all over the globe, certain limitations hindered the effectiveness and smooth collection of data for the work, these in specific terms include.
1. Inadequate working fund: The funds needed to carry out this research work is huge sum which cannot be provided by the student, this posed a great threat to the accomplishment of this work.
2. Lack of Time: There was no enough time to carry out this research work, the work was done in line with the class work, this made it uneasy to provide the work at when due.
3. Non challant attitude: This limitation exist when the researcher visited the organization under study, some of the respondents felt less concerned about the questions asked to them, while some refused out rightly to answer the questions, this contributed to the slow and steady of this work.
1.9 SIGNIFICANCE OF THE STUDY
The researcher is motivated to critically appraise the Nigerian tax laws as administered by Enugu state government with the intention of finding the impact of the act on the revenue generation in the state, also to introduce reforms where necessary such that the law shall meet as much as possible the classical cannons of good taxation, particularly now that the Nigerian economy calls for self reliance, self sufficiency inculcation of maintenance culture and restriction in sourcing external borrowing so as to manage the national.
This work therefore shall be of interest to the following parties.
a. The government and her agencies, federal, state and local government.
b. Future researchers
c. The general public
It will reveal the lapses or short comings in the tax laws and other factors inhibiting effective administration of the law in the state. Whether the tax laws since the commencement had made any positive impact on the revenue generated in the state. Its recommendation will attempt to bring more payment into the tax and for improved internally generated revenue (IGR).
1.11 PERATIONAL DEFINITION OF KEY TERMS
Tax: The transfer of resources and income from the private sector to public sector in order to achieve some of the nation’s economic and social goals.
Citizen: Person with full rights in a country.
Administration: Performance of executive duties or execution of public affairs as distinguished from policy- making.
State: one of the constituent units of nation having a federal government.
Revenue: The income received by an organization or a state from taxes.
This material content is developed to serve as a GUIDE for students to conduct academic research
CRITICAL APPRAISAL OF THE NIGERIA TAX LAWS AS ADMINISTERED BY ENUGU STATE GOVERNMENT 2000-2010
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