THE PROBLEMS OF TAX COLLECTION AND EFFECTS ON THE REVENUE GENERATION IN NIGERIA
ABSTRACT
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. A total of 80 respondent from different department. The instrument employed in obtaining the data used for the study was questionnaire. The three hypotheses were tested using chi-square at 0.05 levels significant. The three hypotheses were all rejected in favor of alternative hypotheses. The summary of the finding revealed that there has been a sub-optimal realization of revenue from the inexperienced sources. Based on the findings of this study, the local government is recommended to finance and conduct more research work on revenue generation procedures and methods.
CHAPTER ONE
1.0 INTRODUCTION
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 bearest minimum the nation’s (the local, the state and Federal government 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 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 rely 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 profit tax, personnel income tax, levies, fines etc as a sources of generated revenue in the hands of government is sued 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 budgeted standard which has always been failing 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 dwindling 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; impossible 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;
1) To review the collecting procedures of taxes, levies, fines, rate e.g in Orumba Local Government council.
2) To find out the problems of tax collection and its effect on local government revenue.
3) To determine the comprehensiveness of the statistical data of taxable adults and business.
4) 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 how much was actually collected or realized as against the expenditure incurred.
5) To review existing literature and collect information on demanded revenue report.
6) To make recommendation based on the finding.
1.4 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 are. 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.
1.5 RESEARCH QUESTION
In developing this research work, the researcher posed some research questions. These researches will enable any reader of this work to comprehend clearly what the study is all about. However, these research question are formulated based on the objective of this study.
Sequal to this, posing the following research questions becomes inescapable imperative;
1. What are the problems of tax collection in Orumba South local government counci3l?
2. How are revenues generated in Orumba South local government council?
3. How realistic and appropriate are these criteria used in realizing revenue?
4. Does revenue officers and tax collectors account for money that was realized?
5. What are the measurement criteria?
1.6 FORMULATION OF HYPOTHESIS
For the purpose of achieving success in the subject matter, it is the opinion of the researcher to work on the following hypothesis.
1. Ho: Internally Generated revenue has no significant relationship with tax law and rates.
Hi: Internally Generated revenue has significant relationship with tax law and rates.
2. Ho: There is no significant relationship between revenue realized and revenue determinants.
Hi: There is significant relationship between revenue realized and revenue determinants.
1.7 SCOPE/LIMITATIONS OF THE STUDY
The scope of this study covers only Orumba South local government area of Anambra State. It is to achieve the aim of this study that the scope of this study was limited to only Orumba South Local Government Area. A study of this nature cannot be completed without the researcher experiencing some constraints. In view of the above, the first limitation to this study was time constraint. It was difficult for the researcher to conduct a survey of all the activities of the local government authorities towards the tax collection engagements bearing in mind that the researcher is a worker and equally a student.
The other limitation of this study was the difficult encountered by the researcher in convincing some of the local government staff in supplying the necessary data to researcher. Some of them discretely revealed to the researcher that sampling certain information could jeopardize their position in the local government offices-notwithstanding the efforts made by the researcher to let them understand that the study was purely for an academic exercise.
DEFINITION OF TERMS
For clarity and over semantics the following words and terms are contextually defined;
BUDGETED AMOUNT
This is the estimated amount to be realized at a specific period of time.
ACTUAL AMOUNT
This is real cash that was realized.
TAX
Tax is a compulsory levy imposed by the governments to meet public expenses.
REVENUE
This refer to as income from taxation.
EXPENDITURE
These are monies or income from revenue source of government expended by the government on both capital and recurrent item in the budget and extra budgetary activities.
GENERATION OF REVENUE
The revenue generation is concerned mainly in the collection of monies from individual and corporate bodies.
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