ADEQUACY IN PERSONAL INCOME TAX SYSTEM IN NIGERIA
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ADEQUACY IN PERSONAL INCOME TAX SYSTEM IN NIGERIA
ABSTRACT
The goal of this study was to look into the adequacy of Nigeria’s personal income tax system utilising NIFOR as a case study. A survey research design was used for the investigation.
The study’s population consisted of both management and non-management staff from NIFOR Edo State, Nigeria. 40 staff members were chosen at random using the simple random sample technique.
Data were collected via questionnaires and interviewers. The hypothesis was tested using the Chi square test at the 0.05 level of significance. The study found that PIT is enough, and it was recommended that tax collection be more efficient.
Chapter One: Introduction
A tax is a mandatory charge imposed by a public authority (First-Federal ILAND Revenue Service) on an individual’s or a corporation’s income, profit, and wealth for public purposes.
Every nation has a tax policy in place, thus the Nigerian government is not exempt from imposing taxes. It has both economic, social, and financial repercussions.
For example, certain goods are forbidden to be traded since they do not contribute to the development of the economy or humanity; therefore, the government will impose severe taxes and restrictions on such commodities and their use.
Cocaine and Indian hemp are items that are not encouraged to be produced or consumed, hence the government does not encourage but imposes harsh penalties on offenders.
Personal income tax (PIT) is a type of tax levied on individuals who are either employed (in both public and private sectors) or manage their own small companies under a company name or partnership. Personal income taxes are typically collected by the federal and state governments, however local governments may also collect them.
The federal inland revenue service is responsible for collecting personal income tax from Abuja residents as well as what could be described as highly mobile federal workers –
staff of the Ministry of Foreign Affairs and other Nigerians and foreigners outside the country earning income in Nigeria (non-resident) expatriate workers residing in Nigeria, police and military officers, and civilians working in police and military formations.
They do, however, pay taxes in their home state. The present law governing the taxation of personal income tax went into effect in 2004, and it allowed federal and state tax boards to identify individuals residing in or generating money in Nigeria who are legally compelled to pay tax.
The personal income tax is insufficient to cover taxes in Nigeria, self-employment in Nigeria (barbers, GSM operators, mechanics, spraying painters, market women and men, hair dressers, hawkers, e.t.c) does not account for personal income tax vendors
bus conductors do not pay income can be determined and deducted at source that actually pay tax to the relevant authorities market women and men make profits that are not accounted for because our taxation system is not
STATEMENT OF PROBLEMS
The federal, state, and local governments’ ability to carry out desirable projects is dependent on enough and available resources. Access to free health care, education, piped water, adequate roads, and other services are the primary obligations of both federal and municipal governments.
The study will seek to address some of the causes behind the inadequacy of personal income taxes, as well as the proposed alternatives. In light of this, the study attempts to find answers to the following questions:
Is taxes inadequate in Nigeria?
What efforts should be taken to guarantee that Nigeria has an acceptable tax system?
Does the Niger tax fulfil international standards?
How will the appropriate tax agencies ensure an effective tax system?
Is there a relationship (good or negative) between tax policies and the overall economy?
Has taxation benefited individual taxpayers or corporations in a progressive or retrogressive manner?
What economic, social, and financial indicators suggest that question 6 above has been answered?
Has adequacy in personal income tax prompted governments and tax authorities to combat fraud and illegal collection by tax officers?
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