PERSONAL INCOME TAX IN DEVELOPMENT OF NIGERIA ECONOMY
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
PERSONAL INCOME TAX IN DEVELOPMENT OF NIGERIA ECONOMY
ABSTRACT
This study shows the findings about the impact of personal income tax. The study’s population consisted of 100 randomly selected persons. Data were collected using a self-constructed questionnaire, and the results were analysed using the simple percentage approach.
The validity and reliability of the instrument were determined. The study’s findings found that people pay little income tax, and that personal income tax has an impact on Nigeria’s economic progress.
The results revealed a good association between tax contributions and economic progress, as well as a significant impact on Nigeria’s GDP. However, it is advised that notices of tax returns at the beginning of each fiscal year be supplemented by handbills and posters written in local languages such as Yoruba, Hausa, Igbo, and others to also enable illiterates to continue to civil responsibilities.
Chapter one
INTRODUCTION
1.1 Background of the Study
Tax is described as money paid to the government by citizens based on their profits from goods and services delivered. Chris and Elizabeth (2001) also described taxes as a forced proportional payment from individuals and property imposed by the state in exercise of its sovereignty for the support of government and all public necessities.
In general, taxation can be defined as a levy placed on all residents and non-residents doing business in a certain tax jurisdiction. It is the civic and patriotic responsibility of residents to pay taxes levied
which also serve as an income or revenue-generating device for the government to fund the supply of socioeconomic and infrastructure amenities, as well as to improve industrial efficiency.
Taxation in Nigeria has a long history that predates colonialism. According to Lekan and Sunday (2006), prior to the colonisation of the various entities that were later amalgamated under the name Nigeria,
different systems of taxation existed in the form of compulsory services, contributions of goods, money, labour, and so on among the various kingdoms, groups, and tribes controlled by the Obas, Emirs, Ezes, Attah of Igala, Tor of Tiv, Ohinoyi of Ebira, and so on in order to sustain the monarchs.
According to Ola (2004), the various taxes levied by the different ethnic groups by the kings took several forms, such as ‘Zakkat’ levied on Moslems for educational, charitable, and religious purposes, ‘kudin-kasa’, a form of an agricultural tax levied on the utilisation of land,’shuka-shuka’ levied on the ownership of cattle based on the member of cattle, ‘Ishakole’
– contribution of farm products as a form of land tax in exchange for the use of land for agricultural purposes Couples in Tivland, Benue state, pay particular fees during marriage rituals, which are used to fund various community development projects.
The current form of taxation in Nigeria may be traced back to August 6, 1861, when a British colony was established in Lagos, followed by the unification of Nigeria’s Southern and Northern protectorates in 1914.
According to Yerokun (1997), the colonial authority imposed any type of tax on citizens (individuals and corporations) through the proclamation of laws. Native Law Ordinance Cap. 74 of 1917, which applies to Western Nigeria, is one example of such law.
According to Ola (2004), the re-enactment of the same law in 1929, which initially levied taxes on women, led in the 1929 Aba women’s riot. Another measure was the Non-Native Protectorates Tax Ordinance of 1931.
The regulation was then repealed and incorporated into Taxation regulation No. 4 of 1940, which was then re-enacted as the Income Tax Ordinance (ITO) 1943.
According to Yerokun (1997), various tax and revenue officials in different provinces and regions applied the aforementioned tax legislation to people and corporate entities.
According to Lekan and Sunday (2006), the colonial authority established the Raisman Commission in 1958 to achieve uniformity in tax incidence throughout the geographical entity known as Nigeria.
The commission concluded its work by recommending the implementation of uniform basic income tax principles for all areas of Nigeria. The government adopted this recommendation and put it into the Federal Republic of Nigeria’s 1960 constitution. This resulted in the passage of the Income Tax Management Act (ITMA) 1961 and the Companies Income Tax Act (CITA) 1961.
The above-mentioned legislation (ITMA and CITA) 1961 was later abolished and re-enacted as the Personal Income Tax Act (PITA) 1993 and the Companies Income Tax Act (CAP 60 LFN) 1990, respectively.
These laws have been reviewed and amended as a consequence of the Tax Laws Review Commission’s efforts, and they are now part of the Federal Republic of Nigeria’s 2004 laws.
The current law governing the administration of Personal Income Tax (PIT) is the Personal Income Tax Act Cap. P8 LFN 204, which imposes a tax on individual and corporate incomes.
According to Nightingale (2000), taxation in any jurisdiction is discriminatory in the sense that it is levied on individuals or property based on profits/incomes or gains, and the benefit obtained by citizens from tax payment is unrelated to the contribution of individual taxpayers.
According to Ariwodola (2000), the primary goal and purpose of taxation in most countries around the world is to generate revenue for government spending on social welfare such as defence, law and order, health care, and education.
Tax revenue can also be used to fund capital projects, often known as consumer expenditure, such as the development of social and economic infrastructure that will better people’s lives.
In Nigeria today, tax administration has been a challenge Naiyeju, J.K. (2010) identifies several challenges to tax collection and administration in Nigeria today, including administrative challenges, compliance challenges
a lack of equality, the challenge of multiple taxes, poor taxation driven by tiers of government, the challenge of bad governance, the challenge of corruption, and the challenge of human capacity building and training.
The purpose of this study project is to investigate the various restrictions encountered in the administration of Personal Income Tax and to assess the economic advantages to the development of Lagos State. Also, providing solutions in terms of revenue authorities’ methods for expanding the Nigerian tax net in order to boost tax collection.
1.2 Statement of the Problem
Personal Income Tax is a global and broad topic that unquestionably requires examination and the development of potential solutions to the problems related with successful tax administration.
Most tax authorities (particularly state and local governments) lack the necessary institutional capacity to efficiently administer the taxes under their jurisdiction.
Employers’ failure to register their employees and remit payroll taxes to the appropriate tax authorities. Many people avoid taxes in both urban and rural settings. SMEs, informal sectors, and even large corporations engage in evasive techniques.
The majority of PIT today is paid by employees. Politicians, the wealthy, professionals, and the privileged are among the few who are not taxed equally. Multiple taxes are still a key issue in our tax collecting and administration.
Poor Taxation Drive by Various Levels of Government: The political economy of revenue allocation inhibits proactive revenue drives, particularly by states and LGs. They rely largely on their portion of oil revenues.
Need help with a related project topic or New topic? Send Us Your Topic