TAX MANAGEMENT AND REVENUE GENERATION (A CASE STUDY OF ANAMBRA STATE)

Thesis Overview

<p> </p><p><strong>1.0 INTRODUCTION</strong></p><ol><li><strong>BACKGROUND<br>OF THE STUDY</strong></li></ol><p>The prime objective of every government is to maintain<br>law and order, to provide and maintain basic essential services without which<br>the community will be unimaginable and which by their nature cannot be left<br>appropriately in the hands of private entrepreneurs. Such services include<br>Internal Law and Order, Maintenance of National defense, provision of good<br>healthcare system, educational system, transportation system, agricultural<br>system etc. To cover the cost of providing these goods and services for the<br>public good, government must generate financial and adequate revenues. The<br>quest to governing meaningful financial resources has often led government to<br>designing and administering some efficient and effective revenue generation<br>systems. Primarily the main source of government revenue includes the<br>following:</p><ol><li>Taxation<br>on citizens</li><li>&nbsp;Taxation on income of companies</li><li>Borrowing</li><li>Grants.</li></ol><p>Amongst these sources, taxation (the demand made by the<br>government of a country for a compulsory payment of money by the citizens of<br>that country.) remains the most outstanding. This may be due to it being a<br>civic responsibility that must be performed by the citizens of the state. As a<br>non-penal by compulsory transfer of resources from the private sector, taxation<br>must be levied on the basis of equity, certainty, convenience, economy and productivity.<br>Unfortunately, taxes are not paid in exchange for specific things but are<br>collected for the sake of public welfare and interest.</p><p>&nbsp; &nbsp; &nbsp; Government<br>often uses various kinds of taxations to generate the required revenues. For<br>instance, direct taxes which include personal income tax, often applied on<br>employees, sole traders, partnership, capital gain tax on companies, individual<br>and non- co-operate entities, capital transfer tax (applicable asset<br>transferred from one person to another), purchase tax, petroleum profit tax,<br>and company income tax has constituted a significant source of revenue to the<br>government. Similarly, indirect tax, e.g. stamp duties, custom duties,<br>industrial training fund, toll paid on federal highways, will have often<br>enhanced government revenues.</p><p>The<br>administration of tax in Nigeria<br>is in the hands of three relevant tax authorities viz:</p><ol><li>The joint Tax Board</li><li>The federal Board of Inland Revenue</li><li>The various state Board of Internal Revenue</li></ol><p>In<br>Nigeria,<br>persons liable to pay income tax include men, women, married or single,<br>trustees and executors, families, villages and indigenous communities. Though<br>government can also raise funds through natural resources such as oil, palm<br>oil, coal and gas which are exported, those alternative sources of income to<br>government are hardly enough to shoulder the burden of government expenditures,<br>especially in the area of economic and social spheres in each year, hence the<br>need for tax payment.</p><p>&nbsp;We must emphasize here that income Tax Law must be interpreted in strict- to- sensor. There is no equity in tax law. The tax payer must be brought within the letter of the law and rigid adherence is the rule. Nothing should be read in and nothing should be implied. The onus of bringing a tax payer into the tax net is on the revenue or assessment authority. Another important point to note is that tax is not imposed on person or individual. Section 4 (1) of ITMA 1961 states that “the tax shall subject to the provisions of this act, being payable for each year of assessment upon income accruing in derived form, brought or received in Nigeria. Studies have shown that in Nigeria, workers pay more than the rich people who invest in various proper ties such as building, transporters, etc as a result of ineffective administration of taxes. Yet those investors are the category of people who would want government to move mountains in terms of raising their socio-economic well being, without meaningfully contributing towards the funds.</p><p>&nbsp;Now that our various government are gearing efforts to revamping over bettered economy and improving the living condition of Nigerians, the need for the evolvement of more effective strategies to ensuring regular tax payment by taxable individuals need not be overemphasized. Taxable adults and organizations in various sectors of the economy must discharge their civic responsibilities. Unfortunately, this can only be achieved if tax systems are effectively administered so that people would in government revenue generation, willingly and without grudges pay their taxes. This will result to improvement in government revenue generation, hence the basis for this research study.</p> <br><p></p>