ABSTRACT

This study focuses on the problems and prospects of personal income tax as a source of revenue  to tne AOia state government   me problems  associated with the administration  of personst income tax are lack of trained and qualified staff, corrupt alliance of tax administrators with tex payers and no enlightenment on the part of taxpayers as regards the importance of taxation. The objectives of this study are to ascertain whether there are really problems in personal income tax generatiOnand collectiOn; investigate and identify these problems, find out how these problems have affected work of the Board of Internal Revenue, discuss the problems and prospects of personal income tax generation in Abia state and recommend measures to overcome or minimize these problems of personal income tax generation and collection in Abia state. In order to achieve these objectives, primary data was used and the questionnaire was analyzed using the chi-square statistical technique. The result showed that one null hypothesis was rejected and two were accepted. The findings of the results showed that personal income tax  serves as  a  strong source of  revenue to   the Abia state government, that  the misappropriation of funds by tax officials aggravates the problems and challenges of personal income tax generation and that the operation of an efficient tax system alone would not cause a signilicant reduction in the problems and prospects of personal income tax generation and collection. Also, conclusion reached was that personal income tax is the most problematic and disappointing of all taxes in Abia state, yet it yields a large chunk of total revenue of the country. For an effectjve and efficient tax system, tax reforms should be adopted and followed up. On the part of the government, the system should be closely monitored and maintained; and trained and qualified staff should be  employed.  However,  the tax system requires patriotism on the part of the government, tax offJCials and tax payers in order to survive.

TABLE OF CONTENTS

Title page

BSc. Research Project

Evaluation Form

Declaration

Certification iii iv

Dedication v

Acknowledgement vi

Abstract vii

Table of Contents viii

List of Tables xi

CHAP'TERONE

1.1 Background Of The Study 1

1.2 Statement Of The Problem 4

1.3 Objectives Of The Study 5

1.4   Research Questions                                                                    6

1.5     Research   Hypothesis.                                                                 6

1.6  Significance Of Study                                                                   6

 1.7   Limitations  Of The Study.                                                            7

 CHAPTER  TWO

2.0 REVIEW  OF RELATED LITERATURE

2.1.1 Pre-Colonial Period 8

2.1.2 The Colonial Period 10

2.1.3 The Post-Colonial  Period 14

2.2 Objectives And Uses Of Taxes. 16

2.3 Principles Of Taxation 18

2.4 Effects Of Personal Income Tax 20

2.4.1 Social Effects Of Personal Income Tax 20

2.5 Classification Of Personal Income Taxes 22

2.6 Administrative Machinery 26

2.6.1.1      The Joint Tax Board (Jtr)                                                    26

2.6.1.2       Duties Of The Joint Tax Board.                                            28

2.6.2   The Federal  Board Of Inland Revenue (Fbir)                              29

2.6.3 The State Board Of Internal Revenue (Sbir)                               29

2.6.3.2       Functions Of The State Board Of Internal Revenue           30

2.6.4.1       Local Government  Revenue Committee  (Lgrc)                   30 

2.6.4.2       FunctionsOf The Local Government Revenue 31

2.6.5.1      The Joint State RevenueCommittee 31

2.6.5.:2      FunctionsOf The Joint State RevenueIn Any 32

2. 7    Returns By Taxable Persons. 33

2.8    Ascertainment Of AssessableIncome (Section 26) (Pitd) 34

2.9  Ascertainment Of PersonalIncome Tax 34

2.10 Self Assessment 35

2.11 PaymentOf Tax 36

2.12 The Pay As You Earn System Of PersonalIncome 37

2.13 New EmployeeOr EmployeeLeaving 37

2.14 Year-End Procedure 38

2.15 Liability Employer 38

2.16 Tax ClearanceCertificate 38

2.17       OffencesAnd Penalties                                                         40

2.18 ProspectsOf PersonalIncome Tax Generation In Abia State.      44

2.18.1 AmendmentsTo The PersonalIncome Tax Act                        44

CHAFt"fERTHREE

3.0 R.ESEARCH  METHODOLOGY

 3.1 Scope Of Study                                                                              49

 3.2 ResearchDesign                                                                            49

3.3 Population Of The Study                                                                SO

3.4 Sample Size Of The Study                                                              50

3.5 SampleAnd SamplingTechnique                                                   51

3.6 Data AnalysisTechnique                                                                51

3.7 Data CollectionAnd Instrument                                                      51

3.8 ProcedureFor Data CollectionAnd ResearchInstrument                52

3.9 Validity Of Instrument                                                                    52

3.10 Statistical Method Of Data PresentationAnd  Testing Of

Hypothesis                                                                                          53

CHAl>TER FOUR

4.0 t•ata Presentation And Analysis                                              54

4.1 PtesentationAnd AnalysisOf Key Research Questions                  54

4.2 Test Of Hypothesis                                                                        67

4.2.1 Testing For RelationshipBetween Personal Income Tax And Government Revenue.                                                             67 

4.2.2 Testing How Misappropriation  Of Funds  By Tax Officials Aggravate The Problems Of Personal Income Tax Generation.            69

CHAP1ER  FIVE

S.O SUMMARY OF FINDINGS, CONCLUSION RECOMMENDATION

5.1 Summary  Of Findings

5.2 Conclusion And Recommendation 74

BIBUOGRAPHY

Glossary

Appendix