THE IMPORTANCE AND BENEFIT OF TAX TO GOVERNMENT
INTRODUCTION
The economy's current reliance on oil as the major source of revenue to the government is no longer a feasible alternative. This development coupled with increased demand for basic social amenities by the teeming population has made it imperatively difficult for the government(Federal, State and Local) to look and improve on other sources of revenue, example, taxes, grants, borrowing, rents, royalties, profit, fees, and specific charges.
AN APPRAISAL OF CREDITMANAGEMENT STRATEGIES IN COMMERCIAL BANKS
Taxation in general is one of the most important sources of revenue for all governments in Nigeria especially in Jigawa State. It is therefore a factor to be reckoned with in both state and federal governments' budgets. It should be noted that taxation is concerned not only with personal and corporate income tax, but also import and excise duties, petrol, tobacco and oil taxes are all part of the whole structure of taxation. Internally generated revenue by Jigawa State government is derived mostly from taxes, most especially personal income tax, since from statistics majority of Jigawa State tax Payer are workers and are directly charged against their earnings.
Taxation as a whole, in Nigeria can be dated back to the days of our great grandfathers when communities use to tax themselves through communal labour to execute communal projects or to help the community to wound off external aggression. Personal income tax is a machinery by which communities or groups of persons are made to contribute part of their income in some agreed method for the purpose of administration and possibly for the economic development of the society.
1.1 Statement Of The Problem
In Jigawa State the major problems that are encountered in the collection and administration of taxes include tax evasion, tax avoidance, attitude of the officials, inadequate personnel, etc. Regardless of the amount of tax revenue collected in the state, these problems in turn significantly lead to a reduction in the revenue generated to the state government; thereby, incapacitating the State's expenditure programme. As a result of these problems we will like to know how the limited amount collected as personal income tax contributes towards economic development in the state
1.2 OBJECTIVE OF THE STUDY
This research work was conducted with the following objectives in mind:
a. To ascertain whether or not personal income tax contribute to the economic development of Jigawa State.
b. To determine what personal income tax is all about.
c. To carry out evaluation work on how personal income tax affect economic development.
d. It is intended to discover if any, the various problems behind the assessment and collection of personal income tax.
e. To recommend a workable solution to the assessment and collection of personal income tax in Jigawa State for developmental purposes.
1.3 HYPOTHESIS
Our Hypothesis will test for the following:
a. Personal income tax does not contribute to economic development.
b. Personal income tax is necessary for economic development.
c. Personal income tax in one of the most important sources of revenue to the Jigawa State government.
We shall test for both the null hypothesis (H0) and the alternative hypothesis (H1). Questions to be answered will include the following:
1. Does personal income tax contribute to economic development in Jigawa State?
2. Does personal income tax form part of the major sources of revenue to the Jigawa State government?
3. Are there any problems associated with the collection of personal income tax?
4. Why is it necessary for economic development?
1.4 SIGNIFICANCE OF THE STUDY
Researchers are necessary without them our world would have been static and primitive. Like all researches, this study will be of primary importance to the student and tax officers who apply its principles in the course of their activities. In addition to this, the study will help enlightened taxpayers (either individuals or corporate bodies) on the benefits of paying tax to the state, for the betterment of the general public.
It should also be useful to any body requiring an insight into the contribution of personal income tax to the economic development of Jigawa State or any state of the federation. Finally, this research work can be used by investors, future researchers, etc to learn and know more about the contribution of personal income tax to economic development.
AN ASSESSMENT OF THE IMPACT OF MERGERS AND ACQUISITION IN THE NIGERIAN BANKING INDUSTRY
1.5 SCOPE OF THE STUDY
The research intends to cover the whole areas of Jigawa State with Dutse local government as a case study. This research will mainly the department of Board of Internal Revenue Dutse Branch, since it is believed that what may be obtained in Dutse local government area can as well be applicable to the whole of Jigawa State.
1.6 LIMITATION OF THE STUDY
As a result of financial problems, time, materials and probably cooperation that may be required to carry out further research to the local governments in the state, the research will not give a thorough or one hundred percent coverage of all that is required. There are also administrative bottlenecks; lack of cooperation form respondents, tight academic schedule and lack of primary data which hinders the full investigation of this research.
1.7 DEFINITION OF TERMS
1. Personal income tax: This is defined as a compulsory levies on individuals on their generated income.
2. Contribution: This refers to a donation or substantial help towards the existence or re-existence of particular things by someone or something else.
3. Economic: This is simply defined as anything relating to the production, distribution and consumption of goods and services, pertaining to the material welfare of a community, nation or individuals; and also to the means of living to the act by which human needs and comfort are supplied.
4. Development: This is the process of unfolding and unraveling of a plot and a gradual increase in national income and positive advancement through progressive changes.
CHAPTER TWO
REVIEW OF RELEVANT LITERATURE
INTRODUCTION
The importance of this chapter can not be overemphasized. The chapter will review previous books, periodicals, journals and other written materials related to the topics as the one in question. This will help the researcher arrived at a better and dependable conclusion at the end of this research work.
HISTORY OF TAXATION IN NIGERIA
The history of taxation can be traced back to the second century B.C. During the Roman Empire period when citizens were made to pay tax and charged levies on custom duties as well as tribute from conquered states.
Back home in Nigeria, there had been in existence some form of taxation before the advent of colonial period, where people use to pay their taxes through homage or force labour for the purpose of community development. But present day taxation came into being in 1940 with the establishment of the direct taxation Ordinance No. 4 and the Income tax Ordinance No. [3] of the same year. These Ordinances were discriminatory in nature. While the first was meant for citizens of the country other than Lagos the second was meant for Lagos only. These Ordinances were replaced in 1943 to do away with the discrimination and made to be applicable to the whole country.
In 1956, the Eastern Region established another Law known as the Finance Law No. 1 of 1956. The Western Region equally accepted this Law in 1957. It provided for tax allowance for married couple and additional allowances/relieves for people with children of not more that three. The PAYE element of taxation was also introduced in the tax.
After independence in 1960 there was a debate on the introduction of a uniform tax law. The Income Tax Management Act (ITMA) was introduced and was applicable throughout Nigeria. It has however seen lots of amendments and in 1993 changed to become the Personal Income Tax Act (PITA).
DEFINITION OF TAX
Many scholars have tried to define the word "tax" according to their own point of view. One of the definitions came from Dandago (2000) who defined tax as "a compulsory contribution from individuals and or corporate organisation for the purpose of meeting government expenditure". From this definition one can deduce that taxation is an important source of revenue generation to every governments of a country to meet up with its expenditure and for economic stabilization.
According to Edward (1987), a tax is "a legal demand made by the federal and the state government for its citizens to pay tax on the income received, goods and services produced within the State or country". From this definition one can also deduce that payment of tax to the government is necessary because of its importance to the government, and failure to do so may lead to serious offence in accordance with the relevant tax authorities.
PURPOSE OF TAXATION
Government imposes tax for a number of reasons these are:
1. To generate revenue to cover expenditure: Government imposes tax on individuals and cooperate organisations in order to meet its numerous expenditure programs in the areas like education, infrastructure development, health, defense, administration, etc.
2. Regulation of the Economy: Government imposes tax on imports to encourage the consumption of domestically produced goods. By reducing exports duties many foreign exchange will be generated. To discourage exports of goods of strategic importance, export duties should be increased.
3. Income distribution: Government imposes tax in order to narrow the widen gap of income distribution between the rich and the poor. Progressive tax is normally used in this respect.
4. Stabilization of the economy: Tax can be referred to as an instrument of fiscal policy for the purpose of stabilizing the country's economy. When a country is facing too much money in circulation (inflation), taxes can be increased to reduced the purchasing power of the people of the country; thereby reducing the money in circulation and if the country is facing storage money in circulation (deflation), tax can also be used to correct the situation.
CLASSES OF TAXES
Tax can be grouped into two broad categories namely:
a. Direct taxes
b. Indirect taxes
Direct taxes are a kind of taxes where the taxpayer feels the impact as well as the incidence of the tax paid. This tax is imposed on individual and corporate organizations. There are different types namely: personal income tax, company income tax, capital gains tax, petroleum profit tax, etc.
Indirect tax on the other hand is a kind of tax where the taxpayer feels the impact directly but the incidence of the tax is borne by the consumer. They are mostly imposed on goods and services. The following are some of the different types of indirect tax in Nigeria: import duties, export duties, excise duties and value added tax (VAT).
DEFINITION OF PERSONAL INCOME TAX
Dandago (2000) defined personal income tax as a tax "imposed on income of individuals, communities and families arising from either employment, business, trade, vocation, etc". The international encyclopedia of social science also defined personal income tax as " a compulsory levy imposed on individuals income as well as family units on the basis of their income received. They are usually classified as direct taxes because the burden is on the individual who finally pay the tax".
Persons liable under this tax are income of an employee, self-employed, and partnership. That is to say individual partners will be taxed separately; trust fund and settlement are also liable to personal income tax. The relevant tax authority for personal income tax is the state and federal Inland Revenue boards. The tax law governing personal income tax is the Personal Income Tax Act of 1993. The current tax rate is given below:
1st 30000 at 5%
2nd 30000 at 10%
Next 50000 at 15%
Next 50000 at 20%
Above 160000 at 25%
Source: Ministerial breakdown 2001 budget (Thisday Newspaper).
In Jigawa State the rate is 2.5% of basic salary.
FEATURES OF PERSONAL INCOME TAX
1. It is a compulsory payment.
2. It is for the common good of all.
3. It is imposed not as a penalty for any legal offence.
4. People must attain certain age before they start paying tax.
ASSESSMENT OF PERSONAL INCOME TAX
Before arriving at a taxable income, a taxpayer shall deduct all out goings and expenses which are considered as wholly, exclusively, necessarily and reasonably incurred in the production of the income as provided in Sec. 20 – 21 (1) of PITA 1993. The assessment of income tax is the second stage in income tax administration. It is concerned with itemizing the exact amount of income to be paid as tax. This means that the profit of personal income tax assessable to tax is normally the adjusted profit of its accounting year, the accounting year is the period of twelve months for which a trade has decided to make up its accounts.
The normal rule of assessment is that the assessable profits or income of any trade, business, etc for each year of assessment from each source of its profit/income are the profit of the fiscal year immediately preceding the year of assessment from each source Sec. 24 (Dandago & Alabede 2000). It should be noted that the income of an employee is assessed on actual year basis in line with Sec 26 (1) of PITA which state that income of employee should be assessed in the year of assessment in which he received his income and any income from trade, business are assessed on preceding year basis. The following are the possible ways of assessing income/profit arising from personal income tax. They are:
COMMENCEMENT OF BUSINESS
The important year is the one related to the date of commencement of operation and not the date of incorporation. The specific provision of the Act (CITA and PITA).
YEAR OF ASSESSMENT BASIS PERIOD
First year AYB – Date of commencement to the end of the year (31st December). For example for the year 2000, 1/9/2000 – 31/12/2000.
Second year A period of twelve months starting from commencement date. Example for 2001 year. 1/92001 – 31/8/2002.
Third and subsequent years PYB taking cognizance of accounting year-end or when the business is making up its accounts. Example for 1997 1/1/96 – 31/12/96 or if the accounting year-end is October 31st ,1/11/95 – 31/10/96. However, where twelve months basis period on a preceding year can not be obtained the assessor is to repeat the basis period for the second year of assessment.
RIGHT OF ELECTION
Every business has the right of election in the second and third year of assessment. The assessment of these two years will be on actual year basis (1/1 – 31/12). This right is exercisable within two years after the end of the first year of assessment or within one year after the end of the second year of assessment. It is advisable for a taxpayer to opt for the lowest of the aggregate assessable profit after the computation based on PYB and AYB.
CESSATION OF BUSINESS
This will arise when a business ceases operations permanently not temporally. The provision of the law is applicable under permanent cessation only. Any earned income by a business after the date of cessation shall be deemed to have been accrued on the last day of that business. The following years are important on cessation of business – Penultimate year and Ultimate year.
The penultimate year or semifinal year is the year before the final year of the business. Where as the ultimate year is the final year of the business. The provision of the Act on the cessation of business is found in the following Sections. Sec 20(4) ITMA and Sec. 25(4) CITA. The provisions of the Act are summarize below.
YEAR OF ASSESSMENT BASIS OF ASSESSMENT
Penultimate year it is the higher of : AYB and PYB.
Ultimate year First January each year to the date of cessation. That is if the business ceases operation on April 30th 1990, the basis period is 1/1/90 – 30/4/90.
CHANGE OF ACCOUNTING DATE
Change of accounting date or year will arise when a business fail to make up its accounts to its usual accounting date. The following are some of the reasons why a business may change its accounting date.
1. When another company acquires a company.
2. When two companies merged together to become one.
3. When a company wants to conform to the government fiscal year.
4. When a company decides to change the accounting year to suit the nature of its business.
The provision of the Act on the change of accounting year is found on the following sections. Sec. 23 (2) ITMA and Sec. 25 (2) CITA.
PROCEDURES IN TAX ASSESSMENT
a. Identify the year of change, that is the year of change to another date.
b. Two subsequent years after.
c. Compute assessable profit for the three years based on the old accounting year-end.
d. Compute assessable profit for the three years based on the new accounting year-end.
e. Sum up the assessable profit in (c) and (d) separately.
f. Select the higher of the two.
Note that the assessment for both old and New Year must be on PYB.
ADVANTAGES OF PERSONAL INCOME TAX
1. It is easy to ascertain its incidence.
2. It is easy to calculate.
3. It is used to redistribute income.
4. It is used to control inflation.
DISADVANTAGES OF PERSONAL INCOME TAX
1. It reduces disposable income.
2. It discourages savings.
3. It discourages hard work.
4. It may cause deflation.
ECONOMIC DEVELOPMENT
The concept of economic development has no precise definition, an attempt was made by various economist and scholars to explain it. One of these definitions was given by Anyanwuocha (1993), who defined it as "the process of increasing the actual per-capita income and as well as the substantial positive changes in the various sectors of the economy". This means that the positive changes, which take place, improve the general well being of the people and ensure that the standard of living of the masses has substantially rise up. With economic development there are structural transformation in the different sectors of the economy as well as general improvements in various economic activity and different areas of the country, leading to increase economic welfare of the citizens.
Another definition came from Anyaele (1987), who defined economic development as "the maturity of the quality and quantity of goods and services produced within a country, the transformation of her economy form primary to secondary sectors, changes in the citizens creative energies and acquisition of special creative skills etc". From the two definitions given above we can understand that economic development is very essential and it is the desire of every nation of which developing countries seem to have a greater need for various reasons to increase the level and extent of their per-capita income; and to optimize the use of their abundant human and national resources and to ensure that equalities and inequalities in whatever form are eliminated.
It should be noted that there is clear distinction between economic growth and economic development. Economic growth is concerned with the annual increase in the quantity of goods and services produced in a country, which raises her national income. While economic development is mainly concerned with an on-going process of economic transformation in a society.
ECONOMIC DEVELOPMENT IN JIGAWA STATE
First and foremost, it is important to once again define the concept of "economic development" in Jigawa State. In a nutshell economic development is the process or change in society which leads to an improvements in the standard of living and welfare of the masses of the people in the state. Furthermore, economic development is the need for every state or nation to increase it per-capita income as well as positive changes in the various sectors of her economy.
Therefore, Jigawa State has put more effort at improving the economic well being of the people of the State, by giving special attention to agriculture which is a key sector both because of its importance in improving the lot of the poor people as well as providing the basis for growth in other sectors of the economy. In view of this the state has established numerous projects such as Sugarcane plantation, Gum-Arabic scheme, cotton production, mangoes production, date-palm trees and other related programs which contribute to economic development, all with the aim of generating income and employment to the teeming populace. It also introduced micro credit scheme loan in order to give all necessary assistance to the farmers for greater yield.
The state under the Ministry of commerce and industry, which was created by the Turaki administration is able to construct and developed a border export zone at Maigatari with the construction of warehouse, construction of forty-two rooms resort hotel at Kazaure and the maintenance of Three Star Hotel at Dutse. The state also established garment industry at Kazaure for the production of garment and textile materials, training youths on sewing, knitting and wearing. This is all provided by the state for commercialization, poverty reduction, promotion of tourism and improving the revenue base of the State, which subsequently increase the economic well being of the people of the state.
The state under the Ministry of Science and Technology which was also created by the Turaki regime, has established an internet involving a world wide web for the state, with the establishment of computer training schools, procurements and distribution of computers system to various ministries, government agencies and schools as well as the establishment of a computer access net work. The computer school at Kazaure, imformatic institute and Dutse training center were all established and link to the informatic center at Singapore. This was aimed at training 1000 students in a year for them to be computer engineers. This was taken into a consideration by the Turaki administration in order to provide technology in the state for rapid economic development.
Really, the Turaki administration has play an important role in terms of educational development because the state is the only one that increases the basic salaries of its teachers by 25% as well as their allowances which was also increased by 100%. By this increments the salary of teachers in Jigawa state start form N20000 to a maximum of N90000 per month. It is also able renovate the primary schools within the state and the teachers salaries were giving to them in a good time. Feeding rate per each boarding secondary school in the state has been increased by 100%. At this point Jigawa State has pay more attention with the aim of reducing the rate of illiteracy and ignorance among the people in the state thereby increasing its economy.
Further more, the state has developed the human resources agency by restructuring the government ministries and parastatals for the complete and total development of all capable and able indigenes to participate in viable and gainful economic endeavors. The ultimate aim of this agency is to reduced poverty among the people as well as urging in personal responsibilities as education, health and housing thereby, reducing dependence on government. It also provides training to the teeming unemployed youths in various trades and occupation in order to be self-employed.
In addition to the above, the state under the Ministry of water resources which was established in October 1999 by the present administration is able to achieved the construction of open wells and Gurarta irrigation project; extension of Babura water scheme, installation of transformer at Shuwarin water works, rehabilitation of Hadejia, Ringim, Gumel and Kazaure systems: overhauling and rehabilitation of Sakwaya scheme and Koya motorized water scheme and the construction of over one hundred hand pumps, bore-holes at various locations in the state. Orilade (2001).
Having seen the structure of economic development in the state, we shall now look at the problems if any, facing its economic development.
PROBLEMS OF ECONOMIC DEVELOPMENT IN JIGAWA STATE
Basically there are some problems facing the economic development in Jigawa State which include the following:
1. Lack of implementation of plans.
2. Lack of skilled manpower.
3. High level of illiteracy.
4. Lack of technology.
5. Lack of organized market.
6. Lack of adequate capital
7. Financial misappropriation and mismanagement.
8. Lack of adequate infrastructure facility.
9. Low level of investment.
10. Low level of saving.
11. Inadequate industrialization.
12. Problems of leaders.
HOW TO COMBACT THESE PROBLEMS
Firstly, the state government should at all cost implement its programs or plans in reality than a paper work or mere saying, because the problems of economic development in Jigawa state is lack of implementation.
Secondly, the state should also educate its people in order to reduced the rate of illiteracy in the state and avoid putting unqualified personal in the various sectors of the economy because, many people were appointed to these sectors contrary to their own profession.
Thirdly, the Jigawa state leaders should be honest and disciplined in the course of discharging their activities and also avoid misappropriation and mismanagement of public funds in an unnecessary reason or selfish motives.
Lastly, the state government should provide all necessary things required for increasing the economic well being of the people such as organized market for exchange of goods and services, industries where people will be employed as workers, infrastructures like good roads, hospitals, schools, savings and investments.
THE ROLE OF PERSONAL INCOME TAX TO ECONOMIC DEVELOPMENT IN JIGAWA STATE
The contribution of personnel income tax can best be described as contribution made to the total income tax collected by the state.
PAY-AS-YOU-EARN (PAYE)
In Jigawa State, the SIRS manage this form of taxation. It has contributed a lot to the total tax revenue through out the period of study. For instance in 1992 fiscal year as can be seen from table 1.1, PAYE contributed 50% while in 1993 rose to 52% of the total tax revenue collected by the state. From the data available as shown in the table 1.1, it can also be seen that the trend PAYE leads have been continuos. The major reason for the continuos rise in the PAYE tax is that there has been an increase in salary and arrears of workers in 1975 by the Federal government after the report of Chief Udoji. And subsequently increase of 1991 salaries of workers within the county was increased, which resulted in the increase of the grade of workers, and thus more tax derived form the income of the workers who formed part of the PAYE.
The increase in the PAYE tax revenue can also be associated with the increase in employment opportunities during the civilian regime, and any increase in employment of workers can lead to an increase in tax revenue because they are subject to tax.
TABLE 1.1 TAX COLLECTED BY JIGAWA STATE GOVERNMENT
TAX 1991 1992 1993
N '000 N '000 N '000
PAYE 3000 10000 12000
Direct Taxes 5000 8000 9000
Pool/casinos 57.5 82 90
Entertainment 74.4 100 120
Capital gains - 50 80
Property 700 900 920
Others 500 621 730
9327.9 19632.121 22940
Source: Jigawa State Board of Internal Revenue.
Comparatively, out of the various taxes examined as contained in the table above, where PAYE provides the highest percentage of the total tax revenue collected by the state government. It occupied the first position throughout the period of the study. For instance, as can be seen form the table above PAYE provides 33% in 1991 fiscal year of total income collected, in 1992 it was increased to 50% while in 1993 it rose to 52%.
It should be noted that this increments in PAYE is attributed to the increase in the number of people employed by both public and private sectors who are liable to tax. Another reason should be attributed, due to the fact that the majority of the taxpayers are workers, which are charged against their currents earnings at its source. At this point we can conclude that personal income tax is contributing a lot to the total tax revenue collected by the Jigawa State thereby, contributing to its economic development because, personal income tax is taking the highest percentage of the total tax revenue as a result of increase in the employment opportunities, grades, arrears, and allowance of the workers.
REFERENCES
1. Dandago, Kabiru I. & Alabede, J.O. (2000) – Taxation and Tax Administration in Nigeria. Triumph Publishing Company Ltd Kano, Nigeria.
2. Agyei, A. K. (1967) – Principles of Personal income Tax in Nigeria. West African Book Publishers. Lagos, Nigeria.
3. Edward, Agyeman D. (1987) – Nigerian Taxation: Principles and Practice. Triumph Publishing Company Nig. Ltd. Kano, Nigeria.'
4. Anyanwuocha, R. A. (1993) – Fundamental of Economics for senior secondary school. African Fep Publishers Ltd, Nigeria.
5. Anyaele, Ugoji J. (1987) – Comprehensive economics for secondary school. A Johnson Publishers Ltd. Lagos, Nigeria.
6. Orilade, (2001) – The news. Jigawa State Mid-term report.
7. State Inland Revenue Service, Gumel Jigawa State.
8. Haladu, Alhassan (1999) – Notes on principles of Taxation. Unpublished.
9. Lawan, Adamu M. T. (2002) – Votary and the Challenge of Development in Jigawa State. Triumph Newspaper of 18th July, 2002. Page 13.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
It is believed that research is widely defined as the process of arriving at a dependable solution to problem through the planned and systematic way or collecting, analyzing and interpreting such data. Therefore, this chapter is very important to any research because it deals with the method employed in gathering the relevant data for the project computation.
POPULATION SIZE
In the researcher's words, the population of this research refers to the total contribution of personal income tax to economic development in Jigawa State. The research population therefore covers the whole of the twenty-seven local government areas in the state.
SAMPLE SIZE
The sample drawn from this through random sampling is Board of Internal Revenue Dutse branch. The random sampling technique was selected purposely because of its objectivity.
METHOD OF DATA COLLECTION
In order to find the necessary information required for this research project, two methods will be used as our method of collecting data for the research. These are:
a. Questionnaire.
b. Face-to-face interview.
The researcher will post written questionnaire to the respondents for them to answer them. It is expected that useful as well as reliable answers to the questions as regards the problems on the ground will be given. The SIRS will be targeted as they specialized on tax matters through the state. Questionnaires provide convenient method for interviewing senior officer who would rather escape the embarrassment of face-to-face interview.
The researcher also intends to use face-to-face interview to buttress the questionnaire. The reasons for applying face-to-face interview is mainly for the junior staffs because some of them are semi-literate so there is the need to interpret some of the terminology used for proper understanding. The researcher will also want to take advantage of asking supplementary questions that the situation may raise.
METHOD OF DATA ANALYSIS
The researcher in this respect has chosen to use tables and simple percentages for the computation of available data at hand. In addition, logical analysis may be used to explain the data obtained.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter is of paramount importance to my research work. It deals with the analysis and presentation of data collected from various respondent of the area of study.
4.1 DATA ANALYSIS
This refers to the process of breaking down data into meaningful points for presentation. In the cause of ordering the data so far obtained, the researcher use as a guide to the hypothesis of the study as stated in chapter one. The hypothesis were presented and applied to test their validity. Based on the analysis, the hypothesis were in the position to be either accepted or rejected.
Statistical tools were used in the data presentation. The respondents were in the Board of Internal Revenue Dutse branch. Twenty (20) questionnaires were distributed but only nineteen (19) were filled and returned back successfully.
4.2 DATA PRESENTATION
Data collected from questionnaire, which have direct bearing on the hypothesis, are presented below:
TABLE 1 Sex Distribution
OPTIONS | RESPONSE | % |
Male | 18 | 95 |
Female | 1 | 5 |
TOTAL | 19 | 100 |
Source: Field Survey.
From the above table, we can see that 18 respondents are male representing 95% while only one respondent is female representing just 5%. This shows that the majority of the respondents are male.
TABLE 2 Age Distribution
OPTIONS | RESPONSE | % |
18 – 30 | 5 | 26 |
31 – 40 | 7 | 37 |
41 - 60 | 5 | 26 |
60 and above | 2 | 11 |
TOTAL | 19 | 100 |
Source: Field Survey.
From the above table we can see that out of the total respondents the age group of 18 – 30 and 41 – 60 have respondents each of 26%, while the age group of 31 – 40 have 7 respondents which is 37% and 60 years and above have only 2 respondents representing 11%. This shows that the age group of 31 – 40 have the highest respondents. These are the active working population.
TABLE 3 Marital Status
OPTIONS | RESPONSE | % |
Married | 16 | 84 |
Single | 3 | 16 |
TOTAL | 19 | 100 |
Source: Field Survey.
We can see from Table 3 that 84% of the respondents are married while 16% of the respondents are single. This shows that the majority are married and people of responsibility.
TABLE 4 Educational Qualification
OPTIONS | RESPONSE | % |
'O' Level | 0 | 0 |
NCE/Diploma | 11 | 58 |
B.Sc./HND | 7 | 37 |
M.Sc. and above | 1 | 5 |
TOTAL | 19 | 100 |
Source: Field Survey.
The above table shows that respondents with educational qualification of 'O' Level have zero respondents. Those with NCE/Diploma have the highest respondents with 58% followed by those with B.Sc./HND which have 37% and those with M.Sc. and above are with 5% of the total respondents.
TABLE 5 Do you have any knowledge on personal income tax?
OPTIONS | RESPONSE | % |
Yes | 19 | 100 |
No | 0 | 0 |
TOTAL | 19 | 100 |
Source: Field Survey.
It is revealed from the above table that all the respondents have prior knowledge of personal income tax. This shows that all the respondents response positively. The implication of this is that it will enable the researcher to get what he is looking for since all the respondents have knowledge on personal income tax.
TABLE 6 Does personal income tax form part of the revenue generation of the State?
OPTIONS | RESPONSE | % |
Yes | 19 | 19 |
No | 0 | 0 |
TOTAL | 19 | 100 |
Source: Field Survey.
From the table above we can see that all the respondents maintained that personal income tax form part of revenue generation to the state. This implies that the state government can source for more revenue from personal income tax in order to enable it executes more viable programs.
TABLE 7 Does it contribute to economic development?
OPTIONS | RESPONSE | % |
Yes | 19 | 19 |
No | 0 | 0 |
TOTAL | 19 | 100 |
Source: Field Survey.
The table above shows that all the respondents responded positively that personal income tax contributes to economic development. The implication is that personal income tax is part of the resources used for economic development in the state.
TABLE 8 Is the contribution satisfactory or unsatisfactory?
OPTIONS | RESPONSE | % |
Satisfactory | 14 | 74 |
Unsatisfactory | 5 | 26 |
TOTAL | 19 | 100 |
Source: Field Survey.
The table above shows that 74% of the respondent are of the view that the contribution is satisfactory while 26% of the respondent are of the view that it is unsatisfactory. What this response is implying is that a greater or a reasonable portion of the amount involve on economic development is from income tax. Table 1.1 in Chapter two proves this.
TABLE 9 is there any problems associated with the collection of personal income tax in the state?
OPTIONS | RESPONSE | % |
Yes | 18 | 95 |
No | 1 | 5 |
TOTAL | 19 | 100 |
Source: Field Survey.
From the above table we discover that 95% of the respondents were of the opinion that there are problems associated with the collection of personal income tax in the state while only 5% of the respondent says no. Here the implication is that the great number of problems associated with the collection of income tax will not allowed the government for increase future generation of revenue.
TABLE 10 Is personal income tax necessary for economic development?
OPTIONS | RESPONSE | % |
Yes | 13 | 68 |
No | 6 | 32 |
TOTAL | 19 | 100 |
Source: Field Survey.
We discover from the above table that 68% of the respondents responded positively that personal income tax is necessary for economic development in the state, while 32% of the respondents responded negatively. The implication is that without it economic development projects can be hardly executed.
TABLE 11 What is the attitude of people towards paying income tax?
OPTIONS | RESPONSE | % |
Satisfactory | 4 | 21 |
Unsatisfactory | 15 | 79 |
TOTAL | 19 | 100 |
Source: Field Survey.
It is clear from the above table that 21% of the interviewee are of the opinion that the attitude of people towards paying income tax are satisfactory, while majority of the respondents says it is unsatisfactory with 79% of the total respondent. The implication is that most taxpayers are not aware of the importance of paying tax. This has the effect of harming seriously and drastically reducing future revenue from personal income tax.
TABLE 12 How do you rate the attitude of tax officials (collectors) to the taxpayer?
OPTIONS | RESPONSE | % |
Good | 8 | 42 |
Fair | 11 | 58 |
Bad | 0 | 0 |
TOTAL | 19 | 100 |
Source: Field Survey.
From table twelve (12), it is clear that 42% of the respondents are of the opinion that the attitude of tax officials is good while 58% of the respondents agreed that their attitude is fair. None of the respondent agreed that the officials attitude is bad, thus 0%. This is indicating that the method or system of tax collection is not only acceptable to the taxpayers but is also very good.
4.3 TEST OF HYPOTHESIS
Using the above analysis we are going to test the hypothesis of this research.
1. Personal income tax does not contribute to economic development. The analysis of data in Table 7, 8 and 9 of the research revealed that personal income tax contribute to economic development in Jigawa State. The Null-Hypothesis is therefore rejected while the alternative-Hypothesis is accepted.
2. Personal income tax is necessary for economic development. Based on the data gathered and analysed in Table 10, 13 and 14; it shows that personal income tax is necessary for economic development due to the fact that it provide reasonable amount for infrastructure development in the rural areas. The null-hypothesis is therefore accepted.
3. Personal income tax is the most important source of revenue in Jigawa State. Tables 5 and 6 together with table 1.1 in chapter two proves that personal income tax is the most important internal source of revenue to the Jigawa State government. The alternative-hypothesis is therefore rejected.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY
This portion summarizes the previous chapters so far discussed in this research project. The research has looked at the introduction, objective of the study, hypothesis, significance, scope and limitations of the study. The various problems encountered during this research work were also brought to light. We also reviewed the subject matter through manuals, magazines, and journals; etc; bringing the views of authorities on the topic.
After a thorough analysis of our data, the researcher was able to discover that Personal income tax is part of the revenue generated by the state and it formed a major contributor to economic development in the state. Also discovered are that Personal Income Tax administration is associated with certain problems like inadequate working materials, lack of qualified staffs to run the operation of activities, lack of arresting powers of the tax authorities, etc.
5.2 CONCLUSION AND FINDINGS
We can conclude by observing that personal income tax is of paramount importance not only in Jigawa State but also to other States of the Federation in terms of revenue generation. More so not only for its contribution to economic development but also help in stabilizing, distributing and controlling the economy.
The major findings of this research work are that:
a. Personal income tax is a major contributor to the Jigawa State government revenue and forms part of the sources of revenue generation.
b. Some problems are associated with the collection and assessment of personal income tax.
c. Personal income tax is very necessary for the economic development of the State.
5.3 RECOMMENDATIONS
It is clear that the purpose of any research is to investigate certain phenomenon or situation and then draw out a conclusion. It is therefore the duty of the researcher to pinpoint any important areas that need immediate attention by the government to look at it carefully. As could be seen from our analysis the State is lacking trained and efficient administration of personnel who can administer tax system accordingly and other problems related to it. As a result of this large proportion of the tax is left uncollected. Therefore, in the light of the above findings, the researcher whishes to make the following recommendations.
1. The government should do all her possible best in terms of employing trained and qualified personnel in the tax administration. It should also established a training center for the establishment of the board to facilitate better and effective collection and administration of the tax revenue as a whole in the state.
2. The State College of Business and Management Studies, should be sponsored so as to enable it trained better and more qualified staffs.
3. The Board should ensure that only trained, qualified and competent staffs are employed.
4. Modern facilities and equipments should be provided for members of the Board so as to encourage efficient performance.
5. The government should use the media and traditional heads to educate the taxpayers on the advantages of paying Personal Income Tax.
6. Incentives and motivations like promotions should be given to the staff to boost their morale and enhance higher performance.
7. The government should establish an audit committee to examine financial statements presented to the Board for assessment and to audit tax collectors so as to ensure proper remittance of tax collected.
8. The Board should be made up of honest, just and people of integrity.
QUESTIONNAIRE
HUSSAINI ADAMU POLYTECHNIC
COLLEGE OF BUSINESS AND MANAGEMT STUDIES
DUTSE
DEPRTMENT OF ACCOUNTING
This questionnaire was designed purposely to collect the necessary information as regards the topic under study, "The contribution of personal income tax to economic development of Jigawa State". This research is in partial fulfillment of the requirement for the award of National Diploma in Accountancy. Please your cooperation is highly needed.
Circle or tick as appropriate
1. Sex
a. male
b. female
2. Age
a. 18 – 30
b. 31 – 40
c. 41 – 50
d. 50 above
3. Marital status
a. married
b. single
4. Qualification obtained
a. O level certificate
b. NCE/Diploma
c. B.Sc./HND
d. M. Sc. and above
5. Do you have any knowledge on personal income tax?
a. yes
b. no
6. Does personal income tax form part of revenue generation to the state?
a. yes
b. no
7. How much does the Jigawa State government realize from personal income tax?
a. much
b. less
8. Does it contribute to economic development in the State?
a. yes
b. no
9. Is the contribution
a. satisfactory
b. unsatisfactory
10. Are there any problems associated with the collection of personal income tax in the State?
a. yes
b. no
11. If yes, what are they?
a. ………………………………………………………….
b. ……………………………………………………………
c. …………………………………………………………..
d. ……………………………………………………………..
e. …………………………………………………………….
12. Suggest possible solutions to these problems.
a. ……………………………………………………………….
b. ………………………………………………………………….
c. …………………………………………………………………
d. …………………………………………………………………….
e. ………………………………………………………………….
13. Is personal income tax necessary for economic development?
a. yes
b. no
14. If yes, why?
a. ……………………………………………………………………
b. ……………………………………………………………………
c. ………………………………………………………………….
d. ………………………………………………………………….
15. In what ways can income generated through personal income tax be improved?
a. ………………………………………………………………..
b. ……………………………………………………………….
c. ………………………………………………………………….
d. ………………………………………………………………….
16. What is the attitude of people towards paying tax?
a. satisfactory
b. unsatisfactory
17. How can you rate the attitude of tax officials to taxpayers?
a. good
b. fair
c. bad
Thank you very much for your cooperation. Best regards.
Very truly yours,
Abdulrazak Adamu.
BIBLOGRAPHY
1. Agyei, A. K. (1967) – Principles of Personal income Tax in Nigeria. West African Book Publishers. Lagos, Nigeria.
2. Anyaele, Ugoji J. (1987) – Comprehensive economics for secondary school. A Johnson Publishers Ltd. Lagos, Nigeria.
3. Anyanwuocha, R. A. (1993) – Fundamental of Economics for senior secondary school. African Fep Publishers Ltd, Nigeria.
4. Dandago, Kabiru I. & Alabede, J. O. (2000) – Taxation and Tax Administration in Nigeria. Triumph Publishing Company Ltd Kano, Nigeria.
5. Edward, Agyeman D. (1987) – Nigerian Taxation: Principles and Practice. Triumph Publishing Company Nig. Ltd. Kano, Nigeria.
6. Haladu, Alhassan (1999) – Notes on principles of Taxation. Unpublished.
7. Lawan, Adamu M. T. (2002) – Votary and the Challenge of Development in Jigawa State. Triumph Newspaper of 18th July, 2002.
8. Orilade, (2001) – The news. Jigawa State Mid-term report.
9. State Inland Revenue Service, Gumel Jigawa State.
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