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            Taxation is a compulsory levy imposed on a subject or upon his property by the government to provide security, social amenities and create conditions for the economic well being of the society. Taxation is also defined as a compulsory levy that must be paid by every citizen to the government. It is imposed by government against the income, profits or wealth of an individual partnership, organization and cooperate bodies.

            The results of responses were compared and evaluate in order to arrive at a logical conclusion. This has become possible through the use of simple descry pewee percentage and tabular methods.

            By all standards, personal income tax in Nigeria is a typical problem child. The economic feature of this country as taxation is concerned; design complete overhauling of the regeneration of the country, and a drastic and positive action is solicited for. The regeneration of tax system, there should be recruitment of more qualified staff. There should be provision of necessary working equipment.

            Each tax office ought to have tax messengers. This will not only reduce the cost of tax collection but would help to comb every street of a community and bring all names and address of everybody engaged in any trade, profession and vocation into the tax net. These include the mechanics, the beer sellers, the petty traders, practicing professionals, owners of beauteous, carpenter, market women, photographers, etc.




1.1       Background to the study

            Taxation is a compulsory levy imposed on a subject or upon his property by the government to provide security, social amenities and create conditions for the economic well being of the society Ola (2012).

            Taxation is also defined as a compulsory levy that must be paid by every citizen to the government. It is imposed by government against the income, profits or wealth of an individual partnership, organization and cooperate bodies Adebolu (2010).

            Government imposes taxes on its citizens to enable it obtain the required revenue to finance its activities, such as payment of public services and other-social responsibilities. The main purpose of taxation is to ensure that government has adequate funds to maintain the administration, ensure peace and security of its subjects and provide for their basics needs.

However, taxation serves many other economic purposes beyond the provision of funds for the government. Again, taxation serves as an agent of social charge when used as a creative force in economic planning and development. In this respect, taxation may be employed to mitigate human misery, reduce income inequalities and control social upheavals. For instance, “Nigeria nascent democracy places greater responsibility on government to look for ways of improving its revenue generation. This is because political office holder and their parties having found themselves in power, may now come to grip with the reality of the moment, need for large amount of money to prosecute party programs in the context of an almost empty government treasury. The earlier this position is realized better, giver the traditional nature of impatience and high expectation of Nigerian electorates” Adebayo (2009).

            Every person is expected to pay tax and the income earned during an income tax year. The term ‘person is defined broadly to include partnerships, cooperation, sale and limited liability companies. Tax payment culture in developing countries like Nigeria is poor. No one pays tax with smile even though taxation is a means of making the private sectors pay for the services rendered to them by the public sector.

            Despite the fact that, taxes constitute a small part of the national income, they have been a controversial issue. The unwillingness of tax payment by taxable adult has brought about the famous Aba riot of 1929 and Agbekoya crises of 1969 in old western state whereby peasant farmers vehemently opposed tax imposed by the then military government.

            The Nigeria tax structure is made up of both direct and indirect taxes: among them are personal income tax, companies_ income tax, petroleum profit tax, import, export and excise duties and so on. However, our scope of study is limited to personal income tax. The history of taxation in Nigeria predated the colonial era. At that time, tax was an affair between the local chiefs and his subject and taxes were paid for security and common services.

            During the colonial era, the local authorities administered the assessment and collection of the tax. Lord Lugard, the British high commissioner northern Nigeria, tried to combine different levied and taxes into simple understandable and collectable direct taxes so as to maintain some acceptable cannons of taxation, as laid down by Adam Smith’s classic work “the wealth of Nations” these are;

            Certainty: - the procedure must be objective, certain and scientific.

            Equity: - they must be equitable. It must not be levied arbitrarily. The amount payable must not be bias or be influenced by personal feelings. People in the same level and circumstances must pay the same tax.

            Convenience: - the tax must be convenient to pay. The tax payer must not experience much cost or inconveniences in an attempt to pay the tax.

            Economic principle:- this means that the tax must not make the condition or situation of tax worse economically.

            Administration: - the administration must be easy. It must be possible to know the tax base and it must be possible to collect the tax once it is levied.

            Political acceptability: - tax payment must generally be accepted by the tax payers so that resentment or riot is avoided.

            Simplicity: - A good tax system should not be difficult to administer and understand so as not to breed problems of differences in Interpretations and legal disputes. The language of expression must not be complicated.

            Flexibility: - a good tax system should be capable of adjusting to changing circumstances. Nigeria income tax is reviewed annually in order to alleviate effects of epileptic economic conditions.

            In other to achieve the principles otherwise known as cannons of taxation mentioned above, Lord Lugard states the following laws.

            The 1904 land revenue proclamation:- :the emir were used to collect the proceed which were shared by the government and The 1906 native revenue proclamation replaces the first proclamation i.e. 1904 proclamation.

            The 1917 native revenue ordinances: - this was the first ordinances which replace 1906 proclamation. It regulated imposition and collection of taxes in form of taxes from the native. This ordinance applied to both the northern and western regions and extended to eastern region in 1928.

            In 1937, the ordinances were made for colony and protectorate. These two ordinances were the native direct taxation (colony). Ordinances and nonnative income (protectorate) ordinance, which discriminated, direct taxation between native and non-native.

            In 1940, two ordinances’ were passed. They were No3 income tax ordinance and No 4 direct taxation ordinance. These applied to all citizens except those in Lagos township while income tax ordinance of 1940 applied to expatriates and to Nigerians living in Lagos.

            The ordinance together with direct taxation (Amendments) ordinance and the income tax ordinance of 1943 which repeated the 1940 ordinance continued to apply until 1956 when house allowance, children allowance up to a maximum of three children and pay as u earn (PAYE) system were introduced.

            The Riesman commission which was an offshoot of the 1957 constitutional conference is recommended, complete regional jurisdiction over personal income tax of African and non-African individuals. It also recommended that the federal government should make jurisdiction over companies’ income tax, constitution of 1960 made provision for the above. Personal income tax was regulated by the ITMA 1961 for the then three regions in Nigeria (western, eastern and northern regions) while Lagos (then Nigeria capital) has its separate law referred to as the personal income tax (Lagos) act 1961. The two acts were replaced with the personal income management (uniform taxation) act 1972 to cater for uniform personal income tax in Nigeria. In the same 1972, the personal income tax (armed forces) act was enacted to handle the Nigerian armed forces.

            However, the two acts of 1972 were replaced in 1993 and a complete uniform personal income tax law was put in place. This gave birth to the personal income tax act (decree) 1993; that is PITA 1993 of PITD 104 of 1993. The PITA or PITD covers the liability to tax of employees sole, traders partnership settlements, trusts and estate. The responsibility for the administration of ITMA is vested in the joint tax board (JTB).

1.2       The statement of the problem

            Despite the fact that is a duty of a good citizen to pay tax for government to meets its obligation, taxable adults are not always interested in doing that. As a result of this, the collection of personal income tax is faced with problems which are addressed in the essay.

The statements of the problems are as follows:

  • Low collection of personal income tax by the state Inland Revenue office due to false declaration of income
  • Tax evasion and tax avoidance are rampant.
  • Some tax officials are corrupt and fraudulent and these affect personal income tax collections
  • Many tax agents deduct and fail to remit, to boost their cash How position.
  • Payment of tax to wrong tax authorities.
  • Dishonored cheques:- in a dent of dishonored cheque have reduced now that treasury receipts are not issued until cheques are cleared. The prevalence of dishonored cheque partly responsible for the introduction of direct payment of tax money to designated banks
  • Ineffectiveness of monitoring section of revenue offices
  • No tax payers register
  • Some tax officials are not professionally qualified and offices are not adequately staffed.
  • People are not willing to pay tax except they are forced.

1.3       Research Questions

            This study will try to answer the following research questions drawn from the study

  1. What factors influence tax collections on revenue generation
  2. How effective is the administration of personal income tax on revenue generation
  3. What are the effect of personal income tax collection
    • Objective of the Study

            The objective of the study is to examine the problems inherent in the various ways of assessing, computing and collection of personal income tax and probable solution of those problems.

            The ability of tax payer in terms of their income capacity, the sincerity, honest, efficiency of the tax payers as well as tax officials in relation to the purpose for which the taxes are collected.

            At the end of the whole exercise, the board will discover with suggestion on how to achieve result for the government. This is to meet the set target that has been made to meet the government intention.

1.5       Hypothesis Statement

The researcher has formulated the following hypothesis for acceptance or rejection.

HO: the more ethnocentric the individual, the higher the satisfaction of the individual to pay tax.

H1: the more ethnocentric the individual, the lower the desire of the individual to pay tax

H2: There is positive and significant relationship between the tax enforcement and the desire to pay tax.

H3: there is no positive and significant relation between tax enforcement and the desire to pay the tax.

1.6       Significance of the Study

            It is obvious that if the country is to become self-reliant in coping with their developmental needs, she has to tap the revenue from various sources in every part of the country to the fullest.

            It is therefore, the intention of the researchers of this project to research and analyze as much as possible, the system of Inland Revenue collections and enforcement procedures under the income tax management act l96l and amended decree 104 of 1993 on personal income tax as well as identifying the problems and difficulties in the collection of that tax.

1.7       Scope of the Study

            This research work effect of personal income tax collection is limited to Ogbomosho North Local Government Oyo State.

1.8       Limitation of the Study

The study was constrained and some of the constraints are:

            It was no doubt a great limited factor for this project considering the world economic recession and the particular financial squeeze within the country. All these combined together lay a bear on me.

            There is also a limited amount of time in the course of investigation. This based in the facts that the researcher will have other task to perform, these include often assignment in the school going for lecturer, preparation for test, examination and other to mention but few

            Another limitation is that l was not permitted to make use of certain documents for security purpose because of the organization would not like its secret to be leakage out despite the backup letter given by the project coordinator.