1.1 Introduction
Revenue generation is a means through which government establishment hurt for money which will be accountable to the government purse for execution of it’s project and the money collected from different areas like market, advertising etc. can been kept by a group of people. The government in this case, accepts members of the society to contribute to the affair of the nation. The rate of contribution depends on ones income; individual contribution according to their income rate, groups or companies contributes according to their size. The money generated through this means is used by the governments to accomplish its budget proposals. The government mapped out different means of revenue generation and all these tend to provide fund for societal development.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
In Nigeria, persons liable to pay income tax include men, women, married or single, trustees and executors, families, villages and indigenous communities. Though government can also raise funds through natural resources such as oil, palm oil, coal and gas which are exported, those alternative sources of income to government are hardly enough to shoulder the burden of government expenditures, especially in the area of economic and social spheres in each year, hence the need for tax payment.
The term revenue generation in Nigeria local governments is basically derived from tax and non-tax sources. Olaoye (2008) viewed tax as a system of imposing compulsory levy on all income, goods, services and properties of individuals, partnership, trustees, executors and companies by the government. Tax itself is an amount of money that you must pay to the government according to your income, property, goods that is used to pay for public services and perform other social responsibilities (Olatunji et al., 2001). While non-tax is the revenue accruing to the government other than tax and which is supported by law of the Federation.
The history of man has shown that man has to pay tax in one form or the other that is either in cash or in kind, initially to his chieftain and later on a form of organized government (Ojo, 2003). Based on the above clarification, no system or rules can be effective whether foreign or native unless it enjoys some measures of financial independence. 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. 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.
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. Revenue generation is a bulk task compilation of list from receipt issued is not an easy task. Complex calculation is involved to produce rate according to income earning or size of organization.
Therefore, in Cross River State where the research was carried out, the activities that was conducted is to know the Problems Associated with Revenue Generation and Management in Local Government Councils.
1.3 Statement of Problems
Investigation revealed that there is poor outing of local government in the aspect of revenue generation and service delivery is not a recent phenomenon. There is also, poor auditing system of local government especially as it concerns internally generated revenue. The argument here is that the local government either lacks the system of ascertaining how their local revenue generation pattern is conducted or they criminally ignores it for the purpose of personnel aggrandizement of those involved in the revenue collection chain. Adedokun (2007) in canvassing this view traced the problem to the colonial era, blaming it on nepotic pattern of recruiting revenue personnel common at the time. This has been sustained in post-colonial local government of Nigeria.
1.4 Aim and Objectives of Study
The aim of the study is to examine the Problems Associated with Revenue Generation and Management in Local Government Councils in Cross River State using Yala Local Government Council as a case study. In achieving this aim, the following specific objectives were laid out as follows:
- To assess the problem involved in each source of revenue in Yala Local Government Council;
- To determine the effort of Yala Local Government Council revenue generation;
- To investigate the various sources of revenue to Yala Local Government Council;
- To discover the proper and wrong practice in revenue generation in Yala Local Government Council; and
- To proffer possible solutions to the problems base on findings and factual analysis.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What is the problem involved in each source of revenue in Yala Local Government Council?
- What is the effort of Yala Local Government Council revenue generation?
- What is the proper and wrong practice in revenue generation in Yala Local Government Council?
- What are the various sources of revenue to Yala Local Government Council?
- What are the possible solutions to the problems base on findings and factual analysis?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Revenue generation cannot bring about development in the Yala Local Government Council level.
- H1: Revenue generation can bring about development at the Yala Local Government Council level.
Hypothesis Two
- H0: Internally generated revenue if harnessed cannot be of great contribution to Yala Local Government Council.
- H1: Internally generated revenue it harnessed can be of great contribution to Yala Local Government Council.
1.7 Significance of Study
This study is very important because, it will serve as an invaluable material for Yala Local Government Council to identify their various sources of revenue generation. Scholars and student with similar research could also use findings of the study for comparative analysis or for furthering their research work.
The study could enable local government to tackle their numerous problems that hinder smooth generation of revenue.
This study will also be of immense benefit to other researchers who intend to know more on this study and can also be used by non-researchers to build more on their research work. This study contributes to knowledge and could serve as a guide for other study.
1.8 Scope of Study
The scope of the research is focused on the Problems Associated with Revenue Generation and Management in Local Government Councils in Cross River State using Yala Local Government Council as a case study.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
Revenue: This can be define as income especially the total annual income of the state from taxis, etc. and one producing revenue contrasted with one protecting a country’s trade.
Revenue Generation: This is a means, through which government’s establishment hurt for money, which will be accountable to the government purse for execution of its project.
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