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The Impact of Tax Administration on Enugu State Revenue Generation

The Impact of Tax Administration on Enugu State Revenue Generation

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Reference ID: PS-190-TM


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The Impact of Tax Administration on Enugu State Revenue Generation




  • 1.0 Introduction
  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Question
  • 1.5 Statement of Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms


  • 2.0 Review of Related Literature
  • 2.1 General Overview About The Study
  • 2.2 Origin of Taxation
  • 2.3 Tax Administration
  • 2.4 Purpose of Taxation
  • 2.5 Qualities of A Good Tax System
  • 2.6 Classification of Taxes
  • 2.7 Enugustate Board of Internal Revenue
  • 2.8 The Revenue Generation In Enugu Through Tax
  • 2.9 Inadequate Staff and Facilities Hinder Tax Generated Revenue In Enugu State
  • 2.10 Incidences of Tax Evasion and Avoidance In Enugu State
  • 2.11 Efforts Made By Enugu State Board of Internal Revenue To Improve Revenue Generation


  • 3.0 Research Methodology
  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Area of the Study
  • 3.4 Population of the Study
  • 3.5 Sources of Data Collection
  • 3.6 Determination of Sample Size
  • 3.7 Method of Data Analysis
  • 3.8 Validity Test
  • 3.9 Reliability Test


  • 4.0 Presentation, Interpretation and Analysis of Date
  • 4.1 Data Presentation
  • 4.2 Data Analysis
  • 4.3 Test of Hypothesis


  • 5.0 Summary of Findings , Conclusion and Recommendation
  • 5.1 Summary of Findings
  • 5.2 Conclusion
  • 5.3 Recommendation




The level of revenue generated in the state has been in a declining form due to poor administration and collections of taxes and lack of proper return of accounts. These are the negative effects that affect government revenue generation which are targeted to meet her basic functions like provision of basic amenities for her citizenry in the state. The aim of this research study is to evaluate the effect of tax administration on revenue generation to the Enugu state government. The research design adopted in this study was survey research method. Primary and secondary sources of data were used in collecting information which was analyzed using simple percentages and hypothesis tested using chi ”square statistical method at 0.05 level of significant for validity and to make decisions.

Findings show that there was rampant incidence of tax evasion and avoidance in the state, and the tax administration in Enugu state is inadequate, not effective and not efficiently managed thus: inadequate staff and facilities also hinder tax administration and collection. The researcher, in the final analysis drew a lasting conclusion, some of which are:- the apathy of Enugu state people towards payment of tax could be reduced by involving them in the decision making of tax administration, collection and utilization of the tax revenue. The environment should be made better by both the government and its agencies. The staff of the SBIR Enugu should be well remunerated and ensure adequate administration of tax laws in accordance with the laid down rules and regulations.

The Impact of Tax Administration on Enugu State Revenue Generation


1.0 Introduction

1.1 Background of Study

In all generation, the problems of personal income tax generation and administration continues to surface in one form or another in virtually every society, especially in this part of the world. It is important to point out that the federal government has taken adequate steps in effective tax administration.

This failure on the part of the federal government is responsible for poor financial positions of both the state and local government. Besides, this inadequate planning and absolute laws governing taxation, evaluation and collection is characterized by chaos.

This chaotic nature of the system can be appreciated by political influence or interferences in the process of taxation during the civilian administration in the country which gave rise to untrained and inexperienced personal being entrusted with the work of collection and administration of personal income tax.

The important of these issues to tax administration in the developing countries like. Nigeria, can be seen from the following extract from tax administration in under developed countries. The tax administration finds himself working with a staff which is inefficient in experienced, and poorly paid.

Board of Internal Revenue Enugu

The board of internal revenue Enugu was established to administer income tax in Enugu state just as there are likely to states of the federation.

Income tax was first introduced in Nigeria in 1904 by late Lord Lugard. The introduction of Native Revenue ordinance of 1927 was most difficult in the Eastern areas of the country, due mainly to absence of recognized central Authority Resistance to this form of direct taxation in such that it result to riots notably in calabar, Owerri and the famous, Aba women Riot of 1929 which was so severe that it attracted a probe. Beside, the Native Revenue ordinance were also Native direct taxation ordinance for the colony and the Native income tax ordinance.

These ordinance were late modified and incorporated into the Direct taxation ordinance No 29 of 1940, cap 54 and the income tax ordinance No 29 of 1943 respectively.

The direct taxation ordinance 1940 empowered native authorities to tax Africans in their areas of jurisdiction while the income tax ordinance 1943 was for the taxation of non-Africans in companies. The two ordinances were the foundation of our modern taxation which necessitated establishment of board of internal revenue in each of the states of the federation which Enugu Board of internal Revenue is one of them.

Administrative Structure of the Board of Internal Revenue In Enugu State

  • The chain of administration in the state board of internal revenue
  • Secretary to the Board Board of Internal Revenue
  • The Executive Chairman
  • Special Assessment Unit Legal Unit Information Unit
  • Administration Prs Dept Assembly Collection Inspectorate Finance & Supply Dept Planning Research % Statistics Dept
  • Acct Dept
  • Data Base Investigation Unit
  • Achiving Unit
  • Collation
  • Unit Paye Tax Cgt & Tax Audit Unit
  • Section Other Tax
  • Cash
  • Pay Roll
  • Open Registry Assessment Motor Licensing Strong Room
  • Confidencial Registry Authorities Authorities Internal Audit
  • Stores Other Charges
  • Training Reconciliation
  • APD

The zonal tax Authority which Enugu North Board of internal Revenue belongs to the Enugu Zonal Authority. The highest authority in the Area is the Assessment Authority.

The Assessment Authority

The assessment officer is the head of the board of internal Revenue in the area. He is appointed by the Board of internal Revenue, Enugu State. He is responsible for the assessment of tax and its collection and as well as accounting for it. He carries out the duty with the help of collection, Assessment and Administrative officers. He is directly in change of assessment and administration. He has the power to issue notice to tax payers to deliver statement of incomes or to finish further returns.

Where there is suspected doubts as to geniuses of returns, he might ask the tax payer to produce before assessment Authority books and documents of the tax payer covered by pay as you earn (PAYE).

The Assessment Authority could ask an employer to prepare and deliver a return on his employees. After assessment and responsibility of collection of this assessed income rests on the tax collector. He makes use of tax agents, tax drivers or the workers of the board and other processes which may be applied from time to time to generate tax in the area.

Administrative Framework

The structural administration of personal income tax is rested in the joint tax Board (JTB) under the income tax management Act 1961.

The board is made up the chairman who is appointed by federal Board of internal Revenue (FBIR) which is the federal body. The personal must be experienced in tax matters. Also, a secretary and a legal adviser are appointed, some of their functions are:

To exercise the powers or duties conferred upon them by any express provision of the Act, and any other power and duties arising under the Act which may be agreed by the board.

To exercise the powers and duties conferred on them by any enactment of the Federal Government imposing tax on the income or properties of companies or which may be agreed by the Federal Board of internal Revenue.

State Internal Revenue Board

The administration of the income tax in each states its collection and administration is vested on the state Board of internal Revenue.

It is headed by a chairman with the Director of Revenue as his Deputy Chairman and the chief executive of the board. Other members of the board

include representative of specified ministries and from field economics, accountancy and legal professions.

Their major function includes, to see the retrieval of the revenue collected by various tax officers in all local government head quarters and forward it to state government for disbursement.

Inspector of Taxes

Inspector of taxes are controlled by the Board. They have variety of duties covering all aspects of taxation some of their duties are:

  • Receipt and examination of tax returns and other information from tax payers.
  • Preparing and issuance of assessment based on the returns on which tax is payable.
  • They also employ the best of judgment guesses, if returns were not received or there is evidence of false information.

Tax Collectors

They are concerned with the service of

  • Returns of income forms
  • Notice of assessment
  • Summonses and affidavits and other sources of information.

1.2 Statement of the Problems

It is true that problem of tax collection and administration is universal but the third world countries of which Nigeria is one, seem to be more plagued and inflicted both in weight and magnitude than the developed nations of the world.

The research work primarily involves identifying the problems of the personal income tax generation and administration in Nigeria taking a case study of Board of Internal Revenue, Enugu state. The specific problems of this research are as follows:

  1. Improper system of keeping accounts and records in the internal Revenue office, which was seen to be quite mechanical and out dated.
  2. Lack of staff and inadequate training of the available tax collectors.
  3. No enlightenment on the part of tax payers as regards the importance of taxation is another problem of tax generation and administration in Enugu state.
  4. Tax collection and administration in Enugu state is not efficient and efficiently managed.
  5. Also corrupt alliance of tax collectors with tax payers to avoid tax for them (tax collectors) to make fast money. Thus lack of enforcement power on the board makes tax laws useless and not serious to tax offenders /defaulters.

1.3 Aim and Objectives of the Study

The main aim of the study is to asertain the effect of tax administration on revenue generation in Enugu state, using the state board of internal revenue as a case study.

The specific objectives of the research work is:

  1. To examine if the use of mechanical and outdated system in recording and keeping accounts affect tax administration on revenue generation in Enugu state.
  2. To ascertain whether lack of adequate staff in the SBIR affect tax administration on revenue generation in Enugu state.
  3. To examine if enlightening the tax payers on the importance of taxation affect tax administration in the state.
  4. To determine if the effectiveness and efficiency of personal income tax collection and administration in the state is properly manage.
  5. To ascertain whether they are corrupt alliance of tax collectors with tax payers to avoid tax for them ( tax collector) to make fast money.

1.4 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:

  • To what extent has the use of mechanical and outdated system of keeping and recording accounts affect tax administration on revenue generation in Enugu state?
  • To what extent does lack of sufficient staff and inadequate training of the available tax collectors affected tax administration on revenue generation in Enugu state?
  • To what extent has lack of improper enlightening of tax payers has affected tax administration on revenue generation in Enugu state?
  • To what extent has tax administration in Enugu state been effective and efficiently manage?

Owing to flexibility of tax laws in Nigeria and attitude of government toward the local government level in the area of administration and collection of personal income tax. It is pertinent to make some assumption that will guide the work for an opinion to be expressed.

1.5 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: The use of machnical and oudated system does not affect tax administration and collection in Enugu State.
  • H1: The use of mechnical and outdated system affects tax administration and collection in Enugu State.

Hypothesis Two

  • H0: Inadequate staff and training of the available tax collector does not affects tax administration and collection.
  • H1: Inadequate staff and training of the available tax collector affects tax administration and collection.

Hypothesis Three

  • H0: Enlightening the tax payers on the important of tax payment does not affect tax administration in Enugu state.
  • H1: Enlightening the tax payers on the important of tax payments affects tax administration in Enugu state.

Hypothesis Four

  • H0: Tax collection and administration in Enugu state is effective and efficiently managed.
  • H1: Tax collection and administration in Enugu state is not effective and efficiently managed.

1.6 Significant of the Study

The researcher is motivated to study the ways through which internally generated revenue in Enugu state could be enhanced.

The information contained here will benefit the society at large as it will expose the society to the need to pay tax and consequence of failure to pay tax.

The study will no doubt charge the aggressive attitude of an average Enugu man towards the payment of tax and collectors of taxes who were hitherto regarded as enemies.

Owing to the present steps taking by federal government in re ” branding the economy activities, the research work will recommend measure that will be taken by the state Board of internal Revenue, Federal Inland Revenue Services, budget and Planning department and other government decision ” making bodies ways to enhance effective administration of her services and achieve immensely her stated objectives, especially in the area of tax administration on revenue generation.

The study will also unleash problems affecting tax effectiveness, which if appropriate corrective measures taken will go a long way in improving the state internally generated revenue machineries of the government.

1.7 Scope of the Study

The research will focus on:

  • Reasons why tax payers avoid or evade tax.
  • How tax evasion and avoidance are carried out.
  • The rate of revenue generation.
  • The manner of sourcing for tax in Enugu state government for the past few years.
  • What are responsible for poor tax collection in the state.

1.8 Limitation of the Study

The study will cover the capital city of Enugu and the remaining two senatorial zones of the state.

This study would have been extended to the entire South East states of the Federation but for limitation of resources and time.

  • Inadequate time due to the combination of class schedule and project work.
  • Uncooperative attitude of some employees that were approached.
  • Exeat: restriction to go out and source for materials.
  • Insecurity as a result of bombings in most states in Nigeria during the period which this work is carried out also limits the study.

Financial Constraints

Despite all this limitations mentioned above and hindrances, the research study no doubt turned out to be successful. 1.9 Definition of Terms

Words that are frequently used in this research work are short listed here and briefly discussed to enable the reader get equipped with their meaning. Some which are:


This can be defined as a compulsory transfer of resources and Income from the private sector in order to achieve some of the nation “economic goals Okpe (1998: 109)

Tax Evasion:

Here, the tax payer adopts illegal means so as to pay less than he should ordinarily pay. “It is also involves an unlawful refusal or neglect by a tax payer to pay the tax due.” J.C Aroh & E.O Nwadialor (2009: 352)

Tax Avoidance:

This is a means where by the tax payer arranges his affairs legally so that he pays less tax than he should otherwise pay.

Revenue Generation:

This is systematic gathering / collection of income revenue.


This could be described as an income accruable to person(s), government and organization.


This is a legal frame work upon which actions/ inaction are based.

Tax Jurisdiction:

This refers to an area where one tier of government has power to collect tax.

Tax Allowance:

This refers to the proportion of income exempted from tax.

Tax Holiday:

This is a period of grace granted to a company during which it's income is not subjected to tax.

Taxable Income:

This refers to that proportion of income that is liable to tax.

P.A.Y.E (Pay As You Earn):

Is one of the systems of personal income tax based on the proportion of the income usually deducted at source.


2.0 Literature Review

2.1 Introduction

This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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