Appraising the Impact of Tax Assessment Collection and Administration Method in Nigeria
OBJECTIVE OF THE STUDY
– To find out government development on economy using the proceeds of tax collection and administration of Akwa Ibom State.
– To find out the various income tax rule and regulations Akwa Ibom State and their profit.
– To identify the steps to be adapted to increase tax yielding sources of Akwa Ibom State.
– To the recommendation and suggestions on economic development through tax collection and administration.
REVIEW OF RELATED LITERATURE
This section presents a brief review of existing theoretical and empirical literature of tax administration. At the end of the review, an attempt is made to summarize the major drawbacks of the existing empirical studies and to identify the knowledge gap to be filled in by further investigation.
Theoretical review of tax administration
Tax administration refers to the identification of tax liability based on the existing tax law, the assessment of this liability, and the collection, prosecution and penalties imposed on recalcitrant taxpayers. Tax administration, therefore, covers a wide area of study, encompassing aspects such as registration of taxpayers, assessments, returns processing, collection, and audits (Kangave, 2005). The low revenue yield of taxation can only be attributed to the fact that tax provisions are not properly enforced either on account of the inability of administration to cope with them or on account of straight forward collusion between the tax administration and taxpayers.
Since taxes are an involuntary payment for government services, taxpayers have a strong inventive to minimize their tax liabilities either through avoidance (legal) or through evasion (illegal). Tax administration has to secure compliance with the laws by applying an array of registration, assessment and collection procedures. A government can keep taxpayers from doing these activities, and thus successfully avid tax evasion depends on the nature of economy’s actual tax base. Tax administration therefore, should aim at improving on laws regarding the registration, assessment, collection revenue, and exploiting fully taxation potential of a country (World Bank, 1999).
Legal structure for effective tax administration
The legal rules required for effective tax administration might be categorized under four broad headings:
- rules for the establishment of an individual’s tax liability;
- rules establishing a system of appeals from the initial assessment of tax;
- rules for the collection of taxes that have been established to be owing; and
- rules relating to tax offences and their punishment.
According to Kothari (2004) a research design is the arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. It is needed because it facilitates the smooth sailing of the various research operations, thereby making research as efficient as possible yielding maximal information with minimal expenditure of effort, time, and money. This section of the study shows how the research is designed, research methods applied, and the types of data used to achieve the research objectives. It also deals about the source of data, sampling technique, data collection methods, and data analysis methods in the study to arrive to the point on which identifying determinant factors of tax payers’ compliance.
Population and Sampling Techniques
Akwa-ibom was selected by using purposive sampling because many customers can be accessed and the responsible managers are found at the uyo Town tax administration office . The target populations of the study were managers and customers of B/w/T/A/O. The selection of the customer respondents is carried out by using non probability sampling technique. Among the various non- probability sampling techniques accidental or convenience sampling have used to contact customers. According to Anol, (2012: 70) convenience sampling also called accidental or opportunity sampling, is a technique in which a sample is drawn from that part of the population that is close to hand, readily available, or convenient. In this case the researchers have customers who visit the branch which is easily accessible as they use the services of the branch and is provide the questionnaire to fill out and return. In order to determine the sample size the student researcher have used the model proved by Malhotera, (2006:339).
DATA PRESENTION, ANALYSIS AND INTERPRETION
This chapter describes the result of the study starting from summery of the survey, response rate and respondents background. The response of tax payers are presented analyzed, and interpreted. In addition the opinion of the authority experts, woreda heads, and process owners are included.
The researcher intended his finding and gives his own conclusion by relating results with literature review and also by taking in to consideration other facts.
CONCLUSION AND RECOMMENDATION
The results of this study support the phenomenon of attitude being affected by better tax knowledge and demonstrate that this holds true for other attitude dimensions. Tax knowledge and tax compliance are positively related and helps in increasing taxpayers’ awareness. In this study lack of awareness was cited as the major and leading reasons for tax evasion and the respondents strongly agreed and commented that great effort has to be employed in this area.
Tax authority is the responsible body for encouraging compliance of taxpayers by changing their attitude. Tax payer education using different mechanisms is one way of conveying information for taxpayers regarding how, when, why and where to pay taxes and this will have an influence in the taxpayers attitude. The authority has tried to convey information for taxpayers once a year in each woreda, but this would not be sufficient to change their attitude. The survey result also showed that tax authority has been the main responsible body for the prevailing poor compliance and tax payers believes that the authority did not play well in improving the tax administration. In light of this the tax authority of the region is not efficient and effective in providing taxpayers educations regarding tax. It can be concluded that, so long as this is a fact it is not easy to bring taxpayers in to the track and narrow the compliance gap.
An effective compliance program requires that the tax administration has a sufficient power that enables it to in force non compliance. The amount of revenue collected is directly dependent on the efficiency and effectiveness of the authority. In regards to this fact the survey results showed that the tax authority of the region is not efficient and effective in service delivery, tax collection efficiency, law enforcement and awareness creation and tax payers’ education. It means that the authority is weak in regards to these parameters. There has been a change in the tax authority in terms of staff composition and quality. The authority has recruited many professionals to fill human power gap especially at regional level. But still there has been shortage of human power at woreda level where the tax collection and assessment is undertaken. This has directly related with efficiency and effectiveness of the organization in providing satisfaction for the tax payers at required level. With this perspective it would be difficult for the authority to bring about voluntary compliance and narrow the gap.
Any strategy to prevent tax evasion should begin with a theory of why people cheat on their taxes. Economists the question of why people to comply with the tax laws begin by constructing a theory based upon the assumption about human behavior that underlies all of economics, namely individuals generally act rationally in evaluating the cost and benefits of any Chosen activity.It might be argued that proper compliance means that taxpayers meet their tax obligation willingly. Without the need for enquires obstructive investigations, remainders or the threat or application of legal or administrative sanctions. Successful tax administration requires taxpayers to co-operate in the operation of a tax, rather than be forced to undertake every aspect of their obligations unwillingly.
Based on the study conducted using survey method, factors that determine taxpayers voluntary compliance were identified and possible recommendation are forwarded so that it may help the tax authority and other policy makers to approach this issue accordingly. Multiple approaches are needed to reduce the tax gap. No single approach is likely to fully and cost –effectively address noncompliance, since; it has multiple causes and spans different types of taxes and taxpayers.
- Anol Bather Research Methodology in Social Science 2012 India New Delhi Printers Baumol, William J. and Blinder, Alan S. (1994): “Macro Economics Principles and Policy”, 7th Edition, Dryden Press, Princeton University, Canada
- Derartu, Kenea .0(2007): “VAT Collection Problems: Empirical Evidence from Federal in Land Revenue Authority”, Senior Essay, Addis Ababa University, School of Economics, Addis Ababa.
- Douglas and Green Wald (1983): “The Thought of Tax Collection Practice,” 6th Edition, Thomson South Western, Princeton University, Canada.
- ERCA, (2010): “Federal Government Tax Collection,” Ethiopian Revenue and Custom Authority. Addis Ababa.
- Gupta, Alka (2001): “Public Finance and Tax Planning”, Anol Publication, New Delhi. Kothari, B L (2007). “Research Methodology: Tools Techniques ABD Publisher .Jaipur, India
- Misrak, Tesfay (2008): “Ethiopian Tax Accounting: Theory and Practice“, Senior Essay, School of Economics, Addis Ababa University, Addis Ababa.
- Naresh K. Malhotera, (2006). Marketing Research: An Applied Orientation. By Pearson Education. Pearson Publications LTD. New York
- Stanley L., Brue, (2000): “The Evolution of Economic thought,” 6th Edition, Thomson South Western, Princeton University, Canada.