PERSONAL INCOME TAX AND ECONOMIC DEVELOPMENT OF LAGOS STATE. (A Study of Lagos State Board of Inland Revenue Service) 


Taxation as a potent fiscal policy instrument through which infrastructures and social services that drive the development process of any society has been ineffective in Nigeria. The adoption of appropriate measures is, however, are requirement for the generation of adequate tax and appropriation of the revenue generated. This study set out to investigates Personal Income Tax And Economic Development of Lagos State.

The research adopts ex-post facto research method. Data was basically collected by secondary means through Lagos State Board of Internal Revenue and National Bureau of Statistics. Data garthered span 2005 to 2014.

Four hypothesis were formulated and tested with the used of regression analysis and T-test. Based on the result of the analysis, the four null hypotheses were rejected and the alternate hypotheses accepted. It was thereby concluded that; there is significant relationship between Poor Tax Administration and the economic development of Lagos state; tax Evasion has significant impact on the economic development of Lagos State; corruption of Tax collectors has significant impact on the economic development of Lagos State and there is significant relationship between Non Compliance of Tax Payers on tax laws and economic development of Lagos State.

Recommendations were proffered to Lagos State Government among which is

drive be resusciated because it is an effective way of enforcing tax compliance in a developing country like Nigeria.


Content                                            Page

Title page    -    -    -    -    -    -    -    -    -    -    i

Approval    -    -    -    -    -    -    -    -    -    -    ii

Dedication    -    -    -    -    -    -    -    -    -    -    iii

Acknowledgement    -    -    -    -    -    -    -    -    -    iv

Abstract    -    -    -    -    -    -    -    -    -    -    v

Chapter One: Introduction

1.1             Background to the Study

1.2     Statement of the Problem                  

1.3     Objectives of the Study  

1.4     Research Questions                 

1.5     Statement of Research Hypotheses    

1.6     Significance of the Study         

1.7     Scope of the Study         

1.8     Limitation of the Study            

1.9     Operationalization of Variables

1.10   Definition of Key Terms


Chapter Two: Literature Review

2.1     Introduction                                      

2.2     Conceptual Framework

2.3     Theoretical Framework           

2.4     Empirical Framework    

2.5     Gaps in Literature          


Chapter Three: Research Methodology

3.1      Introduction         

3.2     Research Design            

3.3     Population of Study       

3.4     Sample Representation   

3.5     Sampling Technique

3.6     Re-Statement of Research Hypotheses         

3.7     Methods of Data Collection              

3.8     Instrument of Data Collection  

3.9     Validity and Reliability Test    

3.10   Methods of Data Analysis

3.11   Model Specification       

Chapter Four: Data Presentation and Analysis

4.1      Introduction                  

4.2      Personal Characteristics of the Respondents

4.3      Testing of Hypotheses   

4.4     Calculating the Percentage of Personal Income Tax in Total Tax

4.5     Discussion of Results from Hypotheses Testing

Chapter Five: Summary, Conclusion and Recommendation

5.0      Introduction         

5.1     Summary of Findings    

5.2     Conclusion           

5.3     Recommendations





Tax is defined as money that has to be paid to the government by the people according to their profits on goods and services provided. Chris and Elizabeth (2001) also defined taxes as a forced proportional contribution from persons and property levied by the state by virtue of its sovereignty for the support of government and for all public needs.

Generally, taxation can be described as a form of levy imposed on all residents living and non-residents doing business within a tax jurisdiction. It is a civic and patriotic responsibility of citizens to pay taxes imposed which also come to the government as income or revenue yielding device to finance the provisions of socio-economic and infrastructural amenities and also to enhance industrial efficiency.

The history of taxation in Nigeria dates back to the pre-colonial period. According to Lekan and Sunday (2006) before the colonization of the different entities which were later amalgamated under the name Nigeria, there were different systems of taxation existing in the form of compulsory services, contribution of goods, money, labour and so on amongst the various kingdoms, groups and tribes controlled by the Obas, Emirs, Ezes, Attah of Igala, Tor of Tiv, Ohinoyi of Ebira and so on in order to sustain the monarchs.

The various taxes levied by the different ethnic groups by the kings according to Ola (2004) took several forms such as ‘Zakkat’ levied on Moslems for educational, charitable and religious purposes, ‘kudin-kasa’, a form of an agricultural tax levied on utilization of land, ‘shuka-shuka’ levied on the ownership of cattle based on the member of cattle, ‘Ishakole’- contribution of farm products as a form of land tax in exchange for the use of land for agricultural purposes payable to Obas, chiefs and family community heads, community tax payable by all adults in order to execute projects beneficial to the community; ‘Oko-ane’ payable to Attah Igala for hunting in a particular forest, ‘Osusu Imachi-Nkwu’ payable to Ezes in Igbo land by those who harvest palm fruits and are expected to contribute proportion of the harvested palm oil. In Tivland in Benue state certain taxes are paid by couples during marriage ceremonies which are used for various community development projects.

The present form of taxation in Nigeria could be traced to the establishment of a British colony in Lagos on August 6, 1861 and subsequent amalgamation of the Southern and Northern protectorates of Nigeria in 1914.

During the colonial era according to Yerokun (1997), the imposition of any type of tax on citizens (individuals and corporate) took the form of promulgation of laws by the colonial authority. Examples of such law include Native Law ordinance cap 74 of 1917 applicable to Western Nigeria. The re-enactment of the same law in 1929 according to Ola (2004) which for the first time imposed taxes on women resulted in the Aba women riot of 1929. Another law was that of non-natives protectorates tax ordinance of 1931. The ordinance was later repealed and incorporated into the taxation ordinance No. 4 of 1940 and subsequently re-enacted as the Income Tax Ordinance (ITO) 1943.

The above tax laws according to Yerokun (1997) were administered on individuals and corporate entities by various tax and revenue officers in the different provinces and regions. In order to promote uniformity in the incidence of taxation throughout the geographical entity called Nigeria according to Lekan and Sunday (2006), the colonial government in 1958 set up the Raisman Commission. The commission at the end of its work recommended the introduction of uniform basic income tax principles for application in all regions of Nigeria. This recommendation was accepted by the government which incorporated the same into the 1960 constitution of the Federal Republic of Nigeria. This led to the promulgation of the Income Tax Management Act (ITMA) 1961 and Companies Income Tax Act (CITA) 1961.

The above legislations (ITMA and CITA) 1961 were later repealed and re-enacted as the Personal Income Tax Act (PITA) 1993, and the Companies Income Tax Act CAP 60 LFN, 1990 respectively. As a result of the work of the Tax Laws Review Commission, these laws have been reviewed and updated and are included in the laws of the Federal Republic of Nigeria 2004. The current law that governs the administering of Personal Income Tax (PIT) is the Personal Income Tax Act Cap. P8 LFN 204 which imposes tax on incomes of individuals and corporations.

Tax according to Nightingale (2000) under any jurisdiction is discriminatory in the sense that it is assessed on persons or property based on profits/incomes or gain, the benefit derived by citizens from tax payment is without reference to the contribution of individual tax payers. In line with this, according to Ariwodola (2000) it is accurate to say that the primary objective and purpose of taxation in most nations of the world is essentially to generate revenue for government expenditure on social welfare such as provision of defense, law and order, health services and education. Revenue from taxation can also be spent on capital projects otherwise called consumer expenditure, creating social and economic infrastructure which will improve the social life of the people.

In Nigeria today, tax administration has been a challenge Naiyeju, J.K. (2010) highlight the various Challenges of the Tax collection and Administration in Nigeria Today as Administrative Challenge, Compliance Challenges, Lack of Equality, Challenge of Multiple taxes, Poor Taxation Drive by tiers of Government, Challenge of Bad Governance, Challenge of Corruption and Challenges of Human Capacity Building and Training.

The aim of this research project is to look into various constraints faced in the administration of Personal Income Tax and examine its economic benefits to the development of Lagos State. Also, proffering solutions as regards strategies to be adopted by revenue authorities for expanding the Nigerian tax net to improve tax collection drive.


Personal Income Tax is a global and wide topic that undisputedly requires investigation and provision of possible solution to the problems associated with effective administration of tax.

Most of the Tax authorities (especially the States and Local Government) lack the desired institutional capacity to administer effectively the taxes under their purview (capacity in terms of staffing, skills, salary pay, other funding, computer and IT infrastructure etc).

Non-compliance of employers to register their employees and remit such taxes to relevant tax authorities. Many evade the tax in the cities and rural areas.

SMEs, informal sectors and even big companies carry out evasive practices.

The bulk of PIT today are paid by only the employees. Politicians, the rich, professionals and the privileged, few are not equitably taxed. Multiple taxes is still a major problem besetting our tax collection and administration.

Poor Taxation Drive by tiers of Government: The political economy of revenue allocation discourages a proactive revenue drive, especially by the states and LGs. They heavily rely on their share of the oil revenue.

Challenge of Bad Governance: Taxpayer are not encouraged to pay more taxes because there is no visible evidence of good governance.

Challenge of Corruption: The tax collection and administration is often prone to corruption. The corruption risk erodes the tax yield and confidence in the system.

Challenges of Human Capacity Building and Training: At the States and Local Governments, there is dearth of capable hands to administer the relevant taxes efficiently.

The identified problems can be summarized as follows;

Poor tax administration Tax evasion Corruption of tax collectors Noncompliance with tax laws by tax payers


The main objective of this study is to evaluate the impact of Personal Income Tax on economic development of Lagos State.

The specific objectives are:

To examine the impact of poor tax administration on the economic development of Lagos State. To examine the effect of tax evasion on the economic development of Lagos State. To determine the impact of Tax collectors on economic development of Lagos State. To determine the effect of noncompliance on tax revenue generated by Lagos State.


In order to achieve the purpose of this research study, the study attempts to provide answers to the following research questions in order to arrive at a logical conclusion

How does poor tax administration affect the economic development of Lagos state? To what extent does tax evasion affect the economic development of Lagos state? To what extent does corruption of tax collectors affect the economic development of Lagos state? How does noncompliance by tax payers affect the economic development of Lagos state?


In a research work, hypotheses are never proved or disproved, they are either supported (i.e. accepted) or rejected. To provide answer to the research questions arising from this study, the following hypotheses are postulated.


Ho:    There is no significant relationship between Poor Tax Administration and the economic development of Lagos state.

H1:    There is significant relationship between Poor Tax Administration and the economic development of Lagos state.


Ho:    Tax Evasion has no significant impact on the economic development of Lagos State

H1:    Tax Evasion has significant impact on the economic development of Lagos State


Ho:    Corruption of Tax collectors has no significant impact on the economic development of Lagos State

H1:    Corruption of Tax collectors has significant impact on the economic development of Lagos State


Ho:    There is no significant relationship between Non Compliance of Tax Payers on tax laws and economic development of Lagos State

H1:    There is significant relationship between Non Compliance of Tax Payers on tax laws and economic development of Lagos State


The researcher is motivated to study the ways through which Personal Income Tax impact economic development.(project topics   final year project topics )

The information contained 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 Lagosian 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.

Finally, the research work will be relevant to other researchers who wish to make further research of Personal Income Tax and Taxation in general.


This research work tends to examine the impact of Personal Income Tax (PIT) on economic development. The scope of the research covers tax authorities of Lagos State Government specifically Lagos State Board of Internal Revenue. The population of the study includes all tax payers working in Lagos State. This research tends to cover Lagos State of Nigeria and will be concluded within an academic session. Data were garnered from Lagos State Bureau of Statistics and Lagos State Internal Revenue Service    

The research cover revenue generated by Lagos State for a period of ten (10) years; between 2005 and 2014.


The major limitations however  envisaged in the course of research work is the unavailability of absolute correct appropriate and needed information to be provided by the respondent, time to cover a large number of respondent and cost to run them. An appreciable amount of co-operation on the respondent part will be of paramount importance to the success of this project.

The major envisage limitations are:

Access to Data: inability to access relevant information is a foreseen challenge to the success of this research. The tax authourity may not reveal data or a true information which they which they may chose to keep for themselves.   

Time Constraint: this study would have choose to cover a larger scope to consider the thirty-six state tax authority which would yield a more reliable result but due to the limited time available, the scope is limited to Lagos State tax authority.

High cost of running a large area: Also the financial implication of covering the entire nation could be a predicament to the success of this research.

Despite all this limitations mentioned above and hindrances, the research study no doubt will turn out to be successful.


Y       =       Dependent

X       =       Independent

Y       =       f(X)

EDLSG =    f(PIT)

EDLSG will be represented by Total Income Generated

y1      =        Total Income Generated     x1    =       Poor Tax Administration

y2      =        Total Income Generated     x2    =       Tax Evasion

y3      =        Total Income Generated     x3    =       Corruption

y4      =        Total Income Generated     x4    =       Non Compliance


f(x1 + x2 + x3 + x4)




y1 + y2 + y3 + y4      =   f(x1 + x2 + x3 + x4)

TIG = f(PTA + TEV + CRP + NCP)


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:

Tax: 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.



RESEARCHWAP.COM is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • " is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • " is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing