This research work is an investigation into the' administration of personal income tax and the socio-economic development of Ikeja Local Government of Lagos State. To tax is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law. This study adopts both the historical and survey research methods in generating relevant data. The population of the study is limited to selected tax payers in Ikeja Local Government Area of Lagos State. The sample size of the study is 50, while the sampling technique Used is random. The chi-square (X2) method was adopted as a method of analyzing the data generated in the course of the study. The study concludes that the way forward from is for the Lagos State government to implement its tax policy effectively as to educate and encourage tax payers in Ikeja metropolis in paying taxes regularly. Recommendations made in the course of the study among others is that the Lagos State Government should consider Ikeja taxpayers and other key stakeholders' interests in fiscal policy formulation and implementation in order to achieve improved tax awareness and compliance rate in the local government area.


Content                                            Page

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

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

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

Acknowledgement    -    -    -    -    -    -    -    -    -    iv

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



1.1 Background of the study

1.2 Statement of the problem

1.3 Objectives of the study

1.4 Research questions.

1.5 Research hypotheses

1.6 Significance of the study

1.7 Scope and limitation of the study.

1.8 Plan of the study

1.9 Operational definition of terms

1.10 Historical background of Ikeja Local Government Area References


Literature review

2.1     Introduction

2.2.     Theoretical framework

2.3     Purpose and effects of tax

2.4     Personal income tax act 1993 (no 104) operation of pay as yoU earn (payer) regulations 2003

2.5     The administration of personal income tax in Nigeria

2.6     The problem of tax collection

2.7    Conclusion



Research methodology

3.0    Introduction

3.1    Research design

3.3    Sample size

3.4    Sampling technique

3.5    Sources of data

3.6     Method of data analysis

3.7    Research instrument

3.8    Reliability and validity of research instrument



Data presentation and analysis

4.1    Introduction

4.2    Data presentation

4.3    Test of hypothesis


Summary of findings, conclusion and recommendations

5.1    Summary of finding

5.2    Conclusion

5.3    Recommendation






Every Society in whatever form will comprise the ruling and the authority and the ruled subjects. As social contract term the ruler is expected to perform some roles; be it administrative, social, economic, political, cultural or religious. In return, the ruled subjects that enjoy the benefits from these roles performed are to give something for keeping the machinery working. This could be in cash or in kind. 'In light of the above, every constituted human society, whether primitive or modem, has one form of levy or the other. This necessitates tax and taxation. A historical review of man and societyreveals that tax exists as a major source of revenue for government.

Tax payment, according to Nightingale (1998), "is the part of the price to be paid for living in an organized and orderly society, for if this is not done, the miscreants produced through the inequality in the system will be a source of constant irritation to the well-being of those who have." A system of tax- will vary (even if slightly) from one 'country to the other because it is a socio­political and economic' model representing society's social, political and economic needs and aspiration at arty given time. Because of this, Nigerian tax system is dynamic and is continually changing to meet the needs of the constituents of the society.

An income tax is a tax levied on the income of individuals or business(corporations or other legal entities). Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive, when the tax is levied on the income of companies, it is often called a corporate tax, income tax, or profit tax. Individual income taxes often tax the total income of the individual (with some deductions permitted), while corporate income taxes often tax net income (the difference between gross receipts, expenses, and additional write-offs). Various systems 'define income differently, and often allow notional reductions of income (such as a reduction based on number of children supported).

According to Lekan and Sunday (2006) "Personal Income Tax is a tax imposed with income as its base." This income is as received by some chargeable people. Agbetunde (2004) states that "It is not everybody that falls under the coverage of this tax but certain sets of people called taxable persons." The discussion on the administration of income tax is incomplete without due consideration of the socio-economic development of Ikeja Local Government Area of Lagos State.

In light of the above, the revenue generated through taxation in Ikeja Local Government of the state has been channeled to various areas such as road construction and rehabilitation, transportation, traffic management, environmental beautification, waste management, flood control, physical planning and flood upgrading, education, job creation, health, economic planning, commerce and industry, housing, etc. most feasible in Mobolaji Bank Anthony Way, ObafemiAwolowo Road, Oba Akran Road, Airport –Road etc,

The economic impact of personal income tax administration in Ikeja cannot be over-emphasized. It is seen in the system of transportation in that, roads have enormous impact on the standard of living of the people in so many ways. It is also noticeable in the environment to general, because of the determination to have a sustainable environment and this has prompted an aggressive promotion of a culture of 'Greening Ikeja Local Government. '

The success 9f this landscaping and beautification exercise is self-evident in many outer and inner areas and major roads as stated earlier.

In the course of this study, effort shall be made to discuss extensively on the economic importance of personal income tax administration in Lagos State, and Ikeja Local Government in particular.


The following are the problems that prompted the pursuit of this study:

a.    Low level of awareness of the method of operating personal income tax system by tax payers in Ikeja Local Government of Lagos State.

b.    High level of tax avoidance and tax evasion among traders in Ikeja Local Government.

c.    Slow rate of socio-economic development In Ikeja Local Government.

d.    Inadequate qualified and competent tax inspectors, tax collectors and tax consultants in Lagos State.

e.     Indiscriminate imposition, assessment and collection of taxes by officials of tax authorities in Lagos State.


Relevant to the study is the definition of the general objectives of this study, which is the evaluation of personal income tax administration and the socio- economic development of Ikeja Local Government' Area in Lagos State. The objectives are as follows:

a.    To discuss the evolution and development of tax in Nigeria before, during and after colonial era.

b.    To evaluate the reasons for the high level of tax avoidance and tax evasion among traders in Ikeja Local Government.

c.    To identify the various sectors of the economy of IkejaLocal, Government that requires rapid development. '

d.    To discover certain challenges facing effective personal income tax administration in Lagos State such as unqualified and incompetent tax officials,indiscriminate imposition, assessment and collection of taxes, etc.

e.    To find out why the rate of socio-economic development in Ikeja Local Government of Lagos State is low.


The research questions are as follows:

a.    How does tax reflects the socio-economic needs of people in the society?

b.    How effective is the implementation of personal income tax by Lagos State Government?

c.    What is the compliance level by residents, firms and traders in Ikeja Local Government Area in terms of payment of taxes?

d.    To what extent has personal income tax been applied in the provision of infrastructures in Ikeja Local Government Area?


The following hypotheses are formulated in this study:

Hypothesis I

Ho:     Personal income tax administration cannot facilitate socio-economic development of Ikeja Local Government Area.

H1:     Personal income tax administration can facilitate socio-economic development of Ikeja Local Government Area.

Hypothesis II

Ho:     Low awareness and compliance level of personal income tax system' by most people in Ikeja Local Government Area is not a major reason for low tax revenue to the government.

H2:     Low awareness and compliance level of personal income tax system by most people in Ikeja Local Government Area is a major reason for low tax revenue to the government.


This study intends to indicate its meanings and values to the following groups:

a.    Tax authorities In Lagos State and Ikeja Local. Government in particular will realize the need for improvement in the system of administrating of personal income tax, the need to recruit qualified personnel and devise effective method of imposing, assessing and collecting taxes from tax payers.

b.    The tax payers should be better enlightened about the essence of taxation in terms of its economic, social and cultural implications in a civilized society.


The areas to be covered in the course of this study are: tax and taxation, personal income tax administration, the evolution and development of tax in Nigeria “characteristics of a good tax system, tax administration and the socio-economic development of Ikeja, problems facing tax authorities in ensuring an effective tax system in Lagos State, etc.

Major constraints or limitations of this study are stated as follows:

a.    Inadequate information required for the study write-up.

b.    Poor attitude of respondents to research instruments.

c.    Insufficient funds for clerical and other related costs.

Nevertheless, this research work will achieve its major objectives.


This research work has been arranged chronologically into five chapters as follows:

Chapter one provides a background the study, It "gets out the major problems prompting the research work. It clearly states the objectives of the study, the research questions for which answers must be provided, the research hypotheses that will be tested later (in chapter four), the relevance or significance of the study to both tax authorities and tax payers, the scope and limitations of the study, the study plan (which gives a total framework or arrangement of all the activities involved the study), the definition of key terms, and an historical background of the case study (Ikeja Local Government Area).

Chapter two concerns detailed discussion and explanation of relevant areas of the subject matter in a theoretical and conceptual manner, making references to related work carried out by some authors of textbooks, journals, seminar papers, etc.

Chapter three is the description of the methods adopted in conducting the study. It considers" the research design employed, the study population, sample size and technique, the sources of data, the validity and reliability of research instrument adopted, and the method of data analysis.

Chapter four involves the presentation and application of method of data analysis stated in chapter three. It also involves the testing of the stated hypotheses (hypotheses I and II) and making decisions 'based on the results of the analysis.


a.        Personal Income Tax: A tax charged on the income of a person,

b.    Society: A particular communityof people, who share the same customs, laws, etc.

c.    Tax: A compulsory levy imposed by the government authority through its agents, on its (tax payers) or his properties to achieve some goals.

d.    Taxation: The process of imposing, assessing and collecting taxes.

e.    Tax Administration: The interpretation and application of tax laws into practice.

f.     Tax Avoidance: An attempt to escape tax payment by capitalizing on the loopholes in tax laws.

g.    Tax Evasion: A criminal attempt to escape tax payment by breaking tax laws.

h,     Taxable Person: A person on whom certain tax can be imposed.

i.    Tax Laws: Legal instrument of fiscal policy that is derived from, adopted tax policies.

j.    Tax System: The process of taxation involving sets of rules, regulations and procedures with the organs of administration interacting with one another to generate funds for government.


Ikeja Local Government Area is an outer-ring suburb of the city of Lagos and capital of Lagos State. It is one of Nigeria's 774 Local Government

Areas (LGAs). It was founded by an Awori hunter-named 'AkejaOnigorun', after whom the area was named. To this day, the majority of residents in Ikejaare Awori.

Ikeja Local Government Area has numerous infrastructures and government organizations such as Federal Airports Authority of Nigeria with Vs headquarters on the grounds of MurtalaMuhammed Airport. The Accident

Investigation Bureau of the Nigerian government is headquartered in Ikeja.

The Nigerian Civil Aviation Authority (NCAA) has its Lagos office in Aviation House on the grounds of the airport.

Several airlines have their head offices in Ikeja. Arik Air's head office is in Arik Air Aviation Centre on the grounds of MurtalaMuhammed International Airport in Ikeja. Others like Air Nigeria (formerly Nigerian Eagle and Virgin Nigeria Airways), Aero Contractors, Overland Airways, Associated Aviation, Dana Air, Virgin Atlantic, etc. all have their head offices in Ikeja.

Ikeja is "home to a large computer market. Begun in f997 as a small market of only 10 shops, the current market now has well over 800. While most vendors provide the expected computer sales and repair services, it is also possible to find sales and repair services for various types of office equipment and electronic devices.


Agbetunde, L. A. (2004); "Principles and practice of Nigerian Personal Income Tax": Feetal Consulting Publishers.

Lekan, S. and Sunday, O. K. (2006); "Taxation: Principles and Practice in Nigeria"

Nightingale, K. (1997); "Taxation, Theory and Practice." Pitman Publishing. U.K;




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