Title Page - - - - - - - - - i

Approval --


Acknowledgment - - - - - -- - - iv

Table of Contents - - - - - -- - - v


1.1  Background of the Study - - - - - - 1

1.2 Statement of the Problem- -- - - - - 3

1.3 Objectives of the Study - - - - - - 6

1.4 Significance of the Study-

1.5  Scope and Limitations Of The Study -


Literature Review-------10

Principles of Taxation. ------11

Characteristics of a Good Tax System. ---12

Why Taxes Are Imposed. -----13

Legal Bases of Taxation. -----15

Tax Laws in Nigeria. ------16

Class of Income. -------17

Theoretical Framework ------19

Methodology -------22

Research Design -------25

Population of the Study -----25

Sample Size And Sampling Technique--25

Method of Data Collection -----27

Tests of Validity And Reliability of  Instruments -27

Method of Data Analysis-----29


The State Board of Internal Revenue (Sbir)- --30

Organizational Structure of Sbir-----30

Zonal Tax Arrangement------34

The Assessment Authority (Aa) ----35

The Tax Collector -------36

Motor Licensing Authorities  -  ----37

Tax Office Structure------37

The Paye Assessment Subsection----38

3.3.6 Collection Section- - - - - - - 38

3.3.7 Ledger Sub Section - - - - - - 39

3.3.8 Annual Returns- - - - - - - 40

3.3.9 Prosecution Sub-Section- - - - - - 40

3.3.10 Information Sub-Section - - - - - 41


4.1 Data Presentation and Analysis -- - - - 43


5.1 Summary-  - - - - - - - - 53

5.2  Recommendations- - - - - - - 54

5.3 Conclusion- - - - - - - - 59

Bibliography Appendices



In developed and developing countries there are wide range of taxes and levies that affect individuals and companies, citizens and foreigners, manufacturers and marketers, workers and pensioners . In Nigeria taxes range from petroleum profits taxation to tenement rate imposition, and taxes are imposed at different levels to enable the government provide certain essential services and facilities to the population. Some of the issues involved are legal, economic, others are political, sociological, while others are historical.

The study will begin the appraisal by examining related taxes and levies applicable in Abia State and the legal instruments governing them. The government plays the piper and dictates the tune. Ogundele (1999:8) states that government intervention in an economy takes  many  forms. The degree of intervention differs from country to country, depending on the form of political model adopted in the

governance of the country. The intervention referred to is tax, which in a well planned economy affects every aspect of human endeavour. On the subject of intervention which differs from one form of government to another, and the form of intervention, they either intervene for the wrong reason or adopt the wrong strategies when intervention is justified. Mbanefo (1999:21) posits that the implications of government tax intervention are many and will be expatiated in this study.

Anyanwu (1997:18) opines that fiscal administration is tax policy making and collection as well as expenditure programming at all levels of government. It involves the controlling, organizing, directing, monitoring, planning and management of government revenues and expenditure. Furthermore, the long term role of fiscal administration is to collect all registered taxes at minimum cost, as well as execute government programmes as efficiently as possible by avoiding waste.


Among the many problems confronting tax administration in Abia State, is how to ensure voluntary compliance  on the part of the tax payers. Tax being a commodity nobody want to buy, the tax man is hardly liked by tax payers who perceive him as government toll collector. The problem of the tax man is worsened by poor performance of most state governments in terms of provision of amenties for the tax paying public. Lack of confidence and mutual distrust in government represented here by the tax man, gave rise to voluntary compliance difficulties.

Tax laws in Nigeria are complex and difficult for the common taxpayer to understand, and some cases are problematic even for literate official. In addition to lack of understanding, many taxpayers are unaware of the existence of certain tax. This couple with the lack of information, laziness of the tax official, uncooperative taxpayers and the habit of ‘quick –fix’ solutions-encourages the use of the best judgement approach. This may be a manifestation of the poor tax education and weak fulfillment

by tax authorities of their responsibilities  with  regard  to public awareness.

Ocheoha (2000) asserts that tax is a commodity nobody will want to buy if buyers are given the opportunity of choice because tax is an imposition. He explains that government imposes taxes primarily to raise the revenue required to cover the cost of general administration and defense. He contend that the cost of general administration includes paying of personnel emoluments, salaries, wages of leaders or those in authority, their aides, as well as the salaries of civil servants, police and military personnel.

Toda,y the purposes of taxation have assumed a wider dimension hence the government uses it as a veritable  tool of administration. Therefore, the status and standing of taxation as a subject worthy of study cannot be overemphasized. Abudulrazaq (2002) asserts that the way Nigerian taxation should be studied and practiced remains a broad and demanding one. He suggested there must be technical competence with a positive group of primary sources that the competence can be tested in many ways

regarding form, elementary computation to planning transactions. Tax is imposed by those in authority for a variety of reasons and charges. Musgrave (2004) posits that taxes and charges are withdrawn from the private sector without leaving the government with liability to the payee. However, tax is a compulsory imposition, whereas charges and borrowing involve voluntary transactions. In other words, a major distinguishing factor of tax from other charges is that tax is not a quid proquo expenditure, thus implying that a tax payer should not demand or expect a commensurate exchange of goods or services for the  tax paid.

In view of the above, this study will attempt to answer the following questions which form the bedrock of the problems raised by the study.

What classes of people are liable to which type of taxation and what is the level of their compliance to the personal income tax in the state?.

What is taxation, and what purposes does taxation serve?

How have multiplicity and duplication of taxes, levies by the other levels of government made the administration of personal income tax by Abia state difficult?

High level incidence of corruption in the administration of personal income taxation gave rise to increased tax evasion, avoidance and ineffective and inefficient personal income tax administration in Abia state.

Noticeable inefficacy as evidenced in the increasing number of tax defaulters, evasion and avoidance are attributable to corruption and other vices in the administration of personal income tax in Abia state.


The objectives of the study are as follows:

1. To review out, in detail, the operations of personal income tax in Abia State in order to establish their success or otherwise in the generation of revenue for Abia state government.

2. To ascertain the meaning and nature of tax, especially the context of administration of personal income taxation in Abia State.

3. To determine which and what income are liable to tax and the level of compliance by those who are liable.

4. To identify the factors that impinge on the effective administration of personal income tax in Abia State.


Practically the study will assist the Abia State Board of Internal Revenue in positively administering their responsibilities in raising revenue through personal income taxation and conducting other tax duties.

It will also help policy makers in adopting appropriate policy on tax personal income tax and sanctions against violation or evasion of taxes by individuals, groups or companies. It will also help the officers of  the  Board  of Internal Revenue to adopt new strategies in ensuring compliance of individuals, groups and companies in fulfilling their responsibilities as citizens of the country.

Theoretically, it will help in the education of the management, administrators and tax officers on the need for continuous tax assessment towards increasing the revenue base of the government. It will also assist in the education of

the general public and tax payers on the need  to  carry  out their responsibility as citizens of the country.

The study will be of great importance in providing information to readers, especially those involved in financial administration to gain knowledge on the administration of personal income taxation.

It will increase the data base for scholars and practitioners interested in the field of revenue generation through personal income taxation.

Finally, it will serve as a reference point to scholars, and students who want to conduct research in future in the field.


The scope of this study covers only  the  staff  of  Abia State Board of Internal Revenue. The senior staff from grade level 10 and above, will be considered from other ministries and agencies of government for this study.

Some factors that constituted hindrance to success of this work include the following:

The time this study is expected to be completed is very short compared to the enormous work involved.

Limited financial resources also constituted a hindrance to the success of this study. A lot of money was required for transportation to various branches and zones of the Board of Internal Revenue.



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