Effect of Tax Administration on Revenue Generation

The effect of tax administration on revenue generation in Enugu state. Download the full project materials from chapter one to five with reference and abstract.



1.1 Background of the Study

The serious decline in price of oil in recent years has led to a decrease in the funds available for distribution to the Federal and State Governments. The need for state and local governments to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance. This need underscores the eagerness on the part of state and local governments and even the federal government to look for new sources of revenue or to become aggressive and innovative in the mode of collecting revenue from existing sources. Aguolu (2004), states that though taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derivable from taxation, however, taxation is the most important source of revenue to the government, from the point of view of certainty, and consistency of taxation.

Aguolu (2004) further mentioned that taxation is the most important source of revenue to the government. Owing to the inherent power of the government to impose taxes, the government is assured at all times of its tax revenue no matter the circumstances.

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


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.


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.

The chain of administration in the state board of internal revenue

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 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.


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.


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

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


They are concerned with the service of

  1. Returns of income forms ii.
  2. 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.

  1. Tax collection and administration in Enugu state is not efficient and efficiently managed.
  2. 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 /defaulte

1.3             Objectives of the Study

The general objective 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 to

  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.

  1. To ascertain whether lack of adequate staff in the SBIR affect tax administration on revenue generation in Enugu state.
  2. To examine if enlightening the tax payers on the importance of taxation affect tax administration in the state.

Other headings in chapter one include the followings.

1.5 Hypotheses of the Study

1.6 Significance of the Study

1.7 Scope of the Study

1.8 Limitations of the Study

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