ABSTRACT
Tax
evasion and avoidance, a problem which seemed to have defied solution, has be
deviled the Ekiti state tax system right from the times of separation from old
Ondo state. While some have blamed the situation on tax authorities for not
living up to expectation with regards to tax administration, others attribute
it to the unpatriotic attitude of the taxpayers.
evasion and avoidance, a problem which seemed to have defied solution, has be
deviled the Ekiti state tax system right from the times of separation from old
Ondo state. While some have blamed the situation on tax authorities for not
living up to expectation with regards to tax administration, others attribute
it to the unpatriotic attitude of the taxpayers.
The
study sought to identify the causes of tax evasion and avoidance amongst
individual taxpayers, the way through which it is perpetrated and the social
and economic consequences brought about by this problem. The research gathered
data through primary source and analyzed through chi – square statistics. It
was found among others, that loopholes in the tax law, poverty and lack of
adequate public enlightenment are responsible for the problem. The taxpayer
perpetrates this unpatriotic act through such means as concealment of profit
and interference with the Revenue agents through briery and corruption. The
situation results in the inability of government to render essential service
adequately, creation of resentment among honest taxpayers and inequality in the
society.
study sought to identify the causes of tax evasion and avoidance amongst
individual taxpayers, the way through which it is perpetrated and the social
and economic consequences brought about by this problem. The research gathered
data through primary source and analyzed through chi – square statistics. It
was found among others, that loopholes in the tax law, poverty and lack of
adequate public enlightenment are responsible for the problem. The taxpayer
perpetrates this unpatriotic act through such means as concealment of profit
and interference with the Revenue agents through briery and corruption. The
situation results in the inability of government to render essential service
adequately, creation of resentment among honest taxpayers and inequality in the
society.
It
was recommended that tax officials should be constantly trained and re –
trained on the job and the establishment of Revenue courts by state governments
having powers to impose heavy monetary penalties and criminal sanctions.
was recommended that tax officials should be constantly trained and re –
trained on the job and the establishment of Revenue courts by state governments
having powers to impose heavy monetary penalties and criminal sanctions.
TABLE OF CONTENTS
Title Page
Certification
Dedication
Acknowledgments
Abstract
Table of contents
CHAPTER ONE
1.1 A
General Description of Area of Study
General Description of Area of Study
1.2 Statement
of the Problem
of the Problem
1.3 Statement
of Objective
of Objective
1.4 Relevant
Research Questions
Research Questions
1.5 Significance
of the Study
of the Study
1.6 Scope
and Limitation of the Study
and Limitation of the Study
CHAPTER TWO
2.0 Literature
Review
Review
2.1 Introduction
2.2 Types
of Tax
of Tax
2.4 Personal
Income Changeable to Tax.
Income Changeable to Tax.
2.5 The
Meaning of Tax Evasion and Tax Avoidance
Meaning of Tax Evasion and Tax Avoidance
2.6 Causes
of Tax Evasion and Tax Avoidance
of Tax Evasion and Tax Avoidance
in Nigeria
2.7 Ways by Which Tax Evasion and Avoidance
Are Perpetrated.
2.8 Effects
of Tax Evasion and Avoidance
of Tax Evasion and Avoidance
CHAPTER THREE
3.0 Research
Methodology
Methodology
3.1 Research
Design
Design
3.2 Re
– Statement of Research Questions
– Statement of Research Questions
3.3 Statement
of Hypothesis
of Hypothesis
3.4 Characteristics of the Study Population
3.5 Sample
and Sampling Method
and Sampling Method
3.6 Data
Collection Equipment
Collection Equipment
3.7 Validity
Test and Realizable of the Study
Test and Realizable of the Study
3.8
Method
of Analyzing Data Collected
Method
of Analyzing Data Collected
3.9
Limitation
of the Methodology
Limitation
of the Methodology
CHAPTER FOUR
4.0 Presentation
and Analysis of Data
and Analysis of Data
4.1 Data
Collection and Organisation
Collection and Organisation
4.2 Presentation
and Analysis of Data
and Analysis of Data
4.3 Data Analysis and Interpretation
According of the Test of Hypotheses
4.4 Discussion
of Finding
of Finding
CHAPTER FIVE
5.1 Summary
of Findings
of Findings
5.2 Conclusion
5.3 Recommendations
Bibliography
Bibliography
Questionnaire
CHAPTER ONE
1.1 A GENERAL DESCRIPTION OF
AREA OF STUDY
AREA OF STUDY
Tax
evasion and avoidance a problem which seems to have defiled solution had
bedeviled the Ekiti state tax system right from day of creation.
evasion and avoidance a problem which seems to have defiled solution had
bedeviled the Ekiti state tax system right from day of creation.
While
some have blamed the situation on the authorities for not living up to
expectation with regards to tax administration, others attribute it to
unpatriotic attitude of the tax payers. It was in the light of this contending
position that this research work will be carried out based on Ekiti state and
individual tax payers.
some have blamed the situation on the authorities for not living up to
expectation with regards to tax administration, others attribute it to
unpatriotic attitude of the tax payers. It was in the light of this contending
position that this research work will be carried out based on Ekiti state and
individual tax payers.
The
desire to uplift one’s society is the first desire of every patriotic citizen.
Tax payments is a demonstration of such desire, the payment of tax is a civic
duty and an imposed contribution by government on her subjects and companies to
enable her finance or run utilities and perform other social responsibilities.
desire to uplift one’s society is the first desire of every patriotic citizen.
Tax payments is a demonstration of such desire, the payment of tax is a civic
duty and an imposed contribution by government on her subjects and companies to
enable her finance or run utilities and perform other social responsibilities.
Personal
income tax, thus, constitutes one of the major principal sources of government
revenue in Ekiti state tax system.
income tax, thus, constitutes one of the major principal sources of government
revenue in Ekiti state tax system.
However,
one of the greatest problems facing the Ekiti state tax system is the problem of
tax evasion and tax avoidance, while tax evasion is the willful and deliberate
violation of the law in order to escape payment of tax which is unquestionably
imposed by law of the jurisdiction, tax avoidance is the act by which the tax
payer seeks to reduce or remove altogether his liability to tax without
actually breaking the law.
one of the greatest problems facing the Ekiti state tax system is the problem of
tax evasion and tax avoidance, while tax evasion is the willful and deliberate
violation of the law in order to escape payment of tax which is unquestionably
imposed by law of the jurisdiction, tax avoidance is the act by which the tax
payer seeks to reduce or remove altogether his liability to tax without
actually breaking the law.
The “twin devils” have created a
great gulf between actual and potential revenue which is of great concern to
Ekiti government, the government has for the umpteenth time complained wide
spread incidence of tax avoidance and evasion in the state as companies and
other taxable person employ various tax avoidance devices to escape payment of tax
or deliberately employ fraudulent ways and means of evading tax altogether
sometimes with the active connivance of the tax officials.
great gulf between actual and potential revenue which is of great concern to
Ekiti government, the government has for the umpteenth time complained wide
spread incidence of tax avoidance and evasion in the state as companies and
other taxable person employ various tax avoidance devices to escape payment of tax
or deliberately employ fraudulent ways and means of evading tax altogether
sometimes with the active connivance of the tax officials.
With increase in the level of
personal income tax evasion and avoidance, this study will be looking at which
way this can be stopped or reduced to the bearest minimum.
personal income tax evasion and avoidance, this study will be looking at which
way this can be stopped or reduced to the bearest minimum.
1.2 STATEMENT OF THE PROBLEM
Although
tax evasion and avoidance are problems that face every tax system, the Ekiti
state situation seems unique when viewed against the scale of corruption
practices prevalent in Ekiti state.
tax evasion and avoidance are problems that face every tax system, the Ekiti
state situation seems unique when viewed against the scale of corruption
practices prevalent in Ekiti state.
Under
direct personal taxation as practiced in Ekiti state, the major problem lies in
the collection of the taxes especially from the self employed such as
businessmen, contractors, professional practitioners like doctor, accountant,
architects and trader in the shop among others.
direct personal taxation as practiced in Ekiti state, the major problem lies in
the collection of the taxes especially from the self employed such as
businessmen, contractors, professional practitioners like doctor, accountant,
architects and trader in the shop among others.
As
observed by Ayua (1999), these persons blatantly refuse to pay tax by reporting
losses every year. According to him, many of these professional live a
lifestyle inconsistent with reported income, which is usually unrealistically
low for the nature of their businesses. Civil servants and other salary workers
are the only class of people that actually pay tax in Nigeria.
observed by Ayua (1999), these persons blatantly refuse to pay tax by reporting
losses every year. According to him, many of these professional live a
lifestyle inconsistent with reported income, which is usually unrealistically
low for the nature of their businesses. Civil servants and other salary workers
are the only class of people that actually pay tax in Nigeria.
However, even among the salary
workers, he added, many have turned the statutory personal allowance and relief
into a fertile ground for tax evasion. Almost all Ekiti state taxpayer is
married with four children; Similarly, despite the tax provision meant to plug
loopholes through which taxable persons can minimize tax liability, the self
employed person employ all kinds of avoidance schemes to minimize or escape tax
liability and makes you wonder whether there are still any tax official working
in that capacity. Such scenarios, no doubt, say a lot about tax administration
system in Ekiti state both in its design and in the disposition of some
taxpayers towards taxation.
workers, he added, many have turned the statutory personal allowance and relief
into a fertile ground for tax evasion. Almost all Ekiti state taxpayer is
married with four children; Similarly, despite the tax provision meant to plug
loopholes through which taxable persons can minimize tax liability, the self
employed person employ all kinds of avoidance schemes to minimize or escape tax
liability and makes you wonder whether there are still any tax official working
in that capacity. Such scenarios, no doubt, say a lot about tax administration
system in Ekiti state both in its design and in the disposition of some
taxpayers towards taxation.
While
it immediately presupposes that there are legal frameworks put in place to
punish tax evaders, it perhaps raises a poser on the efficiency and
effectiveness of tax laws and tax administration in Ekiti state. Some state
governments in an effort towards solving this problem had even gone to the
extent of engaging the services of tax consultants. This government effort,
notwithstanding, the problem of tax evasion and avoidance still persists
(Alabi, 2001). There is no doubt that revenue due to any government will be
reduced by the unpatriotic act of the tax evaders.
it immediately presupposes that there are legal frameworks put in place to
punish tax evaders, it perhaps raises a poser on the efficiency and
effectiveness of tax laws and tax administration in Ekiti state. Some state
governments in an effort towards solving this problem had even gone to the
extent of engaging the services of tax consultants. This government effort,
notwithstanding, the problem of tax evasion and avoidance still persists
(Alabi, 2001). There is no doubt that revenue due to any government will be
reduced by the unpatriotic act of the tax evaders.
1.3 STATEMENT OF OBJECTIVE
The
major objective of the study is to find ways by which Tax Evasion and Avoidance
in Personal Income Tax can be curbed in Ekiti state.
major objective of the study is to find ways by which Tax Evasion and Avoidance
in Personal Income Tax can be curbed in Ekiti state.
The specific objectives are to:-
Ø evaluate the importance of personal
income tax.
income tax.
Ø present a conceptual analysis of how
to tax payers in Ekiti state evade and avoid tax.
to tax payers in Ekiti state evade and avoid tax.
Ø find out factors responsible for
little or no awareness of personal income tax.
little or no awareness of personal income tax.
Ø examine the impact of personal income
tax on the tax payers.
tax on the tax payers.
1.4 RELEVANT RESEARCH QUESTIONS
For
the purpose of this study, the followings are the research question carried
out.
the purpose of this study, the followings are the research question carried
out.
1.
Why
is personal income tax being avoided and evaded?
Why
is personal income tax being avoided and evaded?
2.
What
are the factors responsible for little or no awareness of personal income tax?
What
are the factors responsible for little or no awareness of personal income tax?
3.
How
are the various penalties implemented by state board of internal revenue?
How
are the various penalties implemented by state board of internal revenue?
4.
What
are the impacts of personal income tax on the tax payers?
What
are the impacts of personal income tax on the tax payers?
1.5 SIGNIFICANCE OF THE STUDY
It is vital to know that this
research work will generally find solution to the existing and anticipated
problem in personal income tax in Ekiti state and Nigeria at large.
research work will generally find solution to the existing and anticipated
problem in personal income tax in Ekiti state and Nigeria at large.
It will help the Ekiti state
government in collecting personal income tax with ease and the taxpayer benefiting
from it through provision of social facilities and infrastructures for the
state.
government in collecting personal income tax with ease and the taxpayer benefiting
from it through provision of social facilities and infrastructures for the
state.
It
will enhance the taxpayers’ understanding that tax payment is a civil duty and
is being paid by a patriotic citizen of the state.
will enhance the taxpayers’ understanding that tax payment is a civil duty and
is being paid by a patriotic citizen of the state.
1.6 SCOPE AND LIMITATION OF THE
STUDY
STUDY
The
study focuses on curbing tax evasion and avoidance in personal income tax. It
covers the taxpayers in Ado – Ekiti and Iworoko-
Ekiti which is part of Ekiti state and administration of personal income tax by
the Ekiti internal revenue board, Ado
– Ekiti. It also looks at the administration of assessment, collection and
challenges faced by the tax administrator. The scope can’t go beyond this area
because of the cost required and also the time factor.
study focuses on curbing tax evasion and avoidance in personal income tax. It
covers the taxpayers in Ado – Ekiti and Iworoko-
Ekiti which is part of Ekiti state and administration of personal income tax by
the Ekiti internal revenue board, Ado
– Ekiti. It also looks at the administration of assessment, collection and
challenges faced by the tax administrator. The scope can’t go beyond this area
because of the cost required and also the time factor.
The
limitations in this study are the difficulties encountered during the research
work. In some cases, the researcher was mistaken for agent gathering
information for one panel of inquiry or the other. Also, some members of staff
of internal revenue of Ekiti that saw the need for this research and attended
to this researchers data need do not have access to tax payers’ files and
records. The issue of tax causes a lot of friction and reaction from the
taxpayer, therefore many of them turn down being interviewed or filling of
questionnaire.
limitations in this study are the difficulties encountered during the research
work. In some cases, the researcher was mistaken for agent gathering
information for one panel of inquiry or the other. Also, some members of staff
of internal revenue of Ekiti that saw the need for this research and attended
to this researchers data need do not have access to tax payers’ files and
records. The issue of tax causes a lot of friction and reaction from the
taxpayer, therefore many of them turn down being interviewed or filling of
questionnaire.
Some
that responded were not educated; therefore there is a need for translation and
interpreting of questionnaire to their native dialect before they could
respond.
that responded were not educated; therefore there is a need for translation and
interpreting of questionnaire to their native dialect before they could
respond.
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