Tax Administration in the Federal Capital Territory

Background to the study The administrative nucleus of every society is vested in the hands of the government. Government expenditure is broadly categorized into recurrent expenditure operating cost (General administration, defence, societal and economic services) and capital expenditure development cost (investment on roads, buildings, airport, petro-chemical projects, liquidified petroleum gas project, and investment in the productive sector such as agriculture and manufacturing). To perform her statutory function, government needs funds.

Taxes are one of the most important sources of government revenue. The personal income tax which is a form of direct tax is one sure way of revenue for the governments. However, there have been some bottlenecks in its administration in Nigeria. Personal income tax in Nigeria has remained the most unsatisfactorily, disappointing and problematic of all the taxes in Nigeria today. This is in spite of the fact that tax reform has of recent been a key element in economic reform which the country had undergone (Dominic, 1997).

The personal income tax deals with direct taxation, and as such the citizens who fall under the direct assessment are the self-employed and workers who come under the Pay As You Earn (PAYE) system of tax. It is thus important to mention that the problem of tax collection lies more with the self employed rather than those under PAYE. Thus, the self-employed are difficult to pin down. Where he is skillful and manipulative or has the services of a knowledgeable tax lawyer, he may devise or arrange his financial affairs so as to avoid or reduce the appropriate tax payable under the circumstances.

Therefore, the problems of tax avoidance and evasion are more common with the self-employed (Dominic, 1997). The Nigerian environment provides a lot of challenges that self-employed people and companies in it have to contend with. Though the environment provides a good market, the problem it also poses is enormous in sincere effort to reap the benefits of the market. All eligible persons who are self-employed are expected by law to pay tax to the relevant authorities in the states in which they operate. But it is a reality that self-employed individuals do not generally like to pay tax.

They will use whatever type of trick in their power in order to avoid or evade tax. They do not comply with tax matters and consequently enough tax revenue is not generated from them (Ndulue, 2005). The Federal Government has been giving tax incentives in order to encourage compliance among its citizenry, yet tax payers are unlikely to it. The objectives of providing these incentives are to generate enough revenue that will enable both federal and state governments to execute their various expenditure programmes. In spite of these incentives, adequate tax revenue has not been generated from the self-employed people.

Collection from self-employed class is approximately 6% of personal income collection for any fiscal year (Sani, 2005). The net effect is that both federal and state governments (FCT inclusive) are denied the much needed revenue for prosecuting their various programmes which are geared towards improving the living standard of people. Less than 10% of the self-employed assessed heed any appeal to pay their income tax. Similarly, less than 5% even care to file returns of income in spite of newspaper and gazette notices published in March of every year for taxable adults male or female to do so (Sani, 2005).

It is in the light of these issues that the study seeks to examine the challenges associated with the administration of personal income tax in Nigeria with a view to suggesting measures that can be adopted for improvement. 1. 2Statement of the problem Whenever government identifies a problem in a particular sector, reforms are formulated to correct the setbacks. In the past, successive governments have made amendments on the Personal Income Tax. The rationale behind this is to render a good equitable tax system so as to achieve its macroeconomic objectives.

Besides, the rules that regulate personal income taxation in the Federal Capital Territory, Abuja and Nigeria as a whole today are to be found in the Personal Income Tax Decree now Personal Income Tax Act, and several amendments that are virtually on annual basis. The language of these pieces of legislation is often forbidding and confusing, even to the professional. (Gberegbe et al, 2008). This situation has raised the following fundamental questions that need to be answered: a) What are the objectives of Personal Income Tax in Nigeria? ) What is the law governing administration of Personal Income Tax in Nigeria c) What are the challenges in the administration of Personal Income Tax in the Federal Capital Territory, Abuja. d) What measures can be adopted to enhance the effective administration of personal income tax in Abuja, Nigeria. 3. Objectives of the study The aim of this research is to achieve the following objectives: a) To examine the extent to which the objectives of personal income tax have been achieved in the Federal Capital Territory, Abuja Nigeria. b) To examine the law governing administration of Personal Income Tax in Nigeria. ) To assess the challenges in the administration of Personal Income Tax in the Federal Capital Territory, Abuja. d) To recommend measures that could enhance the administration of personal income tax in Abuja, Nigeria. 1. 4Statement of Hypothesis This study is guided by the following hypotheses: 1. Hi:The constraints faced in administration of Personal Income Tax in the Federal Capital Territory are caused by the limitations of the Personal Income Tax Law. Ho:The constraints faced in the administration of Personal Income Tax in the Federal Capital Territory are not caused by the limitations of the Personal Income Tax Law. 2.

Hi:A review of the Personal Income Tax Law in Nigeria can improve administration of Personal Income Tax in the Federal Capital Territory. Ho:A review of the Personal Income Tax Law in Nigeria cannot improve administration of Personal Income Tax in the Federal Capital Territory. 1. 5Significance of the study The findings of this research will definitely be of interest to students and other researchers who may desire to carry out research on personal income tax or any similar area. The study will also serve as a reference material to those who may like to know more about the challenges in administration of the Personal Income Tax in Nigeria.

Finally, this research suggests ways to the authority concerned to formulate an improve tax policy that would curb the numerous challenges experienced in the administration of Personal Income Tax in Nigeria. 6. Scope and Limitation of the study The research covers the income earners and residents/self-employed persons of the Federal Capital Territory, Abuja. The research also covers a time frame of five years (2008 – 2012). In the course of study, the researcher encountered some constraints which are: i) Insufficient funds available for the purpose of this study constitute a major constraint.

Substantial amount of money is required in the collection and processing of data, high cost of transportation, photocopying etc. ii) Time constraint is another problem faced by the researcher. No doubt, sufficient fund and ample time would have been needed for a detailed investigation of the subject matter. However, in spite of all the constraints mentioned above, the data generated and the population sample of relevant group were representative enough to draw conclusion and make generalization. 7. Operational definition of terms i.

Tax:It is a compulsory levy on the income, goods and services of individuals payable to government and guided by various statutes, legislation such as Decrees and Acts of Parliament. ii. Taxation: It is the imposition by the government of a compulsory levy on the income, profit, property or the expenditure (consumption) of an individual, family, community, firms or corporate bodies so as to enable the government carry out its economic and social responsibilities to the citizenry. iii. Income: It is profit, benefits an individual or corporate body earns from work or business. iv.

Administration: It refers to the process, activities of getting things done. 1. 8Organization of chapters This study is organized in five chapters. Chapter one comprises of the introduction, background to the study, statement of the problem, objectives of the study, significance of the study, statement of hypothesis, scope and limitations of the study and operational definition of terms. Chapter two covers the literature review and theoretical framework. The review is on the concept of taxation, meaning/objectives of personal income tax, administration of personal income tax in Nigeria, history and composition of FCT.

Chapter three consists of research methodology which deals with introduction, sources of data, population, sample size and sampling techniques, methods of data collection and method of data analysis. Chapter four, deals with data presentation, analysis and interpretation. It also consists of test of hypothesis and discussion of findings. Chapter five consists of the summary, conclusion and recommendation. CHAPTER TWO LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2. 1Introduction This chapter contains literature review as well as the theoretical framework.

The review is focused on the concept of taxation, administration of Personal Income Tax in Nigeria, History and Composition of FCT. 2. The Concept of Taxation The word “tax” and “taxation” are used interchangeably by many writers to mean the same thing. Taxation denotes a process or an act of making imposition / levy while tax is the compulsory imposition. Taxation has been defined by several tax experts and other academic scholars. Each of these definitions is unique in its own context while at the same time maintaining harmonizing characteristics i.

That tax is an amount levied compulsorily by the government on taxation persons. ii. That such levy is intended to transfer funds from the private sector to the public sector for whatever motive. Sebastian (1998) defines tax as non-penal yet compulsory transfer of resources from the private to the public sector. According to him, a tax must be levied on the basis of a predetermined criterion and without reference to specific benefits received. The need to increase a government level of spending, to a great extent, determines her level of taxation.

According to the definition, tax is non-penal. Penal is connected with or used for punishment, especially by law. For compliance and objectives of taxation to be achieved, there has to be some level of strict measures by the government and tax authorities. In a country like Nigeria where the perception of vast majority of her citizens on taxation is relatively poor, there has to be law enforcing eligible taxable businessmen and women to pay their taxes as at when due in other for the government to achieve her economic and social goals.

In countries with advanced tax system, the essence of income tax is hardly debatable. The greater percentages of taxable adults pay their taxes voluntarily. Speaking with reference to American tax system, Otto Eckstein observed in this pertinent manner: “… the most astonishing fact about the American tax system is the fantastic revenue it collects. Total taxes are over $ 536 billion, about 31 percent of gross national product.

They are collected without violence or bloodshed, with only some mild griping…This is a small miracle, it is possible because in our advanced society, business and individuals keep accounting record from which they can compute their tax bill. More impo- rtantly, it is possible because on the whole, people are willing to pay their taxes. Ours is a system of voluntary compliance, not assessment and enforcement of government.

People know that the common cost of national defence, of educating our children, and of necessary public services have to be met. Generally, people respect the law and pay their taxes. ” According to Delta State Board of Internal Revenue News (2006), taxes are compulsory monetary contributions that are levied on citizens by government to raise fund for development projects. This definition attributes taxes to monetary contributions. From the above definition, it means a good tax system will bring about development.

A good tax system is one in which every adult member of the society pays his tax according to his ability. This is known as progressive tax in economic parlance. Another agent of development besides the payment of taxes is a good management of tax income. Proper use of the money collected through taxation brings about even development. Chigbu et al (2012) define tax as levy on individuals, groups, business or corporate bodies, by constituted authorities for funds used by state in the maintenance of peace, security, economic growth and development and social engineering among others for the benefits of the citizenry.

These scholars pay attention not just on individual’s tax but groups, business and corporate bodies. Business firms are registered under the corporate affairs commission as in the case of Nigeria, by this single act the business firm has a legal backing and expected to pay taxes on its profit to the relevant tax authorities. To them, the tax authorities or organs are legally established by the laws of the land and charged with the responsibility of tax collection. Besides, the scholars gave the reason why tax is levied.

The money gotten from tax is used for the day-to-day activities of the government. According to Chris (2004), taxation is a means of generating revenue for public spending. It appears in the form of compulsory payments required of individuals and corporate bodies by the government. It is usually stated as percentage of the tax base. The key contribution of this definition is percentage of tax base. Tax base has to do with the classification of tax. Taxes have to be levied on some basis and a convenient way of classifying a tax is to do so according to what is being taxed.

There are three (3) main tax bases used in the present Nigerian tax system namely: (a)Income – Personal Income Tax (b)Capital – Capital gain (c)Consumption. One of the loopholes of this definition is the difficulty in determining the income of self-employed persons. The administrative machinery of taxation in Nigeria has not achieved enviable heights over the years. John (1997) defines taxation as a compulsory transfer or payment of money (or occasionally of goods and services) from private individuals, institutions or groups to the government.

The main instrument for transferring resources from private to use is tax system. According to him, a tax may be levied upon wealth or income, or in the form of surcharge on prices. This definition is rather not ultimate because in this modern day tax system, it is money rather than goods that is commandeered by the government rather goods or services. Gberegbe et al (2008), tax is a levy imposed by public authorities on the citizen within their tax jurisdiction for the purpose of obtaining compulsory payment to meet financial, social and economic goals of the authorities.

This definition highlights an important point which is tax certainty. The tax authority must not levy the tax payer beyond the stipulated amounts required of him by law. One of the sure ways of the social and economic goals of the government is through taxation. Ola (1985) defines taxation as a demand made by government of a country for compulsory payment of money by the citizens of the country. The main feature of this definition is demand. Demand connotes firm request for something. This definition advocates the use of force. It is the civic responsibility for every income earner to pay tax to the government.

Appah (2004), taxation is a compulsory levy imposed on a subject or upon his property by the government to provide security, social amenities and create conditions for the economic well-being of the society. Property in this sense could also mean the earnings, income of the taxpayer. It is the levy that the government make uses of to provide the basis infrastructure of life to her citizens. Bhartia (2009) argues that a tax is a compulsory levy payable by an economic unit to the government without any corresponding entitlement to receive a definite and direct quid pro quo from the government.

The economic history of both developed and developing countries, reveals that taxation is an important weapon or instrument in the hand of government; not only to generate revenue, but also to create fiscal goals that influences the direction of investment and taming the consumption and production of certain goods and services. It is on the basis this that Anyanwu (1997) and Anyafo (1996) argue that taxes are imposed to regulate the production of certain goods and services, protection of infant industries, control business and commerce, curb inflation, reduce income inequalities etc.

Types of Taxes All the various types of taxes could be classified into two broad categories, Direct tax and Indirect tax. A direct tax is a tax whose incidence of payment is bored directly by the tax payer. Examples of such taxes are: Personal income tax, Company income tax and capital gains tax. Similarly, indirect tax is a tax whose initial burden of payment is bored by the tax payer but is later transferred to the consumer of the produce/service or shared between the payer and the consumer. Taxes such as customs duty, excise duty and value added tax are examples of indirect tax.

Principles of Taxation A tax system (that is, the set of all taxes) for achieving certain objectives chooses and adheres to certain principles which are termed its characteristics. A good system, therefore, is one which is designed on the basis of an appropriate set of principles, such as equality and certainty. Mostly, however, objectives of taxation conflict with each other and a compromise is needed. Therefore, usually economists select some important objectives and work out the corresponding principles with the tax system should adhere to (Bhatia, 2008).

The first contributor for principle of a good tax system is Adam Smith. In 1776, in his publication titled, “The wealth of a Nation”, he stated that certain rules guide the tax regimes in any society. Adam Smith called them the “canons of taxation”. These canons or principle include (Chris, 2004): (i)Equality of Payment: Equality or fairness is guaranteed if the tax is proportional to one’s income, and the rich is made to pay more than the poor. Tax payment should depend on ability to pay. The more the benefit one receives from certain programmes or activities of government, the more tax one should pay. ii)Certainty: The taxpayer should be certain of the amount of money to pay in tax. The taxpayer should be made to understand how the amount he is made to pay is arrived at. The amount to be paid, time and manner of collection should be known in advance. (iii)Convenience: The payment should be arranged in such a way that it is convenient for the taxpayer to pay. The use of PAY AS YOU EARN (PAYE) is convenient because the amount to be paid depends on one’s income. If one is paid per month then total amount to be paid per annum is pread over the twelve months, in the year. (iv)Cost of Collection: It is necessary that the authorities ensure that cost of collection of tax is not excessive. If cost of collection is high, it means that tax collected will be used to pay the collectors in which case, the purpose of taxation is defeated. With minimal cost of collection, the revenue from the tax can be used for the improvement of social welfare. (v)Encourage Investment:Tax should be imposed in such a way that it does not serve as a disincentive to investors.

This is because the investor may reduce his scale of production if much of his income is taken in tax. He may not also have sufficient encouragement for further innovation or investment if he feels that much of his income will go into tax payment. (vi)Flexibility: Tax should be levied in such a way that it respond to changes in the economic environment; increase sets in. This way, the tax regime is more relevant to the needs of the society. (vii)Limited Interference with Resource Allocation: Tax should be levied in such a way that it does not interfere with resource allocation.

For instance, imposition of taxes on highly elastic good could discourage their consumption as prices rise. This may send negative signals to the producer who may, as well, reduce or discontinue production. There are other principles of taxation aside the ones mentioned above. Gberegbe (2008), stated the following principles of taxation to be: (i)Administrative Efficiency:Administrative efficiency is one of the yardsticks used to establish the acceptability of a tax system.

It accounts for both the administrative cost of collecting the tax and the compliance cost of the tax payer. These costs (Administrative and Compliance) must not be overlooked when evaluating the tax system as they in no doubt impinge on the welfare effects of the various taxes. (ii)Buoyancy of the Tax Base: The buoyancy of a tax base does not only establish the applicability of a tax but also determine its administrative efficiency. One of the reasons for the discontinuance of sales tax was because of the narrowness of the tax base. iii) Neutrality:Neutrality denotes that the attitude of the taxpayer should not be affected negatively by the tax imposed. A tax is said to be neutral if it does not distort economic choices and there is no substitution effect. This distortion of economic choice is known as the excess burden of taxation. All economic activities have costs and benefits associated with them. Distortion of choice, substitution effect, excessive tax burden and tax wedge are all positively correlated. Tax wedge accounts for differences between marginal cost of the activity and the marginal benefits received.

Any tax that impinges on economic activity cannot be completely neutral in its effect and indeed governments would not wish them to be, if they are to use fiscal policy as a means of manipulating the economy. In this direction, the extent of neutrality becomes most decisive. 3. Meaning and Objectives of Personal Income Tax Meaning of Personal Income Tax The Personal Income Tax is a form of direct tax. Direct taxes are those levied individuals or business property or income and are collected directly from the individuals or businesses imposed on. The effect lies on the tax payer as there is no submission effect.

It reduces the disposable income of the taxpayer (Chris, 2004). Besides, personal income tax is levied on the individual’s income. Such incomes include salaries, wages, rents and interest. Income tax is easily deducted from government employees since they can determine their income with certainty. It is difficult to collect from self-employed persons since the authorities could not easily determine their earnings (Chris, 2004) Gberegbe et al (2008) stated that the base for income tax is defined as the total increase in an individual’s capacity to consume marketable output.

The legal basis for this tax is found in the provisions of the Personal Income Tax Decree 104 of 1993 (Now Act). The history of personal income tax in Nigeria is incomplete without the due considerations to the roles played by Local Government or Native Authority Administration as they were then called. Personal Income Tax, as is known in Nigeria, was first administered and collected by the Native Administrations in the name of Direct Taxation (Olabisi, 2009). The Objectives of Personal Income Tax

The Objective of Personal Income Tax system is to allow governments to raise revenue to pay for public goods (like education, healthcare and law enforcement), and to provide income support for those less able or available to support themselves. Underpinning the design of the income tax system is to desire to provide balance between ensuring that those people with more capacity to pay contribute more (vertical equity) and that those with a similar capacity to pay, bear the same burden (Taiwo, 2011).

We tend to judge tax as fair or unfair on how they come to satisfying the two following criteria: horizontal equity and vertical equity. Taiwo’s view on the objective of personal income tax is that, fairness in taxation must cope with the idea that we do not all fit in one economic group. Vertical equity therefore requires an acceptable pattern of tax payments among people deemed to be unequal. Also one of important objective of Personal Income Tax is to project a progressive tax system, increase earnings for the states thereby reducing dependence on government (Monye, 2012).

Monye’s contribution is on projection of progressive tax. A progressive tax is one whose rate increases as the tax base increases. This implies that the rich and poor in the society are taxed according to their measure of earnings. Also, progressive tax enables government to obtain more revenue as income rises and less revenue as income falls in relative terms. In the same vein, government can through tax burden adjustment, influence the savings ratio throughout the economy.

The figure below shows this thinking: Figure 1. 0Progressive Tax Rate % of Income Progressive tax rate Paid in tax 0 Income Figure 1. 0 reveals that at high levels of naira income, the percentage of that income paid as tax would be quite high. An example of a progressive tax in Nigeria is the Pay-As-You-Earn (PAYE) system for salaried workers. 4. Administration of Personal Income Tax in Nigeria Under Nigeria’s Federal system, tax falls under the exclusive and concurrent lists.

A wide range of legislation has been made on taxation in Nigeria. The tax laws constitute the legal instrument used by the tax administrators as basis of authority for implementation of tax policies some of the major tax legislation includes: Income Tax Management Act (1961) and Personal Income Tax Act (1961). These legislations have undergone series of amendments. (Chris, 2004). Specifically, the Personal Income Tax Act provides that taxable persons under the Act consist of individuals, partnerships, communities and families.

Section 3 of the Personal Income Tax (Amendment) Act, 2011 clearly highlighted the taxable income to be: any salary, wage, fee, allowance, or other gain or profit from employment including compensations, bonuses, premiums, benefits or other perquisites allowed, given or granted by any person to any temporary or permanent employee other than so much of any sums as or expense incurred by him in the performance of his duties, and from which it is not intended that the employee should make any profit or gain.

Under Personal Income Tax Amendment Act (2011), a tax payer is required to file returns for the preceding year within 90 days of the end of the year. Monthly payments of Pay As You Earn (PAYE) tax liabilities are to be made on or before the 10th day of the month following the applicable month (e. g. January tax to be remitted by 10th of February). The employer has the duty to deduct PAYE and remit to the tax authorities on a monthly basis. The tax rate for PAYE is applied on a graduated scale as shown below: • First N30,000 at 5% • Next N30,000 at 10% • Next N50,000 at 15% Next N50,000 at 20% • Above N160,000 at 25% The Act also provided for Tax reliefs. Tax authorities refer to the bodies statutorily vested with the power to make laws on tax matters and collect tax from persons/ firms under her jurisdiction. In Nigeria, there are two principal tax authorities. The Federal Inland Revenue Service (FIRS) and the States Board of Internal Revenue (SBIR) Ogheneochuko (2010). The law that back up the collection of Personal Income Tax by the Federal Government of Nigeria is found in the Taxes and Levies (Approved list for collection) Decree No. 1 of 1998, Laws of the Federation of Nigeria, Schedule (Part 1), Personal Income Tax in are collected in respect of – a) members of the Armed Forces of the Federation; b) members of the Nigerian Police Force; c) residents of the Federal Capital Territory, Abuja; and d) staff of the Ministry of Foreign Affairs and non-resident individuals. In the line with existing constitutional and statutory provisions, the Federal Inland Revenue Service (FIRS) is the sole body charged with collecting revenue for FCT (Mike, 2010).

According to Seyi (2003), the Personal Income Tax Decree (Now Act) in Nigeria generally covers such areas as: o Taxation of Employees o Taxation of Sole Traders o Partnership Assessment o Taxation of Estates, Trusts and Setllements. There are two classes of jurisdiction for tax purpose Local jurisdiction PersonRelevant Tax Authority 1. Resident Individuals other than officersTax Authority of the state In the Military, the Police, Officers of of Residence in Nigeria Foreign Affairs Ministry. 2. Military Officers and the PoliceFederal Inland Revenue Service 3. Abuja ResidentsFederal Inland Revenue Service 4.

Non-Resident IndividualsFederal Inland Revenue Service 5. Resident CompaniesFederal Inland Revenue Service. 6. Non-Resident CompaniesFederal Inland Revenue Service 7. Foreign Diplomats accredited Tax Authority of Home Country to Nigeria 8. Nigerian Diplomats serving abroadFederal Inland Revenue Service 9. Nigerians working in EmbassiesTax Authority of the State and UN Organizations located inof Residence in Nigeria. Nigeria 10. Nigerians with diplomatic statusFederal Inland Revenue working in UN Organizations inService abroad 11. Nigerian without diplomatic statusTax Authority of the country working abroadof Residence.

International jurisdiction Any income arising in, or derived from Nigeria will be fully subjected to tax in Nigeria. Where the income is brought into Nigeria, credit will generally be granted for the tax paid in the country where the incomes arise. Itinerant worker An itinerant worker includes an individual irrespective of his status who works at any time in any state during a year of assessment (other than as a member of the armed forces) for wages, salaries or livelihood by working more than one State and work for a minimum of twenty (20) days in at last three (3) months of every assessment year.

A tax authority may in fact assess him depending on his place of work at the point when tax is being computed. In doing this, his gross income to date, the tax paid/ to date and the free pay to date in existence from any other tax authority shall be recognized and utilized (Seyi, 2003). Some challenges of effective tax administration in Nigeria There are several challenges of effective tax administration in Nigeria over the years. The efficacy of the tax system is not just a matter of appropriate laws but depends on the efficiency and integrity of tax administration (Kaldor, 1970).

The Nigerian tax practice focused on two main aspects; the tax structure and its administration John (1997). At the structural level, it has been argued that the tax provisions do not adequately reflect the peculiar socio economic character, goals and problems of the nation. On the other hand, at the administrative level, it is also argued that the machinery and procedures followed in implementing the tax system are inadequate, and hence, account for the consistent low yields and some of taxes and inter group inequalities (Anao, 1988).

Specifically, in Nigeria, tax policy planning is not clearly assigned to a specific unit, either at the ministerial level, or at the level of revenue agencies. Any change in tax law is usually designed in ad hoc manner and is based on expediency rather than on long-term studies. In some cases, the so-called research units/ divisions attached to the Minister or to the Heads of revenue departments devote their time to solving day-to-day problems rather than to long-term studies.

Moreover, the tax statistics that are collected are usually inadequate to allow a sound evaluation of the current tax arrangements, notwithstanding the existing data processing capacities in the country. In spite of recent reforms following the recommendations of the Tax Force on Tax Administration in Nigeria, one is still dismayed by the fact that the number of tax agencies in the country depends largely on our colonial heritage. For instance, customs and excise duties are administered by a separate agency – the Customs Service while income taxes are entrusted to another agency –FIRS.

Other revenues – for example, motor vehicle licenses/taxes, land taxes etc. – are left to the attention of other authorities that collect those charges as a subsidiary function. This practice calls for proper rationalization. In terms of assessment and collection of taxes which are undertaken together by the appropriate agencies, one must say that it promotes co-ordination between the agencies involved, thus eliminating massive tax arrears. However, its main weakness lies in the fact that it encourages dishonesty nd/ or corruption. This implies that some methods should be used to encourage officials to be honest. It is also important to note that the attempt of revenue departments in the country in fighting excessive centralization is, in itself, a measure of their efficiency. This is exemplified in the establishment of regional and/ or state offices in accordance with availability of staff ad geographic distribution of revenue potential. Confusion and lack of uniformity have resulted from the proliferation of taxes and tax laws.

This proliferation of taxes – which are imposed at different or supplementary rates and involve different tax bases, different times of payment, and separate returns, indicate a pressing need in the country for a single code of tax laws and regulations that contains all the required information. Physical facilities in Nigeria are inadequate and not conducive to efficient working conditions, staff morale, or taxpayers’ respect for the tax service. In addition, equipment is often not readily available. There are severe difficulties in identifying and locating individual taxpayers in Nigeria.

In most cases, there are considerable differences between the number of taxpayers registered by the tax departments and the number of persons with business licenses issued by other public agencies. The tax clearance certifications demanded by the authorities on certain occasions, though helpful in some respects, have the demerit to the effect that taxpayers are forced to experience inordinate delays and inconveniences in obtaining them, owing to the inability of the tax administration to perform the necessary checks within a reasonable time, quite apart from encouraging and institutionalizing corruption and forgeries.

This situation should be avoided at all cost since it tends to generate considerable ill-will on the taxpayers’ part. In Nigeria, the litigation system is not always organized for an effective and speedy disposal of tax cases. The administrative review process is not properly developed. Furthermore, defective drafting of tax laws is often conducive to frivolous objectives of taxpayers, which they file only to delay payment.

Besides, mixed membership in the appeal cases (Appeal Commissioners) which has been justified on the grounds that it provides protection for taxpayers against arbitrary administration, creates an unwieldy system because it lends itself to local prejudices and domination by local cliques. It is recognized that tax statistics provide basic data for formulation of economic and fiscal policies. They are also an important tool for managing the revenue departments. However, in Nigeria, the statistics collected, both at the local, state and national levels, are generally inadequate, and in many cases unreliable and inconsistent.

They are also not fully utilized when they are available. In addition, such statistics are not conceived – together with research, planning, programming and budgeting activities – as an integral part of the process of supervising and improving the operations of the tax department. Corruption and dishonesty have been the danger to tax authorities in Nigeria. Corruption is definitely the bane of under-development of the nation. It is a menace which has a lofty height in virtually every sector of the economy.

Lack of adequate internal auditing, close supervision and disciplinary sanctions are principal factors in this current state of affairs in tax administration in Nigeria. 2. 5History and Composition of Federal Capital Territory (FCT) There are several literatures by some writers on the historical background of FCT. The city is bordered to the north by Kaduna, to the east by Nassarawa State, to the south-west by Kogi State and to the west by Niger state. She noted that prior to the creation of FCT, Nigeria was administered from Lagos as its capital.

The land of Abuja was the south-western part of the ancient kingdom of Zazzau (Zaria). The name “Abuja” was derived from ‘Abu-ja’, a brother to Muhammadu Makau, the last Hausa ruler of Zaria. The story has it that, Makau had left Zaria after being defeated by the Fulani and settled in the area now known as Abuja. In 1825, his brother Abu ja succeed him as the 62nd King of Zaria. The full name of Abu ja was Abubarka (shortened to “Abu”) and the name “ja” was given to him because he was light in complexion (in Hausa “ja” means red or fair).

He became known as “Abu-ja”, “Abu the fair one” (other source claim that the name “ja” was derived from the last name of his father which was “Jatua”). Abu ja then built a new capital for his kingdom and called it “Abuja’. Dawam (2000), opines that the Abuja Federal Capital Territory (FCT) was created by Decree No. 6 of 1976. The creation of the Territory resulted from the late General Murtala Mohammed led Federal Government acceptance of the recommendation of a Panel on the relocation of the Federal Capital from Lagos. The panel which was headed by an eminent Nigerian Jurist, Mr.

Justice Akinola Aguda, had, after a careful study of the then dual role of Lagos as State and Federal Capital, recommended that Lagos would be unable to adequately serve the dual role. It was therefore recommended that the Federal Capital should move out of Lagos to a new location. Based on a consideration of several geographical, historical and strategic factors, the Panel recommended that the present Abuja be made the new Federal Capital of Nigeria. In accepting these recommendations, the Federal Government promulgated Decree No. 6 of 1976 which created the new Abuja Federal Capital Territory.

The legality of FCT, Abuja as Nigeria’s Capital is enshrined in the Constitution of the Federal Republic of Nigerian 1999, Part I (Section 298), while its boundaries and Area Councils are clearly defined in Part II (Section I and II). The territory is located just north of the confluence of the River Niger and Benue River. It is bordered by the states of Niger to the West and North, Kaduna to the northeast, Nassarawa to the east and south, and Kogi to the southwest. Lying between latitude 8. 25 and 9. 20 north of the equator and longitude 6. 45 and 7. 9 east of Greenwich Meridian, Abuja is geographically located in the center of the country. The Federal Capital Territory has a landmass of approximately 7,315km square, of which the actual city occupies 275. 3km square. It is situated within the Savannah region with moderate climatic conditions (http://en. wikipedia. org). The estimated population of the Federal Capital Territory as at 2006 is one million, four hundred and six thousand, two hundred and thirty nine (1, 406, 239), National Population Commission Publication. The table below shows the distribution of population by five year groups and the sex in FCT.

Table 1 Distribution of Population by five year age groups and sex – FCT | | | | | |Age Groups |Both Sexes | | | | | |Males |Females | |FCfct | | | | |0 – 4 |220, 366 |109, 835 |110, 531 | |5 – 9 |176, 321 |87, 371 |88, 950 | |10 – 14 |138, 839 |66, 550 |72, 289 | |15 – 19 |121, 784 |57, 324 |64, 460 | |20 – 24 |147, 107 |67, 709 |79, 398 | |25 – 29 |174, 444 |88, 153 |86, 291 | |30 – 34 |130, 489 |71, 290 |59, 199 | |35 – 39 |99, 000 |59, 132 |39, 868 | |40 – 44 |68, 394 |42, 561 |25, 833 | |45 – 49 |48, 598 |32, 964 |15, 634 | |50 – 54 |31, 025 |20, 351 |10, 674 | |55 – 59 |16, 434 |11, 196 |5, 238 | |60 – 64 |11, 482 |6, 840 |4, 642 | |65 – 69 6, 307 |3, 614 |2, 693 | |70 – 74 |5, 348 |2, 785 |2, 563 | |75 – 79 |2, 737 |1, 491 |1, 246 | |80 – 84 |3, 510 |1, 776 |1, 734 | |85 + |4, 054 |2, 230 |1, 824 | |TOTAL |1, 406, 239 |733, 172 |673, 067 | Source: National Population Commission Publication. The Federal Capital Territory Administration (FCTA) The Federal Capital Territory Administration is a Nigerian ministry that administers the Federal Capital Territory. It is headed by a Minister appointed by the President, assisted by the Permanent Secretary, who is a career civil servant.

The Federal Capital Territory Administration was created by President Olusegun Obasanjo on December 31, 2004 following the scrapping of the Ministry of the Federal Capital Territory (MFCT). Seven new Mandate Secretariats were created for Education, Transport, Agriculture and Rural Development, Health and Human Services, Social development, Legal Services and Area Council. The Area Councils in FCT The territory is currently made up of six local councils and these are as follows: i) Abuja Municipality Area Council ii) Abaji Area Council iii) Gwagwalada Area Council iv) Kuje Area Council v) Bwari Area Council vi) Kwali. Area Council. The area councils are equivalents of Local government areas in other states of Nigeria. The councils are headed by elected chairmen. FCT ADMINISTRATION ORGANOGRAM Source: Federal Capital Territory Administration Department) THE MAP OF FCT, NIGERIA [pic] Source: http://www. skyscrapercity. com 2. 9Theoretical Framework There are several theories of taxation. This study examines the Benefits-Received Theory and the Ability-to-Pay Theory of taxation as theoretical framework. However, the researcher adopts the Ability-to-Pay Theory. (A)The Benefits-Received Theory This theory proceeds on the assumption that there is basically an exchange or contractual relationship between tax payers and the State. The State provides certain goods and services to the members of society and they contribute to the cost of these supplies in proportion to the benefits received.

In this quid pro quo (give and take situation) set up, there is no place for issues like equitable distribution of income and wealth. Instead, the benefits received are taken to represent the basis for distributing the tax burden in a specific manner. Services supplied by the State may be divided into two categories. The first category consists of those services to which the principle of exclusion does not apply. In this case every member of the society consumes these services and therefore should contribute to the State revenue in accordance with the benefits received. But the other category is the one where the tax-payers have the option to accept or reject the State services.

Here a market relationship is established between the two, thus, what the members of the society pay are the fees and the prices and not the taxes in strict sense of the term. The benefits-received theory has a long-dated origin and its roots lie in the contract theory of the State. The theory was in vogue with German, French and other writers like Grotius, Hobbes, Locke, Hume and Rousseau. Its main theme was that the subjects of a country have a contract with the state for the protection of their lives and property and, on its part the State provides various goods and services. As in the case of other theories, several problems crop up to apply this theory in practice.

Since the tax burden is to be distributed between tax payers in proportion to the benefits received by them from states activities, the authorities have to identify the beneficiaries and measure the benefits derived by them. This, however, is not an easy task. It should be noted that benefits derived from the State are closely related to the distribution pattern of income and wealth in the country. It is so because, amongst other things, income distribution is a major determinant of demand pattern including demand for state services. Thus, it has to be assumed that the existing distribution of income and wealth is an appropriate one and there is no need to change it.

Benefit derived by an individual is ultimately a subjective thing and it is influenced not only by the State services enjoyed by an individual under consideration, but also the distribution of these services between members of the community as also the attitudes of the beneficiaries. There is no standard format or pattern of these attitudes and as a result, depending upon the set of attitudes of community members, a given amount and variety of state services can yield divergent measures of derived benefits. Thirdly, it is possible that State services may lead to a net addition to or reduction in national income. This theory does not tell us what to do in this case.

It is argued that since benefit is ultimately a subjective thing, there is no scientific way of measuring it. At most it may be possible to consider some proxy variables or commonsense methods. For example, income is often used as an indicator of the benefits received. It may be assumed that without the protection of the State, the economy just cannot exist and accordingly it may be inferred that the benefits which members of the society derive from the State are in proportion to their incomes. Such an inference implies that taxation should be proportional to income. This was the stand taken by Adam Smith when he said that each individual ought to contribute to the public revenue according to his ability.

Smith equated relative ability-to-pay of the tax-payers with incomes which they respectively enjoyed under protection of State. Thus, in due course, the benefits approach gradually came to reflect a philosophy that taxation was basically a payment for the protection of the State. It is, of course, interesting too note that even this narrow reasoning led to contradictory results. Thus, while Rousseau and Sismondi argued that the rich needed greater protection of the State, John Stuart Mill and others thought that the poor were in greater need of protection from exploitation by the rich. Thus, while one group of thinkers advocated progressive taxation, the other was in favour of regressive rates.

In late nineteenth and early twentieth centuries the benefits-received theory was put to an additional use in simultaneously determining the optimum level of state activities and optimum distribution of tax burden. To this end, the concepts of demand and supply schedules were extended to demand for supply of state services in varying details. Limitation of the Benefits-Received Approach There are several limitations of Benefits-Received Theory posited by Bhatia which are as follow: 1)The main difficulty in this approach is that basically the contributions by the members of the society to the State Treasury for the provision of State services are not strictly taxes. They are in the nature of prices which the members of the society voluntarily agree to pay for the public services rendered to them.

Even when the decisions regarding the supply of public services and the respective contributions by the members of the society are taken not on individual basis, but on the basis of some representative body such as the Parliament, or on a majority voting basis, prices only partially acquire the character of taxation (i. e. , compulsory payment without any necessary quid pro quo). 2)A very important difficulty is that of measuring the benefits to individual members of the society. Benefit is ultimately a subjective thing and cannot be estimated directly. Any proxy that may be taken to represent the benefit received will be subject to discussion. And quite often diametrically opposite results may be arrived at on account of this difference in the interpretation of the benefits. Thus, some authors take income as the representative of the benefits received.

In itself, this is a questionable index especially if we do not look into the expenditure pattern of the State. 3)Throughout the discussion on the benefits received from the State services, it is assumed that the benefits are independent of each other. It means that the benefit that any individual enjoys depends only upon his own consumption of State services and that it makes no difference to him as to who else is consuming them and how much. 4)This theory falls foul of all welfare activities of the State which bring in any distributive changes. 5)It is pertinent to not however, that a society is not just the summation of its individual members.

There are many benefits and costs which cannot be ascribed to any particular individual or a group of individuals. 6)In a number of cases people suffer from a lack of complete knowledge. A particular State service may be of great help of the society and even to the individual taxpayers, but it may not be widely known. In Nigeria, for example quite a few villagers may not be able to appreciate the benefits of polio vaccination and similar health measures. It will be misleading on our part to assume these villagers would be voluntarily opting for the provision of these health measures and would also offer to pay for the same. (B)Ability – to – Pay Theory

This is also known as equity principle and is one of the Smith’s Canons of taxation The Ability-to-Pay theory maintains that taxes should be distributed according to the capacity of taxpayers to pay them. Citizens with greater ability to earn income, for example, should be taxed more heavily than those with less capacity to earn. This approach is based on the idea that the burden of taxation should be spread in such a way as to give rise to an equality of sacrifice among the tax paying community. The imposition of tax provides substantial bearing in attaining equity in distribution patterns and bringing about income redistribution particularly progressive tax. This is based on the taxpayer’s ability to pay whereby high income individuals pay more taxes than the low income taxpayers.

The basic tenant of the ability-to-pay doctrine is that the burden of taxation should be shared by the members of society on the principles of justice and equity, and that these principles necessitate that the tax burden is apportioned according to their relative ability to pay (Bhatia, 2008). There are basic components of the ability-to-pay theory as deposed by Bhatia, are as follows: (a)The doctrine of ability-to-pay is combined, in certain cases, with the objectives of maximum welfare of the society. This happens when the index of paying ability is compiled on the basis of equal-marginal sacrifice. (b)The ability to pay is not an absolute quantity and depends upon a number of variables such as the expenditure side of the government budget. (c)There are several indices for determining relative ability-to-pay of the tax-payers such as, income, property and wealth, and consumption expenditure. d)It is sometimes though that income as the index of ability coupled with objectives of equity and welfare necessarily implies progressive taxation. This is not so. Under certain conditions, proportional or even regressive taxation may follow from this combination. (e)As mentioned above, ability-to-pay is not an invariant quantity, and amongst other things, depends upon the expenditure side of the government budget. A modern government is generally eager to adopt all feasible measures to help, guide and protect the economy and society. Basically therefore, it is overall budgetary policy which matters, and not just the taxation in isolation of the rest of the budget.

However, for the sake of simplicity of analysis, all these variables are assumed to have given values. (f)While the fact of repercussive effects of a fiscal policy is recognized their analysis is ignored for keeping the arguments at a simple level. The issue of repercussions is looked into later. (g)There can be a difference of opinion as to what constitutes the ability to pay of the citizens. Here we can think of compiling such an index which can be either subjective or an objective one. An objective index may be compiled on the basis of wealth, property, consumption expenditure, or incomes etc of the tax payers. In contrast, a subject index is based on some measure of sacrifice of the tax payers.

Ability-to-Pay Theory stipulates that all tax payers should bear sacrifice in tax payment. If put in a horizontal equity sense, the principles says that equals should be treated equally. In a vertical equity sense, unequal need to be treated unequally. In other words, the same tax paying ability should attract equal tax whereas persons of unequal tax paying ability should pay unequal taxes (Sebastian, 1998). The ability-to-pay approach gives rise to three aspects in tax payments, viz: equal absolute sacrifice, equal proportional sacrifice and equal marginal sacrifice (Sebastian, 1998): i)Equal Absolute Sacrifice: This requires that a tax on a rich man should cause him, disutility equal to that borne by a poor man who pays tax. i)Equal Proportional Sacrifice: This requires each tax payer to sacrifice the same percentages of utility in tax payment. In these words, the utility forgone for paying tax should be the same for all tax payers. iii)Equal Marginal Sacrifice: Here, each tax payer is expected to bear equal marginal decrease in utility from tax payment. This approach forms the basis for the progressive income tax structure found in many countries. In the progressive income tax structure, the marginal tax rate increases as the taxpayer’s income increases. Any pretence that the Nigerian system is perfect must quickly fall down on its face. There can be no doubt that personal income tax administration in Nigeria today does not measure up to appropriate standard.

The theories of Benefits-Received and Ability-to-Pay have links to the Nigerian tax system. As observed by Gberegbe et al (2008), the bulk of personal income tax yield comes from employees whose salaries are deducted at source. The PAYE is administered according the level of earnings of the employees. The burden is equitably distributed according to the income earnings. Over the decades, taxpayers have been clamouring for better governance in Nigeria. There is corruption epidemic, the dividends of democracy has not been felt by Nigerians. The Benefits-Received theory advocates for a quid pro quo situation, that is to say you give and you receive in return.

If you demand from a man who has more, you must give a token to say you appreciate that because given is reciprocal (Maureen et al, 2012). The relevance of Ability-to-Pay Theory to this study The Ability-to-Pay theory as used in the theoretical framework, states that a citizen is to pay taxes just because he can, and his relative share in the total tax burden is to be determined by his relative paying capacity. This doctrine has been in vogue for at least as long as the benefits approach. Going by the theory of Ability-to-Pay, it is obvious that justice and equity is instrumental in the effective administration of personal income tax in Nigeria.

Implementing the ability-to-pay principle obviously requires us to define what we mean by taxpaying ability and to determine just how much more people with greater ability must pay than those deemed to have lesser ability. The ability to pay of a tax payer is as much dependent upon his needs as his income. Persons having same income but different needs do not have same ability to pay. Ability to pay depends upon marginal utility of money which is a tricky measure. It is subject to quick variations on several grounds and cannot be quantified because of its subjectivity. The validity of Ability-to-Pay theory can be seen in the present Nigerian tax system. There are a lot of civil servants domicile and working in several government ministries in the Federal Capital Territory, Abuja. One of the basic objective indices of ability is income.

There are cadres and several salary scales and other monetization benefits to these civil servants. The Pay-As-You-Earn (P. A. Y. E) advocates convenience which is a major element of Ability-to-Pay theory. The P. A. Y. E tax is deducted at source of the civil servants. One of the features of the Nigerian tax system is that it is purportedly about achieving justice and fairness, and turning inequality to equality. That is, everyone who earns above a certain amount of income is required to pay certain amount of tax. Also, those who earned more are often required to pay a higher level of tax than those who earn less. This is deemed to be fair process as it essentially relied on the ability to pay. Apart from roviding essential services from which everyone benefits, tax revenue is also used to provide a ‘safety net’ for those in need through social security or unemployment allowance. Justice and fairness equality, however, are not objective standards – perceptions of them varying with self-actualization. What may be perceived as being fair at the super-ordinate level (for example, paying more tax than others) could be perceived as being highly unfair at the sub-ordinate level. However, perceptions of injustice are not simply related to inequality in outcomes (distributive justice), but can be related to the perceived unfairness of the methods and procedures used to determine the outcomes procedures used to determine the outcomes.

In Nigeria, one of the foremost motives for the Amendment Act was to bring Personal Income Tax Administration (PITA) up to date with the existing realities of the Nigerian economy, especially in relation to how to impact on low income and middle income earners. The major set back of this theory in Nigeria, is the difficulty of the tax authority to measure the income of taxpayer. The informal sector which comprises of the self-employed, the entrepreneurs, have devised skills to evading or avoiding income tax over the years. The ability to pay has to be taken into consideration. There are several reasons self-employed, petty trader in the market etc evade tax.

The economic situation in Nigeria is not really appealing to many. The question arises, why should we pay taxes from our meager income? The compliance rate in Nigeria is relatively low due to the reason mentioned and many others. Nevertheless, the ability-to-pay theory promotes equity. It encourages the taxpayers to pay their taxes according to their abilities. CHAPTER THREE RESEARCH METHODOLOGY 3. 1Introduction This chapter explains the methodology adopted in this research project. Research methodology simply refers to the process, techniques of collecting data research projects. The techniques that were include: (i)Field Survey (ii)Questionnaire iii)Newspaper publications, company newsletters (iv)Textbooks (v)Journals (vi)Other media for recording historical data. All the techniques listed above were used to collect the primary and secondary data used for this research project. The primary source of data comprises of the questionnaire and field survey. The questionnaire was administered to some residents (the relevant respondents, i. e. those under the jurisdiction of personal income tax) in Federal Capital Territory, Abuja. The field survey also was employed by the researcher. This singular act was aimed at complement data collected through other methods such as journals and textbooks.

With regards to the secondary source, data was obtained from textbooks, journals, seminar papers, company newsletters and other media for recording historical data. 2. Sources of data The two main sources of data collection are primary and secondary sources. This project research made use of both sources. (a)Primary source:This refers to data used in research originally obtained through direct efforts of the researcher through surveys, interviews and direct observation. It is also data observed or collected directly from first-hand experience. The primary data for this study was obtained through questionnaire and field survey which was carried in the Federal Capital Territory, Abuja. (b)Secondary source: This is the data that have been already collected by and readily available from other sources.

It could also refer to information collected by another person or agency to serve another purpose of which it was not originally for. Therefore, the secondary data for this study were obtained from newspaper, textbook, company newsletters, journals etc. 3. Population, Sample Size and Sampling Techniques Population: The population for this research project comprises of selected residents of Federal Capital Territory, Abuja under the jurisdiction of personal income tax. This consists of the military personnel, police personnel, civil servants (which are categorized as government employees in the questionnaire) and entrepreneurs (self-employed). The population size used was six hundred (600).

Sample Size: The sample size for this study is 120 which represent 20% of the total population in this research work. Sampling Technique:Sampling is the process of selecting a part (called a sample) from the whole (called a population or universe) in order to make inferences about the whole. The sampling technique used in this research work is simple random technique. It was used to select the sample from the population. 4. Method of Data collection The method adopted for the data collection for this research work includes questionnaires, field survey, contributions from relevant text books, journals, magazines, newspaper and online reference materials.

A questionnaire is a data gathering instrument in which respondents are given standardized or uniform questions to complete in written form. The questionnaire comprises of uniform questions, and it is written (typed and printed). The use of this method had become more suitable given the geographical disparity of the area to be covered. Questionnaires are most useful as a data collection method especially when large numbers of people are to be reached. The questionnaire of this study is made up of two parts: the biodata and research question section. Sixty (120) questionnaires were prepared and administered directly to the respondents in Federal Capital Territory, Abuja. Given the anticipated failure of the respondents, further follow up with reminders were done by the researcher.

The table below shows clearly the method of distribution: |S/N |Respondent |No. distributed |No. remitted | Percentage | |1 |Government Employee | | | | |2 |Self-Employed | | | | |Total | | | | | Source: Field Survey, 2013. 5. Method of Data Analysis

The questionnaire responses are summarized in tabular form and using percentage method, the method involves the use of the below formula: Frequency 100 Total frequency 1 Hypotheses are tested by using chi-square statistical tool X? which is defined as the ratio of square sum of difference between observed value and expected value divided by the expected value. It is depicted as: X? =? (Fo – Fe) ? Fe Where: X? = Chi-Square ? = Sigma or sign of summation Fo =Frequency of observed value Fe =Frequency of expected value The hypothesis were tested at 5% = 0. 05 level of significant. The 5% represent degree of freedom, which will be calculated by using: C – 1 ? R-1 Where C = No. of columns R = No. of rows. The essence of using chi-square statistics is to make inference about the esearch population based on information contained in the sample. The chi-square is used to test the statistical hypothesis of a sample population perimeter. The test is a goodness of fit because then frequencies of a sample and frequencies of the occurrences of the expected observation are aimed at reflecting the entire population of research hypothesis. The research also makes use of percentage method in analyzing. The percentage values were however approximated to the nearest whole numbers in the tables for clarity. Decision Rule This rule states that if the calculated value is greater than the table value, the null hypothesis will be rejected or otherwise accepted.

However, if the table or the critical value is greater than the calculated value, the hypothesis will be accepted and it then means that there is significant relationship between the table or critical value and the calculated value. QUESTIONNAIRE Faculty of Management Sciences Department of Public Administration University of Abuja P. M. B 117 Gwagwalada. Dear Respondent I am a final year student of the above named institution currently conducting a research work titled: An assessment of challenges in administration of Personal Income Tax in Nigeria (A Case Study of Federal Capital Territory, Abuja). Attached to this letter is a list of questions. Please your sincere response and cooperation is highly needed to ensure a successful completion of this research.

The research is strictly for academic purpose and the information obtained will be treated with utmost confidentiality. Thanks for your anticipated cooperation. Yours Faithfully Ayi Joseph Otu. SECTION ONE Please tick or fill in the space provided below as appropriate BIODATA 1. Sex: MaleFemale 2. Age: Below 25 years 26 – 40 years 41 – 55 years 56 – 70 70 and above 3. Marital Status:Single Married 4. Qualification:Primary Certificate Secondary Certificate Diploma/OND/NCEDegree Certificate 5. Others (if any) ………………………………………………………………….. 6. Nature of employment: Government employee Entrepreneurs (Self employed) SECTION TWO 1.

Do you think high personal income tax rate is responsible for tax evasion? Yes No Undecided 2. Taxpayers are not getting the benefits of their taxes from the government? Yes No Undecided 3. How do you access the administration of Personal Income Tax in the Federal Capital Territory, Abuja Good Poor Undecided 4. Do you agree that economic recession which affects adversely business organizations is responsible for tax evasion? Yes No Undecided 5. Ignorance and illiteracy of self-employed persons in rural areas is one of the factors responsible for tax evasion in the Federal Capital Territory? YesNoUndecided 6.

Inadequate enforcement machinery is responsible for the challenges of administration of Personal Income Tax in Federal Capital Territory AgreeDisagreeUndecided 7. Inadequate information as regard taxation is one of the factors responsible for the challenges in the administration of personal income tax in Federal Capital Territory? AgreeDisagree Undecided 8. Corruption and dishonesty of tax officials are responsible for low revenue generated from personal income tax in Federal Capital Territory AgreeDisagreeUndecided 9. The problem associated with the identification of the taxpayer is responsible for challenges in the administration of personal income tax in Federal Capital Territory. Agree DisagreeUndecided 10.

Do you think lack of adequate tax incentives is one of the reasons why taxpayers evade tax in the Federal Capital Territory? YesNo Undecided 11. Poor standard of living is a reason for tax evasion Agree Disagree Undecided ———————– FCT Abuja Sex SECRETARIATS MANDATE SERVICE COMMON Agric Soci-al Dev Trans HHS Edu AIPDC Audit Treasury Estab Legal STDA FCDA Water Board AEPB AGIS Exec. Secretary A. G Area Council Xtian Pilgrim Board Muslim Pilgrim Board [pic] 78C[ctZ’®­ ? S W ? @ † ? ? [pic]o? AadmoeaOaIaeC? ·C? C? C§CYC—C? C‡C‡CwCoCgC_ h? ¶CJaJ hi[CJaJ h? ‘CChieftain-cy Affairs Secur-ity Proto- col Media/ Pub Chief of Staff Minister