The topic “The Difficulties in Personal Income Tax Generation and Administration” A case study of Enugu Board of Internal revenue evaluates the salient facts in the topic in question with respect to a prove that there is actually difficulties in personal income tax generation in Enugu to be specific, investigating and identifying the factors that contributes to such difficulties and come up with means to eradicate such difficulties.  To make the work more practical and comprehensive, systematic random sampling method were used.  Questionnaires were administered to thirty four respondents and one hundred and three responses were generally used, decisions were taken based on the response that scores the highest percentage.  After which an observation made was that the Enugu Board of Internal Revenue lack adequate staff and resources needed to carry out their functions/duties effectively.  And also that the tax payers are yet to know the need for tax.  We therefore, recommended that the system of keeping record in the Board should be enhanced, the board should be well equipped with materials, tax payers should also be enlightened more on the need and importance of taxation, the tax of the Board should be well remunerated especially the field workers and there should be provision for award to the staff of the Board who will perform best in the local government, which will serve as means of motivation.  This will make personal income tax generation and administration in Enugu and Nigeria in general to be effective and efficient.


        The difficulties of personal income tax generation and administration is generally traced in this chapter with regard to the research question that aids and could aid expected and usable results, scopes and limitations of this study including simplification of terms to be meet under this study/research work.

1.1   Background of the Study

In age all over, the difficulties of personal income tax generation and administration had a negative effect in one form or another in some societies of the world.

        The public expenditure is realistic only when there are matching and enough revenues.  The federal government is responsible for poor financial position of both the state and local government.

      It is a fact based on strong evidence that the political interference in the process of taxation during military administrations in the country, which gave rise to untrained and inexperienced personnel being entrusted with the job of tax collection and administration.

        The need of these issues to tax administration in the developing country like Nigeria can be seen from the following extract from tax administration in undeveloped countries.

        Tax administration staff in Nigeria are mostly inexperienced, insufficient and are been compensated with low salary.  This is why proper records are hardly kept as ought to be demanded by a developing nation.

        The Nigeria economy consist of private and public sector and these sectors are interrelated.

        The public sector is classified into; Federal, State and Local Governments, each taxing power.  This is called the three tiers of government.  Despite the fact that the Nigeria local government are technically creatures of the state within local government constitution.  The fiscal relationship between state and local government are inevitable in the fiscal design of the public sector.

        Local government impact in public sector through its enlarged revenue is worthy of note.  One of the pillar of this revenue enlargement is the current direct revenue allocation to the local government from the federal government.

        Moreso, it is important to state that government at various level derive revenue from taxes.

        The state government spending are the heaviest in the area of such as: education, health and state roads. The state government collect taxes like personal income tax, Capital Gain Tax, Entertainment Tax, Stamp Duties, Purchases Tax, withholding tax and Road taxes.

        It is also important to point out that in most cases the responsibilities of the state and local government are above their revenue capacity.  This brought about the need for inter-governmental grants.  Such grants are transferred from the higher level of government to the lower level of government, added to this transfer to lower level of government are public borrowing.

        Therefore, the tax administrators must often demand the tax from businesses and individuals with deep suspicion ranging to contempt of the collectors from a public whose opposition to tax payment, arising from a basic lack of confidence in government is almost very antithesis of the attitudes, which must be the cornerstone of ever successful democratic tax system, that tax are price necessarily paid for civilized society.

1.2   Statement of Problem

        Difficulties in Tax administration and collection is universal but Nigeria seems to be more plague and inflicted than the developed nations of the world.

        This research work is mainly concerned with identifying the difficulties of the personal income tax generation and administration in Nigeria under a case study of Enugu Board of Internal Revenue.  The following constitutes tax difficulties; lack of orientation on the tax payers on the importance of tax, lack of staff and inadequate training of the available staff, bribery and corruption on tax defaulters, which notifies the law and poor record keeping system as regards accounting and record keeping system in the internal revenue office and as well lack (inadequate) of mobility which would enable them to collect and administer tax in remote areas within the jurisdiction of the board.

        having identified these as the case of difficulties in personal income tax generation and administration, survey to find solution for solving them (the problems) will be made for higher level of efficiency on personal income tax generation and administration in Enugu State particularly and Nigeria at large, but before then, it is important to point out that, in many areas, the problem of tax is that some are not satisfied on how tax collected is been utilized and they seem to respond less positive.

        In Enugu State, during the early regime of the civilian governor of Enugu State; Barrister Sullivan I. Chime, the amount he met according to him with the state revenue board and in all the state treasury was far below expectation.

        Therefore, it is important to investigate the administration of personal income tax and (administration) generation to disclose the difficulties, cause of inefficiency and poor responses to income tax payers, and then come up with reasonable solutions to yield or that will yield the desired result.

1.3   Purpose of the Study

        The importance of an effective personal income tax generation and administration cannot be over-emphasized.  The demand for governmental services is rising as year go on.

        Government is expected to satisfy collective wants and regulate the economic and social policies of the nation.

Against this background of rapidly increasing trend in government responsibilities and expenditure at all levels of government in Nigeria i.e The federal, state, and local government (in Nigeria) level have been facing facts dwindling finances for the past few years.  Internally generated revenues have been grossly inadequate to meet up the numerous government obligations.  This is therefore, why the objective of this study is to:

(i)                Ascertain whether there are actually difficulties in personal income tax generation and administration in Enugu local government (specifically) or not.

(ii)               Investigate and identify the factors that contributes to these difficulties.

(iii)             Find out how the Board of Internal Revenue in Enugu have been affected by the difficulties.

(iv)             Determine how Enugu Board of Internal Revenue is effective and efficient in tax administration and collection.

(v)              Come up with the means to eradicate these difficulties.

1.4   Research Questions

i.            Is the system of keeping accounts and tax records in the Board of Internal Revenue in Enugu rudimentary?

ii.          Is the internal revenue office in Enugu understaffed and ill-equipped?

iii.         Are the tax payers in Enugu not enlightened enough to know the importance of taxation?

iv.        Do the Board have enough and adequate mobility, which will enable the field workers collect and administer tax in remote areas within the jurisdiction of the Board?

1.5   Significance of the Study

        The importance of this research work will go a long way in helping the tax collectors, the three tiers of government and students in department concerned to procure studies that will be conducted in future in this area.

        Income tax is an easy agent of social changes especially when used as creative force in economic planning notably developed investments.  Students and other researchers as well, will be made to know the diversification as regards new policies to govern tax administration.

        Local productions even are stimulated by government through tax by increasing import duties. When import duties are increased, people are discouraged from importing goods thereby resorting development.

        Moreover, the importance of this research work will go a long way to educate the tax payer and tax collectors as well, on the importance and administration of tax.

1.6   Scope of the Study

        The generation and administration of personal income tax has been facing a lot of difficulties especially on money generated and how it is been generated and inadequacy of mobility for the field workers, which will help them collect and administer taxes in remote areas. Considering the time limit and the resource at the researchers disposal, the researchers have confined this study with due respect to Enugu Board of Internal Revenue in Enugu Local Government Area with the view that this will be proper for generalization.

        This work is limited with the scope of tax officials in Enugu local government area of Enugu State such that it can be fully assessed under the following two dimensions viz:

i.            Difficulties in tax collection and procedures in the local government area and

ii.          Effective administration and collection of the tax system including the revenue grand from the system.

The study laid more emphasis on the administration and collection of personal income tax and their inherent problems in the area understudy.

1.7   Limitation of the Study

        In this present system of government, there is no easy flow of information due to the fact that most atimes the researchers are mistaken to be federal or state government agents.  Some payers turned down personal interview, which are the salient source of data for research work.  But due to time inadequacy, the response from the available source are considered accurate and correct since time at the researchers disposal could not allow for further investigation.

        Moreso, it is important to include the time inadequacy under this heading.

        The researchers achievement took a lots of time and money and even needs more money if broader and clearer work is to be done in this same area of work.

1.8   Definition of Terms

i.            Personal Income Tax: This is direct tax and is levied on the wages, salaries and other source of income that accrue to individuals.  According to Udeh Okey S. 2005 in his Book title Theory and Management of Public Finance (P.70) personal income tax is a tax levied on the income of a person and it is usually deducted at source, from the payers income.

ii.          Revenue Generation: Tax is the primary source of revenue generation to the government.  Therefore revenue generation is the same as fund generation.

iii.         Assessment Authority: These are the body of persons who are responsible under the law of the territory to assess people to pay tax on their individual income.

iv.        Tax Avoidance: This is the legitimate way of indulging tax liability through tax planning.

v.          Taxation/Tax: This is non-punitive but a compulsory levy on properties and income of an individual or corporate bodies.  The money raised therefore on tax constitutes part of source of finance for general government expenditure in the economy.

vi.        Inflation: This refers to a rapid increase in price of good and services, products or commodities, which results in fall in the purchasing power of money.

vii.       Import Duties:  This refers to the amount chargeable on goods imported to a country.

viii.     Casino: This refers to public building or room for gambling.

ix.        Rudimentary: This simply means “not completely developed”.

x.          Recession:  This means temporarily dealing in economic activities.