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This project work is carried out on problem of personal income tax generation and administration. Taxation can be simply defined as a compulsory condition by individuals and organizations to statutory Authority. The merits of taxations are numerous, for instance it could be used for re-distribution of income or for stabilization of the economy. In the recent parts and up till date, it has not been easy to fully realized the objectives of taxation owing to the existence of inefficiency and ineffectiveness in the system of administration and collection of personal income tax in Enugu State. The project, “Problems of personal income tax generated and Administration in Enugu State (A case study of internal Revenue Enugu North) will highlight those problems militating against the attainment of the objective of taxation. In carrying out this research work questions had been used to collect data and simple percentage analysis was used to research work enabled me to observe whether inhabitant of Enugu North Local Government Area indulge so much in tax avoidance and tax evasion because they have not been sufficiently enlightened on the importance and merit of taxation. Finally, the research work carried out helped me to know if there is enough personnel needed for effective to collection and administration. The limitation of this study is monetary problem and time, there will be scarcity of accurate national statistics.





In all generation, the problem of personal income tax generation and administration continues to surface in one form or another in virtually every society, especially in this part of the world. It is important to point out that the federal government has taken adequate steps towards effective tax administration. The failure on the part of the federal positions of both the state and local government. Besides the inadequate planning and absolute laws governing taxation, evaluation and collection is characterized by chaos.

This chastic nature of the system can be appreciated by political influences in the process of taxation during the civilian administration in the country which gave being entrusted with the work of collection and administration of personal income tax. The importance of these issues to tax administration in the developing countries like Nigeria, can be seen from the following extracts from tax administration in other developed countries. The tax administration finds himself working with a staff which is inefficient, in experienced and poorly paid.


It is true that problem of tax collection and administration is universal but the third world countries of which Nigeria is one, seen to be more plagued and inflicted both in weight and magnitude than the developed nations of the world. The research work primary involves identifying the problem of personal income tax generation and administration in Nigeria taking a case study of board of internal revenue, Enugu-North local government area.

These problems include the following:

·  Improper system  of keeping account and records in the internal revenue office which was seen to be quite mechanical and out dated

·  Lack of staff and adequate training of the available tax collectors

·  No enlightenment on the part of tax payers as regards to the importance of taxation and administration in Enugu North local government area.

·  The corrupt alliance of tax collectors with tax payers to avoid tax for them (tax collectors) to make fast money.

·  Another back bone of the problem worth mentioning is the uniformed penalties on tax defaulters, thus lack of enforcement power on the board make tax laws useless and not serious to tax offenders/defaulters.

Since these problems have been identified, the researcher considers it necessary to survey as such as possible to find solution preferred for solving the problems which will make for higher level of efficiency in the personal income tax generation and administration in Enugu North in particular and Nigeria in general.


The value of an effective personal income tax collection and administration cannot be over emphasized. There have been an increase in the demand for governmental service or the masses. Government is expected to satisfy collective wants, regulate the economic and social policies of the nations. Against this background of continuous increase trends in government responsibilities and expenditure are all levels of government. Nigeria has been fast dwindling finances for the past few years. The internal generated revenue have been inadequate to meet up the numerous demand and obligations.

·  Ascertain whether there are really problems in personal income tax collection and administration.

·  Investigate and identify the factors that course the problems.

·  Find out how these problems have affected the work of the board of internal revenue

·  Determining the effectiveness and efficiency of personal income tax collection and administration in Nigeria with Enugu North Board of internal revenue as a case study

·  Recommend measures overcome or minimize these problems of personal income tax generation and administration in Nigeria.


Ho 1: Personal income tax generation and administration in Enugu North Board of internal revenue is not very effective.

Ho: Personal income tax generation and administration in Enugu North Board of internal revenue is very effective.

The hypothesis above about personal income tax generation and administration in Enugu North local government area are based on generalization of the assumed relationship between personal income tax revenue like administrative costs population, income of tax payers, free pay allowance etc.

In any case, the rejection of the null hypothesis Ho is sub-hypothesis which are reduced to testable firms.

1.  Ho: The system of keeping account and records in the Board of internal revenue office in Enugu North local government area is rudimentary.

Hi: The system of keeping account and records in the Board of internal revenue office in Enugu North local government area is not rudimentary.

2.  Ho: The internal Revenue office in Enugu North Local Government area is under staffed and ill-equipped.

Hi: The internal Revenue office in Enugu North Local Government area is not under staffed and ill-equipped.

3.  Ho: The tax payers in Enugu North Board of internal revenue are not enlightened enough to know the importance of taxation.

Hi: The tax payers in Enugu North Board of internal revenue are enlightened enough to know the importance of taxation.

Owing to flexibility of tax laws in Nigeria and attitude of government toward the local government level in the area of the administration and collection of personal income tax. It is pertinent to make some assumption that will guide the work for an opinion to be expressed.

1.  The local government shall remain one throughout the research period

2.  The problems identified and solutions preferred shall apply to all local government area in Nigeria.

3.  The revenue board are those who encounter these problems


To overcome the difficulties involved in closing public or group behavior systematically in non-experimental situations as it is the case study, they are really no other alternative than to rely on the following questions.

1.  When taxes are collected, do you record them on your books?

2.  If your answer to question 1 above is yes, where is the evidence of record?

3.  Do you think the work you are doing is more than enough for one person?

4.  What factors prevent the board from its duty of income tax generation and administration

5.  What are the problems experienced by the board in collecting and administering tax?

6.  What do you think hinders staff in carrying out their job effectively? Poor salary, stationeries and Non-incentives

7.  Do you say that any person assessed to tax, pays what he or she is asked to pay?

8.  Would you say that tax collectors pay over to the board all that they collected each day?

9.   Do you think the field workers have enough mobility which enable them to collected and administer tax in remote areas within the jurisdiction of the board? Following to the answer provided to the question above, it was discovered that the board operation is below average, therefore external supervision need to be develop or employed for effective and efficient tax administration


Income tax is very important, because it is a sources to that link both the state and federal government budgets. The taxes collected come to the tax payers in the form of social amenities provided by the government. Income tax was encouraged or discouraged some activities in private sectors, depending upon whether the policy of the government is towards discouraging or encouraging such companies. It reduces that net return on investment and also decreases the balance available for private savings. It is an all pervading subject which affects the live of nearly everybody and no major accountant or legal problem can be satisfactory solved without a consideration of its tax aspect.

Benjamin Franklin, a statement and philosopher, observed that in this world nothing is certain but death and taxes. The taxation is particularly important, water supply, electricity and land allocation. As well, income tax has social effects, personal reliefs, relief in respect to children and tuition, relief on insurance policy premiums and dependent relatives, relief effect the social structure of the whole countries. Its fiscal effect lies on the cost. The cost of collecting taxes by the government is considerable. Profession fees paid by tax payer to accountants and the cost to unpaid employers in deducting tax under the pay-as-you-earn system and handling the taxes so deducted to the government is also vast.

Income tax also has some effect on population movement and the extent of business carried on. A state with low income tax rate will find that more people are moving into that state, while traders will leave states with high income tax rate or engage in various schemes of tax avoidance and evasion. The significance of tax is also show by the fact that one of the problem inherent in any federal system of government is the allocation of taxing powers between the federal and state government.

In May and June 1957, the Nigeria leaders were planning the form of federalism they wanted, a two-member fiscal commission know as the Raiseman commission was appointed to study and to make recommendations as to the allocation of taxing power between the Regional Government and the federal government. In June 1958, the commission tendered its principal report, section 4(1) of the Nigeria constitution enacted that the provision relating to fiscal arrangement can only be amended by a two thirds vote in each house of the parliament, consented to be each legislative chamber of at least three of the former regions.


Board of internal revenue Enugu was established to administer income tax in Enugu State just as there are in other state of the federation.

Income tax was first introduced in Nigeria in 1904 by Late Lord Lugard. The introduction of Native revenue ordinance of 1927 was most difficult in the Eastern areas of the country, due to mainly to abserice or recognized central Authority resistance to this form of direct taxation in such that it leaf to riot notably in Calabar, Owerri and the famous Aba women riot of 1929 which was so severe that it attracted a probe. Besides, the Native revenue ordinances were also Native direct taxation ordinance for the colony and the Native income tax ordinance.

These ordinance were later modified and incorporated into the direct taxation ordinance No 29 of 1940, cap 54 and the income tax ordinance No 29 of 1940 respectively. The direct taxation ordinance if 1940 empowered native authorities to tax African in their areas of justification while the income tax ordinance 1943 was for the taxation of non-Africans in companies. The two ordinance where the foundation of our modern taxation which necessitated establishment of board of internal revenue in each of the state of the federation which Enugu Board of internal revenue is one of them.

The Zonal Tax Authority which Enugu North Board of internal revenue belongs to the Enugu Zonal Authority.

The Assessment Authority:

The assessment officer is the head of the board of internal revenue in the area. He is pointed by the Board of internal revenue, Enugu State. He is responsible for the assessment of tax and its collection and as well as accounting for it. He carries out duty with the help of collectors, assessment and administrative officers. He is directly in charge of assessment and administration, he has the power to issue notice to tax payers further returns. Where there are suspected doubts as to genuiness of returns, he might ask the tax payer to produce before assessment authority books and documents of tax payer covered by pay as you ear (PAYEE).

The assessment Authority could ask an employer to prepared and deliver a return on his employee after assessment and responsibility of collection of this assessed income rest on the tax collector. He makes use of tax agents, tax drivers or which may be applied from time to time to generate tax in the area.

Administrative Framework

The structural administration of personal income tax is rested in the Joint Tax Board (JTB) under the income tax management Act 1961.

The board is made up of the chairman who is appointed by Federal Board of Internal Revenue (FBIR) which is the federal body. The personal must be experienced in tax matters also a secretary and a legal practitioner or adviser are appointed, some of their functions are:

a.  To exercise the power or duties conferred upon them day any express provision of the Act which be agreed by the board.

b.  To execute the power and duties conferred on them by any enactment of the federal Government imposing tax on the income of properties of companies or which may be agreed by the federal Board of internal revenue.

State Internal Revenue Board

The administration of the income tax in each states, its collection and administration is vested on the state board of internal revenue. It is headed by a chairman with director of revenue as his Deputy Chairman and Chief executive of the board. Other members of the board include representative of specified ministries and from field economics, accountants and legal professions. Their major function includes;

·                 To see the retrieval of the revenue collected by various tax officers in all local government head quarters and forward it to state government for disbursement.

Inspector of Taxes

The inspector of taxes are controlled by the board, they have variety of duties covering all aspects of taxation, some of their duties are

a.        Receipt and examination of tax returns and other information from tax payer

b.        Preparing and issuance of assessment based on the returns on which tax is payable. They also employ the best of judgment guesses, if returns were not received or there is evidence of false information.

Tax Collectors

They are entrusted with revenue receipts and are concerned with the service of:

i.            Returns of income forms

ii.           Notice of assessments

iii.         Summons affidavits and other sources of information.


For many years, the generation and administration of personal income tax has been causing some problems especially on money generated from it. However, in a way to keep the work within manageable proportion and with the limited time and resources available, the researcher has confined the study to problem of personal income tax generation and administration in Nigeria using Enugu North local government areas a case study and is of the view that this will bear good result that will be proper for generalization.


The following terms are defined in respect to the study for quick understanding:

a.          Fairness: This means a good tax system should be one that allows citizens to pay according to their ability. Taxes paid by the rich and the poor must have a clear difference, the rich should pay more than the poor.

b.          Neutrality: This means a tax system that is good must be minimal in its effect on the optimum allocation of resources. It should not alter the market mechanism, that is, its effect may fall on demand and supply. It should not as well lead to loss in total output by adversely affecting.

c.           Convenience: This means the tax payment is a burden at the point of payment, although the payer may accept the fairness of the tax he is paying. To collect tax at the most convenient point and time, reduces losses that may be encountered as a result of evasion and make the whole system simple.

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