| Content | CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
Conflict is inevitable in every society as well as organization. It occurs within groups individuals, organization, government and even among family members. Conflict between groups or organization. Potentially improves team dynamism (Mary Ann 2000). Conflict management skills is necessary for management of conflict in any organization. For any organization to be effective and efficient performing of its activities. Here is the need for mutual co-existence and understanding among members of the organization. However, conflict within an organization can emerged as a result of individuals difference, ambitions or from villainy between sub-groups or factions (Dennis, 2006).
Conflict is generated from emotions and frustration and has a detrimental impact on group or organizational outcomes i.e. information processing ability. Cognitive function of group members, attribution of group members behavior group loyalty. Work group commitment intent to stay in the present organization and job satisfaction (Jameson 2007).
Organizational conflict is a state of discord caused by the actual or perceived opposition of needs, value and interests between people working together. Conflict takes many forms in organization there is the inevitable clash between formal authority and power and those individual and group. Affected most organizational conflict are as a result of agitation by workers unions for improve condition of service and other welfare packages. In the recent past organize labour, government and owners of enterprise have been constraint with the problem of industrial conflict, hence conflict resolution as activities of industrial relation become very necessary following the disagreement between workers and management repetition (employer and employee) on the matter pertaining to either policy formulation on the welfare of workers in an organization or workers participation in decision making process on matters that boarders on their interest and welfare.
Jornab (2007), urges that agitation by worker unions for improved condition of service and other welfare package are almost always not in consonance with the interest and expectation of employers the very foundation of industrial conflicts.
Hence, the need to examine conflict resolution as a tool for effective management in SSABML very imperative.
1.2. Statement of Problem
Productivity in most organization have comparatively taken a nosedive sequence to frequent industrial conflict, the frequent agitation by workers for improved working condition and other workers interest and right. Hence optimal productivity has been hampered because of frequent industrial conflict as such many organizations has restored to different means of resolving such conflict because of its intended negative consequences such as down toll, which will affect sales, production decline, patronage and profit margin.
1.3. Objective of the Study
The objective of the study are as follows:
To identify the causes of conflict in SSABML
To examine the relevance of effective conflict management in SSABML
To examine the criteria for effective conflict resolution in SSABML
To proper possible solution to conflict in SSABML
1.4. Significance of the Study
The study will be beneficial to corporate organization especially SSABML as they utilize the finding in policy formulation regarding conflict management in their organization. The study will add to existing knowledge on conflict resolution and would be useful reference materials to individuals, students as well as scholars who may wish to undertake a similar research.
Most importantly, the study will go a long way in putting an end to unnecessary unrest in the corporate and will enhance productivity, peaceful co-existence between management and employee which will have positive impact on sales, profit, management and maximum enhancement of labour.
The research will also serves as a reference point to further research work.
1.5. Research Questions
The research questions that will guide the study are:
What are the causes of conflict in SSABML?
What is the relevance of effective conflict management in SSABML?
What are the criteria for effective conflict resolution in SSABML?
What are the positive solution to the problem of conflict in SSABML?
1.6. Scope of the Study
The study cover the examination of conflict resolution as a tool for effective management in SSABML. To this end the study will identify the criteria for effective conflict resolution as well as the relevance of effective management system in SSABML. The study will equally identify the causes of conflict in SSABML and would proffers solution to such problems.
1.7 Limitation of the Study
For the fact that this study is restricted to Sona System Association Business Management Limited (SSABML) it is not certain if the same result would be obtained if the survey is done on a different area for the fact that the questionnaire as well as the survey design are used as the instrument and the research design respectfully. Its is not certain if other kind of instruments as well as research design could yield the same result.
Other limitations arise from the uncooperative attitude of respondents as well as their non-challant attitude. This affected the validity of their response. As such incoming students as well as individual who may wish to conduct a further research should take this into cognizance.
Sona System Association Business Management (SSABML) was established in Nigeria in 1977. It first started with it first Plant in Kaduna located in Kuddenda Industrial Layout, Kaduna.
The company kick-up with franchise from Hamburg Breweries in Germany Market of Kronerburg and Sergenbre to produce Kronernburg, Serzenbre, other franchise were obtained from Malinnger Breweries in U.S.A to produce legent extra smooth and Amstel Malt.
Sona System Association Business Management Limited Kaduna (SSABML) has distribution outlet across all states in Nigeria Selling Beer and Malt Drinks to its customers.
Conflict: This is a process in which one party perceive that it interest is being opposed or negatively affected by another party.
Management: Management is the act of getting things done through people.
Conflict Management: Is a communication process in an organization that a solution when conflict arise
Organization: This is a framework for getting things done.
Strike: This is temporary withdrawal or withholding of labour power with the hope of raising its price by improving the payment of wages and other condition of employment.
Lockout: This refers to management refusal to allow employees to work.
Trade Union: This is a combination of workers or employers association form for the main purpose of regulating the terms and conditions of employment of workers.
Production: This is the process of transforming resources such as raw materials, labour and capital goods into finished product and services.
SSABML: This is an acronym for Sona System Association Business Management Limited. | CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
The recent global crisis in the world has brought to the fore the need to note that this overdependence on oil creates unnecessary shocks and thus, the need for diversification of the nation’s resource base and long term growth path. The oil is an exhaustible and dwindling resource, while taxation is the only non-exhaustible veritable source of resource and revenue generation to the government both at the tiers of government.(Oloyede, 2010:1).
Nigeria is a monolithic economy with strong dependence on the oil sector; this over-dependence makes the economy to be more vulnerable to external manipulation and adversely affects the planning horizons in the country.
Taxation has rightly been identified as a major tool in the strengthening of domestic resource mobilization and consequently, the search for ways and means of expanding the tax base and also strengthening tax administration has been intensified. Taxation is considered a veritable source of revenue for financing developmental as well as people oriented programs in virtually all countries, irrespective of whether they are classified as developed or developing economies. That taxation has been one of the most important weapon available to government for marshalling financial resources is undisputable (Atta-Mills, 2002: Teidi, 2003 and Oloyede, 2010).
Nigeria is governed by a federal system; hence its fiscal operations also adhere to the same principle. This has serious implications on how the tax system is managed in the country. In Nigeria, the government’s fiscal power is based on three – tiered tax structure divided between the federal, state and local governments, each of which has different taxes jurisdiction. As of 2014, all three levels of government share about 50 different taxes and levies.
It is needless to emphasize that the existence of well defined tax laws alone cannot guarantee the success of tax collection effort. There must always exist an efficient and effective tax administration as a sine qua non to successful domestic resource mobilization.
In some developing countries, Governments impose many types of taxes, individuals pay income taxes when they earn money, consumption taxes when they spend it, property taxes when they own a home or land, and in some cases estate taxes when they die. In the United States, federal, state, and local governments all collect taxes. Taxes on people’s income play critical roles in the revenue systems of all developed countries.
Taxation as a major non-oil revenue has been the mainstay of most developed countries, in contrast to developing countries that still depend on primary products. Also, indirect taxes appear to be in vogue in developed countries, due to higher return, lower administration cost and higher compliance rate, however, most developing countries still rely on direct taxes with lower compliance rate (Oloyele, 2010: 3).
it is increasingly apparent, however, that tax administration must receive far greater attention if the goals of tax reforms and policies are to be achieved in the face of ever growing economy. Much of tax policy is being directed to obtaining increased revenues to enable governments and their agencies or parastatals to carry out their economic planning. Yet it is true in Nigeria that effective administration of some of the existing taxes would provide a considerable and reasonable part of the needed revenue.
The Nigerian tax system has undergone several reforms geared towards enhancing tax collection and administration with minimal enforcement cost. The recent reforms include: the introduction of TIN (Tax Payers Identification Number), which became effective since February, 2008. Automated Tax System (ATS) that facilitates tracking of tax positions and issues by individual tax payer, E-Payment System (EPS) which enhances smooth payment procedure and reduces the incidence of tax touts, Enforcement scheme (special purpose tax officers), all these have led to an improvement in the tax administration in the country.
Without recourse to argument, taxation no doubts, remains a veritable and inexhaustible source of revenue to the government; but Nigeria‟s dependence on Oil as the major foreign exchange earner makes her economy vulnerable to external manipulations.
An effective and efficient tax reforms or administration in the country will go a long miles in helping the governments in devising means to tax successfully the informal and agricultural sectors of the economy which has remained largely untaxed in spite of their inherent potential to provide a reasonable portion of the revenues needed by the governments. However, one common and easily noticeable feature of the country is her low tax effort. While the overall average tax effort level of developing
countries is estimated at about 18% of Gross Domestic Product (GDP), the average for industrialized countries is around 24% (Atta-Mills, 2002).
It is in the light of the above therefore, that this work is tailored to bringing into public domain the critical challenges, problems and prospects of tax reforms and administration in Nigeria with Ogun State Board of Internal Revenue as the case study.
1.2. STATEMENT OF PROBLEM
Aside from being a major source of revenue to most nations, taxation also plays very significant roles in the promotion of social and economic welfare, provision of public goods, redistribution of income, promotion of economic stability, as well as regulation of economic activities and consumption of goods and services. Because of the aforementioned importance of taxation, developed economies have invested considerably on legislative tax reforms, taxpayer education, and development of new technologies to aid in evolving effective tax systems, and to boost tax collections.The institutional framework, within which the revenue administration operates impact directly on the effectiveness and efficiency of the tax administration. The institutional framework in operation in Nigeria is many and varied. The general trend has been to have separate administrations for internal taxes and custom duties. However this policy and method of operation is common in some other countries.
Another challenging problems in the administration of tax in Nigeria is the location of the assessment and collection functions within the tax administration. Problems also emanate from the frequent changes in the tax laws and policy: Every year the annual budget estimate introduces new measures and procedures, amends or cancels existing ones.
These frequent changes can make the law confusing as well as complicate the tax structure. After a few years these changes and amendments become so many that the tax payer finds it difficult to know which laws are applicable.
Another frequent and alarming problem is, Non-Compliance Strategy: Mamud (2008:2), observes that the recurring problem with Personal Income Tax (PIT), is the non-compliance of employers to register their employees so as to remit such taxes to relevant authorities. According to him, government in 2011 amended the 1973 PIT Act to make non-compliance employers liable to penalties up to #5000.00 as well as liable for the payment of all tax arrears. Employers that failed to keep proper records also face a penalty of #10, 000.00. The implication of the above is that these employers may feel reluctant to remit their employees names to the relevant authorities hence they may always bribe their way through. This problem is not limited to PIT but also Pay As You Earn (PAYE), withholding taxes, and taxes paid by ministries and agencies in the three tiers of government.
Multiple Taxes: The study group of 2002 highlighted the multiple taxes in the three
tiers of government as the most serious problem for the country’s tax administration system. The group emphasized that companies are subjected to a wide range of taxes, levies and rates at the state and local levels in addition to the federal income tax. According to Odusola (2006: 3), the imposition of multiple taxes in the system imposes restrictions on inter-state commerce and trade, making locally produced goods uncompetitive and in some instances causing business closure. The failure of government to address this issue has affected resources that could have accrued to it as some business organizations have folded up as a result. Some of those who have remained in business usually put up hostile and confrontational attitudes when approached to pay these taxes.
Tax evasion and tax avoidance: Despite the emphasis on the importance of taxation and the efforts made at improving its efficiency, citizens’ aversion to taxes have remained a problem that most tax authorities have to grapple with. This is because individuals will always look for a means –legal or otherwise–to reduce or even completely avoid paying taxes. This result in heavy revenue losses to governments and ultimately affects their ability to meet their obligations.
Corruption: AmartyaSen.argued that corruption or corrupt behaviour involves the violation of established rules for personal gain and profit. (Sen ,1999) Corruption is efforts to secure wealth or power through illegal means private gain at public expense; or a misuse of public power for private benefit. The widespread of corruption in the tax system in Nigeria and frustrate effective tax administration and reforms in Nigeria. for example, Taxpayers prefer to bribe the tax officials than to pay tax and big companies are also not exempted from this practice. This leads to lack of proper accountability and paucity of funds as the resources available are not enough to cater for the well being of the country and thereby leading to loss of revenue.
1.3. OBJECTIVE OF THE STUDY.
Identifying critical tax administration challenges in the 21st century Nigeria and measures required to meet challenges will not only guarantee improved revenue base for the country but also position the country properly to take full advantages offered by the new millennium. This research work shall examine the tax reform and administration and it’s compliance in Nigeria by analyzing the tax gap in the system over the years thereby revealing the critical challenges that need be tackled.
The main objective of the study is to examine the problems and challenges affecting effective tax administration and reforms in Ogun State Board of Internal Revenue, with a view to proferring solutions, recommendation and strategies through which such problems can be eliminated completely.
The specific objectives are:
To find out whether lack of staff training affect of poor revenue collection in the state.
To identify if poor tax collection is because of pronounced poverty among the tax paying public of Ogun State.
To ascertain the rate of non-compliance of individuals, companies with tax laws and policy.
Eliminate the constraint affecting effective tax reform and administration in Nigeria.
Identify the effect of poor tax administration on the Nigeria revenue generation.
Identify new techniques to uncover corruption, tax avoidance and evasions by tax paying public of Ogun State.
RESEARCH QUESTION:
The research question refers to tentative questions in a research studies which tends to provide a guidance and in which answers are provided for in the research studies.
For the purpose of the research study, the following research questions were asked:
Does lack of staff training affect of poor revenue collection in the state?
Does pronounced poverty among the tax paying public affects effective tax administration and reform in Ogun State?
The rate of non-compliance of individuals, companies with tax laws and policy?
Are there any constraint affecting effective tax reform and administration in Nigeria?
What are the effect of poor tax administration on the Nigeria revenue generation?
Identify new techniques to uncover corruption, tax avoidance and evasions by tax paying public of Ogun State?
1.5. SCOPE OF THE STUDY
From the foregoing discussion, the research focuses on the problems, prospects of tax reforms and administration in Nigeria using the Ogun State Board of Internal Revenue as a case study.
1.6. LIMITATION OF THE STUDY
Limitations envisage in this research work are:
Information Generation: The work however, has experienced limitations by way of extracting information from some staffs of Ebonyi State Board of Internal Revenue, who for some reasons found it difficult to respond to questions.
Financial and transportation constraints: Also there might be financial and transportation constraints to this study as these two factors will be at our capacity which might not be enough to give us desired results.
1.7.SIGNIFICANCE OF THE STUDY
Taxes pay teachers. Taxes train nurses. Taxes maintain roads, deliver medicine, provide clean water. This is as true in the developing world as it is in the developed world. Tax is the most important, sustainable and predictable source of public finance for almost all countries.
Succinctly, there cannot be a better time to work on the critical problems of tax administration in the 21st century than now especially with the growing tax consciousness among the various tiers of governments in Nigeria, especially in Ogun State.
If countries are to eradicate poverty and hunger, then they will need to do so by increasing their own public finances; principally through tax revenues.
This study will continue to be of interest to majorly the governments, civil servants, government establishment, agencies, parastatals, and other public corporation in the public sectors.
It will also be of great importance to various management of companies, tax administrators, revenue collector, and tax officials and other users of laws and policy;It will also give them general insight on the challenges affecting effective tax reforms and administration in Nigeria.
This research would contribute to the existing literature by focusing on tax administration in Nigeria with a view to identifying the critical problems that are confronting the tax system so that appropriate measures could be taken to tackle them.
The work will be of immense benefit to students of tax policy, tax administration and taxation generally as it will provide them insight into the various challenges of tax administration.
Finally this study will be of great significance to schools and students, it will serve as a reference point for future researchers who will want to research more on the topic.
1.8. DEFINITION OF TERMS
Tax: tax is a compulsory levy payable by individual economic units or corporate bodies to government without any direct quid pro quo from the government.
Administration is the capacity to coordinate and execute many and often conflicting social demands in a single organism so perfectly that they should all operate as a unit
Thhax administration: according to Dale , implies tax policy making and execution. That is, it involves planning, organization, commanding, coordination and control.
Non-Compliance: can be defined as the failure on the part of a taxpayer to correctly file returns, report actual income, claim the correct deductions, reliefs and rebates and remit the actual amount of tax payable to the authority on time.
Taxation: is defined by Ogundele (1999) as the process or machinery by which individuals, groups, or communities are made to contribute in some agreed quantum and method for the purposes of the administration and general development of the society they belong.
Tax evasion: refers to any intentional, illegal reduction of tax payments, which usually takes the form of underreporting income, sales or wealth, or overstating deductions (Schneider, Braithwaite & Reinhart 2001), including failure to file appropriate tax returns.
Tax Avoidance: refers to the reduction in tax burden by means of practices that take full advantage of the tax code or exploiting the loopholes in the tax laws to reduce tax liabilities by arranging ones tax affairs using tax shelters in the tax law, and avoiding the tax traps in the tax laws.
Corruption: is an anti-social behaviour conferring improper benefits contrary to legal and moral norms, and which undermine the authorities to improve the living conditions of the people.
BRIEF HISTORY OF CASE STUDY (OGUN STATE BOARD OF INTERNAL REVENUE)
The Ogun State Board of Internal Revenue is the organ responsible for the generation of revenue for the state government on Ogun State.
The Ogun State Internal Revenue Service is a State Revenue Agency that derives its existence from the Personal Income Tax Act Law of the Federation 2004, which stipulates the establishment of the THE BOARD OF INTERNAL REVENUE by all the States of the Federation. The Ogun State Edict of 1996 established the Board to carry out the functions of assessing, collecting and accounting for taxes, levies and fees with the additional responsibility of tax policy formation for the state.
The Ogun State Internal Revenue Service is a State Revenue Agency that derives its existence from the Personal Income Tax Act Law of the Federation 2004, which stipulates the establishment of the THE BOARD OF INTERNAL REVENUE by all the state
of the federation in Nigeria.
The Ogun State Edict of 1996 established the Board to carry out the functions of assessing, collecting and accounting for taxes, levies and fees with the additional responsibility of tax policy formation for the state.
In April 2004, The Governor of the State(Ogun) gave the Board the authority to implement the said Edict of 1996, in its entirety. That mandate led to the restructuring of the Board in terms of organisational structure and improved revenue generation.
The States‟ Board of Internal Revenue in Nigeria are empowered through the Income Tax Management Act (ITMA) as amended in 2004,to levy income taxes on individuals, communities families and trusts. According to the Income Tax Act of (2004).
SERVICES PROVIDED BY OGUN STATE
PERSONAL INCOME TAX
Pay As You Earn (P.A.Y.E)
Direct Assessment (Self Employed)
Minimum Tax
Back Duty Assessment
PROPERTY TAX
Capital Gains Tax
Landed Property
Stamp Duty
ROAD TAXES
Vehicle Registration & Licensing (Motor Vehicle and Motorcycle)
Number Plate (Motor Vehicle and Motorcycle)
Learner's Permit
Trailers & Tippers Permit
Motor & Cycle Stickers/Badges
OTHER TAXES
Lottery
Slot Machine Gaming
Pools Betting
Lotto
Casino
WITHHOLDING TAXES
Rent
Interest
Dividend
Director's Fee
Consultancy/Management Services
Contract Supplies
LEVIES
Education
Development.
Structure
At the head of Ebonyi State Board of Internal revenue is the Chairman. He is assisted in the management of the Revenue Board by a management team of four members.
The team comprises: The Directors of direct and indirect taxes, the PRS and the Secretary, who doubles as Head of Department of Administration.
Other heads of departments who are not members of the management are: the head of Internal Audit,and the head of finance and supplies department.
In order to achieve the goals and objectives for which the Board was set up, each of the departments performs distinct but related roles which are explained thus:
The Chairman
The chairman is the head of the tax collection machinery of the state. He therefore, makes sure that the state tax policy is strictly adhered to.
He leads the Board to defend their budget during budget defence.
He represents the state at the Joint Tax Board (JTB) meetings and brings the
resolutions of the Board to bear on the Board of internal revenue in particular and the State in general.
He takes decisions that are in the best interest of the Board and the State.
He ensures that materials necessary for the execution of the duties of the office are made available at all time. | CHAPTER ONE
introduction
Background of the study
Housing Literallymeans Building or shelters in which people live work dwell etc and to nation as a critical component in social and economic fabric [Kabir and Bustani, 2009]. It represents one of the most basic human needs. As a unit of environment, it has a profound influence on the health, efficiency, Social behavior, satisfaction and general welfare of the community. To most groupshousing meansshelter but to other it means more as it serves as one of the best indicators of a persons standard of living and his or her place in the society [Nubi, 2008]. It is a priority for the attainment of living standard and it is important to both rural and urban areas.
These attribute make demand for housing to know to bound as population growth and urbanization are increasing very rapidly and the gap between housing need and supply becomes widen. Cultural factors such as preferences and value or social Status, taste and financial resources, also influence a home physical characteristics.
In developing countries, poor housing delivery has been attributed to inadequate mechanism and system for land allocation, funding mortgage institutions and infrastructure. Also the government policies dictate the nature and manner of the market and how activities are run in the body polity. Despite this significance of housing adequate supply has remained a mirage to all carder of the society in Nigeria. The situation is very particular to most developing countries where population is growing at exponential rate and rapid urbanization becoming a num, and discrepancy in housing need and supply is high.
According to Kabir and Bastani IBID, in a developing country like Nigeria, the housing Problem basically relates to quantitative and qualitative inadequacies on the supply side various government policies in the past have been formulated towards overcoming the huge shortage through several housing reform programmers and how the property market operates. Despite these past efforts housing continuous to be a mirage to ordinary Nigerian.
Currently there are various mass housing delivering programs such as the affordable housing scheme that utilize the republic, private partnershipeffort and several private finance initiative models could only provide for about 3% of the required stock. Thissuggest the need for a holistic solution in approaching the problem.
While the quality of the existing stock that do not meet the minimum quality requirement. Thus this study is necessitated to point out the property market operation in minna with the view of finding a lasting solution to the problem of housing and give directions for other areas in Nigeria.
Statement of the Problem
According to [Kabir and Bustani 2009] the housing problem basically relates to quantitative and qualitative inadequacies. On the supply side, various government policies in the past have been formulated towards over coming the various mass having delivery programs such as the affordable housing scheme that utilize the public private partnership effort and several private finance initiative models could only provide for about 3% of the required stock.
A recent study of the housing situation in Nigeria put existing housing stock at 23 per 1000 inhabitant.
The housing deficit is put at 15 million houses [mabagunje 2002] while 12 trillion will be required to finance the deficit, this is about 4time the annual national budget of Nigeria. Home price and rents on the other hand, have grown ahead of general inflation making matters worse the composition of homes for sale and rent on the market has been inexorably shifting towards very expensive homes.
Also Kabir and Bustani ibid state that current scheme include a “site & Service” that provides low-income beneficiaries with serviced plots including tenure Security and help to build their own houses and the second approach helped house-owners in existing squatter area obtain tenure to their land and to improve their dwelling. In spite of the fact that they may help to improve tenure security, these initiate target population low-income earners usually does not benefit from them. Hence, this study is necessitated to asses the effect of taxation policies on the property market operation in minna, Niger state with the view of point out the impact of these policies in the area to serve as a guideline blue-print and working document for other areas.
RESEARCH QUESTIONS
This research therefore is intended to answer the following questions;
What are the various Taxation policies of government that impinges on property market in Minna.
What are the impact of these policies on property market
What are the issues and changes of these policies as they apply to the transaction of the property market in the area.
Aim of the Study
The aim of this study is to assess THE EFFECT OF TAXATION POLICIES ON THE PROPERTY MARKET TRANSACTION IN MINNA.
OBJECTIVE OF THE STUDY
To achieve the aim the following objective are set:
1 To identify the various taxation policies of government that impinges on the property market in Minna
To asses the impact of these policies on the property market.
To examine the issue and changes of these policies as they apply to the transaction of the property market in area.
1.5. SIGNIFICANCE OF THE STUDY
The potential finding of this study will be beneficial in the following ways
To the estate surveyors on the need to be sophisticated in their approach in property market transaction. This will largely help to reduced the image and credibility of the profession and also reliability of their report before their highly estimated users.
It will fill gap in literature as there are death information in this respect of research especially in the study area
Users of property [financiers and developers] will be properly and accurately guided.
1.6. OUTLINE METHODOLOGY
The following research methodologies shall be the employed for this study
Method of data collection; for the success of this research work primary and secondary method of data collection shall be employed.
Sources of data; data for this research work will be sourced through questionnaire and back-up with interview.
Target population; some of the team of expect [valuers] and property developers [investors] in the study area will be considered and sample their opinion on the effect of taxation policies on property market transaction in the study area.
Sampling techniques; in carry at this research work, systematic, stratified and simple random sampling shall be employed
Target population; the target population for this study are estate surveyor and users of property [Banks and mortgage institution in Minna Metropolis].
Method of data analysis; the method data analysis will involve the use of table and frequency details
1.7 DELIMITATION AND SCOPE OF THE STUDY
The scope of this study is limited to effect of taxation policies on property market transaction in Minna metropolis, Niger State.
1.8 DEFINITION OF TERMS.
Real property: [encyclopedia] all land, structures, firm attached and integrated equipment [such as light, Fixtures or a well pump], anything growing on the land, and all “interests” in the property which may be the right to future ownership [reaminder], right to occupy for a period of time [tenancy or life estate] the right to drill for oil, the high to get the property back [a version] if its no longer used for its current purpose [such as use for a hospital, school or city hall], use of air space [condominium] or an easement across another’s property.
Market: is one of the many varieties of system institutions, procedures, social relations and infrastructures whereby parties engage in exchange goods and services by banter, most markets rely on sellers offering their goods or services [including labor] in exchange for money from layers. It can be said that a market is the process by which the prices of goods and services are established.
Taxation: Taxation refers to the act of a taxing authority actually levying tax. Taxation as a term applies to all types of taxes, from income to gift to estate taxes. It is usually referred to as an act; any revenue collected is usually called “taxes”. Taxation is one of the primary powers of government over the people. | ABSTRACT
The purpose of this research work is to describe the practical approach to an appraisal of pay-as-you-earn system of taxation with referee to Nssuka local government area. To guide this study, two hypotheses were formulated. A review of literature was down to ensure solid conclusion for the study. A structural questionnaire was developed and administered by the analysis adopted in this research work was chi-square, this method by researcher to ensure that result obtained were real and not by chance.
Based on the above statement some of the major findings include presentation of data and their analysis. The chapter five is discussing a bout the findings made by the researcher and recommendation as well as conclusion.
Conclusively, the researcher will add to the existing literature on an appraisal of pay-as-you0-earn system of taxation. Scope of study and limitation talk about the areas the researcher is going to touch when discussing on the appraisal of pay-as-you-earn system of taxation system are place or area that have been unable to by researched upon to time.
CHAPTER ONE
INTRODUCTION
The global economic recession, which started in 1980’s as a result of decline in the economic growth of industries nation, high rate of inflation, dramatics rise in price of crude oil, increase cost of important a massive building-up of liquidity in the international capital market and unusual fluctuation in commodity prices was not fully felt in Nigeria until 1982, when the developed countries applied a series of restructure monetary and fiscal policies to curtail the a fore-stated problems.
Seventeen years ago, precisely in 1983, the worldbank report that the continuing recession in the industrial world several constrained developed countries growth in 1982. Weakness in the price of oil created difficulties for oil exporting developing countries’’.
Reporting specifically on Nigeria, the bank stated that`` foreign exchange resource declined in 1982 from a level equivalent to three month worth. Investment, equal to about a third of gross domestics product (GDP) in 1980 –1981, has been radically reduced as both foreign exchange and government resource contract (85% of government revenue, both federal and states are direct generated from oil export).
An attempt to wriggle the country out of its financial predicament led to the initially of series of belt-tighten measure since 1982 to date.
These measure include:
Ban on import of a large number of goods, specially taxes on luxury goods, enforcement of trick exchanges control reputation liberalized during the earlier boom, wages and ban on employment in the public sector, increased external borrowing in anticipation of oil income and of late the introduction of value added tax (v.a.t). The impact of the dwindling revenues to the federal government and this ever decreasing portion of statutory allocation to states, has aroused tremendous interest in other source of revenue. Therefore, the hitherto relaxed tax laws are vigorously being enforced while levies of various descriptions are also being in various state of the federation.
Nsukka local government area of Enugu state is not exempted from this nation economic recession. One of the major sources of revenue to the local government, second to statutory allocation from the state and federal government, is the personal income tax (PIT) impose on all taxable persons in the local government. The personal income tax is allocated either through the Pay-As-You-Earn (PAYE) system in which employers of labour deduct tax due from the income of their employees and remit it to the division
In this study, my interest lies in appraising the effective and efficiency of Pay-As-You-Earn (PAYE) as a system of tax collection. The examination of the weakness interest in the system will be carried out and based on empincal observation, make suitable recommendation as to how loopholes in the system could be plugged especially at this time of wide spread awareness of the great potentials of internally generally revenues.
STATEMENT OF PROBLEM
The expectation of the public from governments (local, state and federal) in the developing countries are such that the later are saddle with responsibilities for the provision of various services. The 1979 nigeria constitution sec.16 (a) state. Quite clearly that ``the state shall control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen as the basic of social justice and equality of status and opportunities’’.
It is in an attempt to fulfill these expectation and sometimes constitutionals requirement that government rely on, among either source, the imposition of various taxes, weather direct or indirect on the defined taxable persons in their territory. Such tax and poll tax
These taxes are collected at source at source include taxes on dividend interest and rates. Also induction is tax on personal income tax through the Pay-As-You-Earn (PAYE) system has been effective in achieving its objectives of minimizing collection costs and reduction tax evasion while increasing revenue to the local government. We will all look into the problem of the pay-As-You-Earn system and suggest measures to solve such problems that might be identified.
PURPOSE OF THE STUDY
The purpose of the study can be broken down vas follows:
to ascertain the impact of Pay-As-You-Earn system effectiveness on personal income tax revenue over a period of ten years.
To educate the truthfulness of the data provided by tax – payers in their tax return and ascertain the percentage of those who do not provide the information there in.
To find out weather there is any relationship between the truthfulness of information provided by tax payers in their tax returns and their age.
To identify the problem (if any) encountered by the internal revenue division and the employers of labour in the application of the PAYE system.
To find out how the employers perceive the PAYE system and the likely improvement that they would recommend.
On the basis of my findings, suggestion and recommendation will be made which I hope would be benefit to the local government it is also hope that future researcher in the area of the public finance would find the work a valuable source of literature.
SIGNIFICANT
The significance of adequate revenue for a developing economy such as that of Nigeria cannot be over emphasized. This study is being conducted with a view to exposing the inherent weakness on the Pay-As-You-Earn system of taxation.
The suggestion and recommendation made on how loopholes in the system could be plugged. Especially at this time of widespread weakness of the great potential of internally generated revenue would be very beneficial to the governments.
The local government will find it very useful in drawing up revenue and other methods of taxation which will in turn check the ever dividing revenue to the government.
STATEMENT OF THE HYPOTHENSIS
A hypothesis is a rational assumption, which subject to fast could be true or false
The following hypothesis were made as a guide for this research ho (i) The effectiveness of the Pay-As-You-Earn system has not affected personal income tax revenue.
Hi (ii) the effectiveness of the Pay-As-You-Earn system has affected personal income tax revenue
1.5 SCOPE OF STUDY
The study shall be confined to an examination of the Pay-As-You-Earn system as in weather it is an efficient and effective method of personal income tax (PIT) collection in NSUKKA local government. It thus excludes any other system of tax revenue through Pay-As-You-Earn system with other tax revenue shall be evaluated only for the purpose of comparison.
LIMITATION OF THE STUDY
The study was limited by the following constraints:
there was shortage of relevant texts journal and documentaries on the subject of Pay-As-You-Earn system.
Some of the answer givens an opinions expressed in response to question were subjectively based due to different personal experience.
A study of this nature require longer period of time than was actually available to me.
There is this general problem that many Nigeria do not like to disclose their earnings.
Finance available for this study was inadequate considering its scope and my financial standing as a student.
DEFINITION OF TERMS
BASIS PERIOD: the period in which the income of a taxpayer is assessed for the purposes.
ASSESSABLE INCOME: income of a taxpayer from all sources in a given basis period less all allowable deductions and nontaxable income.
PRECEEDING YEAR BASIS: A basis period by which income of a tax payer in the year proceeding the year of assessment is assessed.
ACTUAL YEAR BASIS: a basis period by which income of a tax payer in the proceeding the year of assessment is assead in that year.
YEAR OF ASSESSMENT: the government financial year in which the income of a taxpayer is assessed for tax purpose.
CHARGEABLE INCOME: assessable income less all reliefs.
RELIEFS: deductible allowance granted to a taxpayer by the law in a relevant year of assessment.
TAX EVASION: an illegal act of paying less tax than ought to pay.
TAX AVOIDANCE: a legal act by a tax payers to pay less than he ought to pay.
TAAX SRETURNS: relevant data supplies by a tax payer for the purpose of assessing income.
TAX DEDUCTION CARD : a document used in the Pay-As-You-Earn scheme in which total allowed relief’s are stated.
TAX EMERGENCY CARD: the card temporarily used before the tax deduction card are made available to the employer by internal revenue division. | CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
Taxation is a compulsory levy imposed by the Government on the incomes of taxpayers in a geographical territory in order to defray the expenses of governance. This implies that anybody that generates income must compulsorily pay taxes. There are different types of taxation. These include the personal income tax, company’s income tax, and petroleum profit tax, value added tax and the capital gains tax. Recently, the issue of capital gains tax in the Nigerian has come to the fore. Government, from time to time, has the responsibility of reviewing the tax position as a component of the subsisting fiscal policy for the purpose of meeting given objectives. However, each review naturally elicits mixed reactions from the stakeholders.
Governments in all parts of the world and at all points in history have faced similar challenges when it comes to funding their ambitions to develop their country or state and to give a good standard of living to the masses in their country or state. We do not believe that governments in the past or in today’s developing world are any less rational or farsighted compared to those in today’s developed world. For this reason, in most countries of the world, the primary objective and purpose of taxation is essentially to generate revenue or raise money for government expenditures on social welfare.
The importance of taxation lies primarily in its ability to raise capital formation for development and growth of the economy and also, in assisting in the regulation of consumption pattern resulting in economic stabilization and effective redistribution of income (ICAN, 2009).
If these are the main objectives of taxation, it is therefore highly important to have in place a strong and vibrant tax system, not only at the Federal level but also at the state and local government levels, so as to ensure that the objectives of tax system are achieved.
With the federal government poised to eliminate the budgetary deficit in the coming year, a debate has commenced about how best to direct future budget surpluses. Some voices have called for tax relief while others have emphasized new spending.
In Nigeria the Capital gain tax administration aims and tries to tax each company in the state more effectively. However the level at which the capital gain tax Administration in Nigeria tend to achieve its desired goals and objectives depends mostly on the tax office and the company that is operating in each state, also when an individual or company is been taxed by the federal board of inland revenue (FBIR) such taxpayer is meant to give an accurate information about their gain or income but some go to the extent of forgery in provision of their documents which gives an incorrect information to the board, thereby causing reduction in their tax assessment.
The backdrop to these fiscal policy discussions is a sluggish economy. The consensus view of most economists is that the Nigeria economy will continue to struggle with lowers than “normal” or historic levels of economic growth. Low economic growth has broad implications including slower growth in employment, income, and ultimately living standards. This means any debate about using future budgetary surpluses should focus on policy measures that can improve economic growth in both the short and the long term.
One area of policy reform that could contribute to higher levels of economic activity is capital gains taxation. A wealth of research shows that capital gains tax reform can increase the supply and lower the cost of capital available to new and expanding firms, and in turn lead to higher levels of entrepreneurship, economic growth, and job creation.
The primary reason that capital gains tax reform can have these positive effects is related to what economists call the “lock-in effect.” Because capital gains are only taxed upon realization, high tax rates on capital gains can create an incentive for investors and asset holders to retain their current investments even if more profitable and productive opportunities are available. The magnitude of the lock-in effect depends on a number of factors, but a series of empirical studies has found a negative relationship between capital gains tax rates, asset sales, share prices, and other proxies for investor activity.
A capital gain (or loss) generally refers to the price of an asset when it is sold compared to its original purchase price. A capital gain occurs if the value of the asset at the time of sale is greater than the initial purchase price. A capital loss occurs if the value of the asset at the time of sale is less than the purchase price.
Capital gains taxes, of course, raise revenues for government but they do so with considerable economic costs. Capital gains taxes impose costs on the economy because they reduce returns on investment and thereby distort decision making by individuals and businesses. This can have a substantial impact on the reallocation of capital, the available stock of capital, and the level of entrepreneurship.
Capital gains are taxed on a realization basis. This means that the tax is only imposed when an investor opts to withdraw his or her investment from the market and realize the capital gain. One of the most significant economic effects is the incentive this creates for owners of capital to retain their current investments even if more profitable and productive opportunities are available.
Capital gains tax has been justified on the ground that capital gain on assets increases a person or person’s taxable capacity by increasing his power to spend or save. Capital gains are not distributed among the different members of the tax paying community in fair proportion to their taxable incomes, but are concentrated in thehands of property owners and it has been argued that theirexclusion from the scope of taxation constitutes a serious discrimination in tax treatment in favour of a particular class of taxpayers.
Non payment of capital gains tax will create discrimination in favour of property owners that will lead to further reinvestment of those gains in assets thereby perpetuating further severe inequalities in income and wealth as capital gains only accrue to those who own property. Non payment of capital gains tax accruing especially to those in the upper income bracket puts a greater relative burden on the income tax of those who do not enjoy such gains (Ayua, 1999).
In developing countries capital gains tax is a lucrative ground for raising money for purposes of development. In addition, In a (developing) countries like Nigeria there exist large opportunities for the realization of capital gains because of the tendency of rising prices inevitably accompanying a process of accelerated economic development, besides, the process of economic development itself tends to generate capital gains because of the rise in real income, company profits and the value of shares. But as the proportion of wealth held in the form of equity shares of the capital gain arises to the owners of property such as land and real estate. Thus, the taxation of capital gains tax constitute an important fiscal mechanism to plough back a proportion of the increase benefits accruing to the holders of property as a result of a process of development into the developmental funds of public sectors.
There are many types of taxes that are often levied on individual and corporate entities. Capital gain tax is on income derived from the sale of a capital asset. This paper will examine the concept of tax, reasons for taxation, features of a good tax system, nature, arguments against Capital Gain Tax and recommendations for effectiveness of this form of taxation.
1.2. STATEMENT OF PROBLEMS
Whatever arguments are in favour of or againstcapital gains tax, capital gain tax like other type of taxation have been criticized as having a kind of a lock-in-effect on business in the sense that it inhibits the sale of capital assets which have appreciated in value (Brown, 1955). It is also argued that capital gain tax reduces the flow of investment especially in developing countries where there is high need for greater investment mobility (Amatong, 1975). The negative effect on sale of asset will be minimal where capital gains are payable on the value of appreciation, where the tax is not only through sale of asset.
Secondly, There are some challenges in connection with CGT Act one of them being that should the same transaction bear tax consequences in another jurisdiction double taxation is likely to occur. It appears the tax consequences and tax point obligation is the burden of the resident entity. It is not clear how the resident entity will arrange for the funds to meet its tax obligation. The amendment has not made any clarifications when it comes to cases where the shares are listed and traded on a stock exchange on a regular basis, thereby potentially triggering a change in control as result of regular trading. Also, unlike other jurisdictions, no limitation has been provided for under the amendment with respect to companies which are land rich or own natural resources which were/are the main target of taxation.
Thirdly, despite the fact that the existing tax provisions provided for taxation of direct share transfers in Nigeria, there was no specific mechanism in place to enforce collection of the tax on the gain. This has now changed following the amendments made to sum section of the CGT Act whereby a single installment tax payment will be required with respect to gains arising from direct share transfers or interest derived from Nigerian entities. The installment rate applicable is ten percent for resident shareholders and twenty percent for nonresident shareholders. A point to note is that the said installment will be available to the taxpayer as a tax credit for the given year of income at the time of the final tax payment.
Fourthly, Capital gains taxes also contribute to tax avoidance. The level of tax avoidance is the extent to which actual tax revenue collected by a government differed from what would have been collected if every taxfiler paid exactly what is required by law. Tax avoidance has important implications for tax efficiency since resources expended on avoidance could be put to more productive uses.
Furthermore, there are many problems with the management and administration of capital gain tax as presently implemented in Nigeria. Oserogho (2004) posited that the principal problem is that of lack of data or record keeping in order for the tax authorities to be aware of when the capital gain has been made and liable to payment of this tax. This is especially as Nigeria continues to maintain a cash base economy as opposed to an electronic one.
If the potential returns are taxed heavily, the entrepreneur’s motivation is reduced. Hence, high capital gains tax rates may divert innovative, would-be entrepreneurs toward different career paths. The economy is harmed by the reduction in entrepreneurial activity, not only because business and job creation declines, but also because possible improvements to living standards are left undiscovered.
Finally, Nigeria is richly blessed with oil and gas among other mineral resources, but the over dependence on oil revenue for the economic development of the country has left much to be deserved. The inability of the tax system to generate revenue affects the services offered by the government. The Nigerian tax system has not been able to perform the expected role of revenue generation and regulation of income distribution. This stemmed from the structural and administrative defects of the tax system. The machinery and procedures for implementing tax systems are inadequate, resulting into tax evasion and avoidance by most individuals and institutions and the resultant effect of this, is low revenue yield for the development of the country or state.
1.3. OBJECTIVES OF THE STUDY
The capital gains tax is different from almost all other forms of federal taxation in that it is a voluntary tax. Since thetax is paid only when an asset is sold, taxpayers can legally avoid payment by holding on to their assets—aphenomenon known as the "lock-in effect." Today there is an estimated $7.5 trillion in unrealized capital gains thathave not been taxed. Over the past 40 years the appreciation of capital assets has outpaced realized capital gains 40-fold. That suggests that a capital gains tax reduction has the potential of "unlocking" hundreds of billions of dollars ofstored up wealth.
OBJECTIVES OF STUDY
The main objective of this paper is to assess and evaluate the administration of capital gain tax in Nigeria Tax system.
Other specific objectives include:
Ascertain the relationship of Capital Gain Tax and economic development of Nigeria for the enhancement of the standard of living of the citizens.
Examine Capital Gain administration with a view to putting in place a good policy of administering the tax system.
Ascertain whether sharp practices in administration of Capital Gain Tax between the staff of FBIR and assess company contributed to tax evasion.
Determine how Capital Gain Tax contributes to revenue generation in Nigeria.
Determine the extentto which Capital Gain Tax has contributed to the steady growth in GrossDomestic Product in Nigeria.
Identify problems that militate against the use of Capital Gain Tax as revenue generation in Nigeria Tax administration.
Making recommendations that will assist to increase the revenue generation through Capital Gain Tax.
1.4. RESEARCH QUESTION
Based on this, the following three research questions are formulated to guide
The study:
Is there any relationship between Capital Gain Tax and economic development in Nigeria?
Examine Capital Gain administration with a view to putting in place a good policy of administering the tax system?
Are thereany sharp practices in administration of Capital Gain Tax between the staff of FBIR and assess company contributed to tax evasion?
How Capital Gain Tax has contributes to revenue generation in Nigeria?
To what extent has Capital Gain Tax contributed to the steady growth in Gross Domestic Product in Nigeria?
Problems that militate against the use of Capital Gain Tax as revenue generation in Nigeria Tax administration?
1.6. STATEMENT OF HYPOTHESIS
Two hypotheses stated in null forms were formulated to carry out this work.
Hypothesis One
There is no significant relationship between Capital Gain tax and economic development of Nigeria.
Hypothesis Two
H01: Capital Gain Tax has not contributed significantly on revenue generation in Nigeria.
1.5. SIGNIFICANCE OF STUDY
The most recent study (Speer & Palacios and Lugo & Vaillancourt, 2014) finds that individuals who reported capital gains income incurred, on average, higher compliance costs than those who did not report any such income. Specifically, the direct compliance costs for those individuals reporting capital gains income was, on average, 13.8 percent higher. This provides some sense of the compliance costs associated with capital gains taxation.
This research study, would contribute to the existing literature by focusing on Capital Gain tax reforms and administration of tax policy/laws in Nigeria with a view to identifying the critical problems that are confronting the Nigerian tax system so that appropriate measures could be taken to tackle them.
This study shall set out, a comprehensive analysis of Capital Gain Tax and it laws in Nigeria and it will also consider the ‘dark’ side of professional practice by examining the involvement of FIRS Tax officials in facilitating tax avoidance, tax evasion and corruption in Nigeria.
The result of this study will throw more light on the problems of Capital Gain Tax Administration in Ogun state Nigeria. The special emphasis on the federal Board of Inland revenue (FBIR) will highlight peculiar problems and difficulties in administering the Capital Gain Tax.
Finally this study will be of great significance to schools and students, it will serve as a reference point for future researchers who will want to research more on the topic.
1.7. SCOPE OF THE STUDY
From the foregoing discussion, the research study focus on the Administration of Capital Gain Tax in Nigeria, it also examineit problems and prospect, effect on economy, and income generation in Nigeria, using the Ogun State FBIR as the case study. The period covered by this research enabled the research to be reliable.
1.8. LIMITATION OF THE STUDY
This research study is limited to detailed study of (FBIR) and the relevant Act setting it up with particular emphasis on the overall administration of the act in Ogun state.
Gathering of relevant data for this study was a hectic task it is also expected that there will be limited mostly in areas of questionnaire distribution answering the question sincerely and returning them (especially the tax officials) due to fear of the unknown.
Also, Financial challenges serves as a deficiency for the research work, and as a result of low financial capability, it was not enough to give us desired results.
1.9. DEFINITION OF TERMS
Tax: this is defines as a levy imposed by the government against the income, profit orwealth of the individuals and corporate organizations.
Taxation: is defined by Ogundele (1999) as the process or machinery by which individuals, groups, or communities are made to contribute in some agreed quantum and method for the purposes of the administration and general development of the society they belong.
Capital Gain/Loss: A capital gain (or loss) generally refers to the price of an asset when it is sold compared to its original purchase price. A capital gain occurs if the value of the asset at the time of sale is greater than the initial purchase price. A capital loss occurs if the value of the asset at the time of sale is less than the purchase price.
Transfer of Capital Asset: this is defined in relation to Transfer of capital asset includes sale, exchange, relinquishment, or compulsory acquisition of the asset or extinguishment of any rights therein.
Capital Assets: It is defined to include property of any kind, whether fixed, circulating, movable, immovable, tangible or intangible and whether or not used for the purpose of his business and profession.
Cost of acquisition: Cost of acquisition of an asset is the value for which it was acquired by the transferor. Expenses incurred for completing title are a part of the cost of acquisition.
Corporation Tax: All other gains are charged to Corporation Tax. These include gains accruing to a non-resident company onthe disposal of assets situated in the State and used for the purpose of a trade carried on by it in the Statethrough a branch or agency.
Asset: All forms of property, wherever situated, are assets for the purposes of Capital Gains Tax. Assets include foreign land and buildings (for example, holiday homes and apartments) incorporeal property (for example, goodwill or an option) and any interest in property (for example, a lease)
Disposal of Asset: Disposal of an asset includes any transfer of ownership of the asset by way of sale, exchange, gift, or settlement on trustees. A part disposal occurs where less than the whole of an asset is disposed of or an interest in an asset is transferred (for example, granting of a lease at a premium).
A loss on a disposal will normally be allowable if a gain on the same transaction would have been chargeable. Allowable losses are set against the chargeable gains of the same year and if the losses exceed the gains, the excess may be carried forward against gains of later years.
Qualifying Asset: The chargeable business asset of the individual which (apart from tangible movable property) he/she has owned for a period of at least 10 years ending on the date of the disposal and which have been his or her chargeable business assets throughout that 10 year period. | CHAPTER ONE
INTRODUCTION
Background of the study
The Ghana Revenue Authority (GRA) is stepping up the collection of tax on rent income from owners of residential and commercial properties following the re-launch of the tax in Accra.Though it has been in the statute books since 1973, compliance with the tax, which is charged at 8% of gross rent income, has not been encouraging and the GRA said it will increase efforts to collect the tax, especially since the real estate sector is witnessing a boom.
It has become necessary, after assessing the performance of the tax on rent income as a percentage of total GRA collections, for us to re-strategize to ensure that the tax takes a respectable position among the tax types, said George Blankson, GRAs Commissioner-General. There is a strong believe that there is a boom in the real estate sector. Unfortunately, the tax revenue from this sector does not correspond to the boom we are experiencing. Available data show that the contribution of rent income tax to total direct tax collections was 0.42% in 2011, representing GH15.92 million out of GH3.75 billion in direct taxes. In 2012, the tax contributed 0.32%, representing GH17.48 million out of GH5.4 billion. As a share of total GRA collections, rent income tax registered 0.14% in 2012.
We are very much determined and committed to enhancing the contribution of the tax to total GRA collection in 2013 and beyond, said Mr. Blankson, adding that the Authority will ensure full implementation of the renewed directive by collaborating with public bodies and private organizations to enable it gain access to relevant information for assessment purposes.He said the GRA will engage with institutions such as the Electricity Company of Ghana, Ghana Water Company, the Lands Commission, Ghana Real Estate Developers Association, Ghana Institution of Architects and the Ghana Institute of Engineers who deal with property owners.
Speaking at the event, Minister of Finance Seth Terkper said the re-launch of the tax is timely and has come at a period when the nation needs to mobilize every available tax revenue to cover rising expenditure.He said the 2013 budget is focused on revenue generation through expanding the tax-base and improving the efficiency of tax administration.Any new initiative in this regard is therefore welcome. For me, the re-launch and the emphasis that is being given to the tax on rent income is an indication of the preparedness of GRA to broaden the tax-base. I charge the GRA to come up with many new ideas in this direction, he said.
Even though the housing sector is one area where the tax potential is huge, we have not derived much revenue from this sector for various reasons. Therefore any fresh initiative which aims at breaking the barriers and increasing compliance is very much welcome and appreciated, he added.The rent income tax law, LI 1698, also obliges institutions and corporate bodies to withhold the tax whenever paying rent to property owners.
The GRA said it is targeting companies, financial institutions, partnerships, educational establishments, medical establishments, corporations, government agencies, consular offices, and international organizations in its renewed attempt to improve collection of the tax.
Statement of the problem
Knowledge about taxation, the benefits of taxation and the dangers of non-compliance remain a key impediment to tax compliance in many countries. Countries such as the US, Canada, Japan, New Zealand, Australia, the UK and Malaysia have all been implementing a continuous tax education for taxpayers and children as future taxpayers (Palil, 2010). Various countries such as the USA, the UK and Australia also have developed interactive websites, disseminated leaflets together with tax returns, opened call centers’, created advertisements or supplied reminders via television and radio (e.g. to remind taxpayers of deadline dates for filings)
Objectives of the study
To ascertain the level of rent tax compliance of the people of BolgatangaMunicipality in Ghana.
To determine the effects of taxation on Ghana’s economy.
To determine the challenges of taxpayers in Bolgatanga Municipality.
To recommend ways of tackling these challenges.
1.4 Research questions
Do the people of Bolgatanga Municipality comply with rent tax in Ghana?
What are the effects of taxation on Ghana’s economy?
What are the challenges of tax payers in Bolgatanga Municipality?
What are the ways of tackling these challenges?
1.5 Research hypothesis
: The people of Bolgatanga Municipality do not comply with rent tax in Ghana.
: The people of Bolgatanga Municipality do not comply with rent tax in Ghana.
1.6 Significance of the study
Most tenants and landlords in Ghana are avoiding outright non-compliance by not submitting returns or pay taxes at all instead they had irregular payment and tax reduction. This study hope to find throw light on the need for compliance on rent tax as taxation is the primary source of revenue for governments throughout the world to implement their social and political agendas and to deliver services to the citizens
1.7 Scope/Limitations of the study
This study covered the rent tax compliance inBolgatanga MunicipalityGhana.
Limitations of study
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection through the internet, questionnaire and interview.
Time constraint- The researcher simultaneously engaged in this study with other academic work. This consequently cut down on the time devoted for the research work.
1.8 Definition of terms
Rent: A tenant's regular payment to a landlord for the use of property or land.
Tax: A compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.
Tax Compliance: The action or fact of complying with a wish or command.
REFERENCES
Atawodi, W., & Ojeka, S. (2012) Factors That Affect Tax Compliance among Small and Medium Enterprises (SMEs) in North Central Nigeria. International Journal of Business and Management, 7(12), 87-96.
Braithwaite, V. (2003). Perceptions of who‘s not paying their fair share. Australian Journal of Social Issues, 3 (8), 335-362.
Carnes, G. A., & Cuccia, A. D. (1996).An analysis of the effect of tax complexity and its perceived justification on equity judgments. Journal of the American Taxation Association, (18), 40–56. |
