| Content | CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
It is no doubt that the achievement of the corporate objectives largely depends on the caliber of human resources or personnel factors that make up such organization. Since, the survival of any ideal organization is a function of the nature and quality composition of such venture. This crucial fact influenced the recruitment and selection practices with special emphasis to first Banks Plc.
In many organizations, the reasonability for the choice of new employee is shared between line management and human resource department. The human resource department should be competent to advice on the most modern and best techniques and practices as well as provide a professional support and monitoring service, while line management is involved in the final decision as to who does or does not work in their department. It is therefore very glaring that line managements must be trained, and advised in selection matters especially interviewing.
The need for recruitment and selection in any organization depends upon the number of existing vacancies to be filled or new post to be created. Generally speaking, the conducts of recruitment and selection processes are cost involved and such could be advertising cost, testing cost, interviewing, placement and event employment cost. In view of these, there is much need for any ideal organization to exhibit the concept of seriousness, commitment, merit selection and organizational diplomacy in the conduct of recruitment and selection exercises. Once organizational yield to these facts, it would go along way to influence the velocity of the attainment of corporate objectives and also reduce the rate of labour turnover drastically, First Bank Plc would be not be exemption.
Recruitment according to “Thomas H. Stone” is a systematic and organized procedure where potential employees are obtained for selection and placement in the organization through a variety of sources.
The sources can be from the following:
1. Institutions e.g. universities, polytechnics, colleges of education
2. Recruitment agencies, such as Author Andrew, Omoloye and Associate etc.
3. relative and friends
4. labor exchange e.g. labour minisry i.e. ministry of labour and productivity.
5. Internal labour market
After recruitment, selecton is the next step in the employment process. The main purpose of selection is to choose individuals that are most likely to succeed on the job from these that are available or responded to the advertisement or limitation to apply for the job vacancies.
The human element has been considered the most crucial in the attainment of any organizations objectives. Therefore, selection procedure involve the screening of candidates according to the progressive series of steps designed to eliminate those who in some says are unsuitable. It involves submitting a comprehensive information or data on the applicant and conducting physical or medical examination, aptitude test, interview and reference checks on the applicant.
Once an individual has been deemed fit to be employed, the person is offered an appointment letter and given the conditions of his/her appointment and responsibilities. The individuals acceptance of the appointment is implicitly a contract to seal and accept the obligation of his/her appointment and perform his/her duties that assigned to him/her for a certain remuneration.
1.2 STATEMENT OF THE PROBLEM
The recruitment and selection policies of first Bank Plc have been claimed to be inefficient and inefficient, hence the research intends to seek remedies to this occurrence.
Crime such as fraud, human errors and time spend by customers in the bank before being attended to have become a major problem to the management. High labour turn-over as a result of the new generation banks has equally become a teething problem. Hence the following questions are designed.
- What are the recruitment and selection problems in Nigeria particularly first bank Plc?
- Can recruitment and selection procedure have and effect on organizational performance?
- How can we achieve and selection process?
1.3 AIMS AND OBJECTIVE OF THE STUDY
a. to access the efficiency and effectiveness of first bank of Nigeria Plc recruitment and selection policies as well as comparing them to the practices.
b. To find out the effectiveness of recruitment and selection pressures used. And recommend possible improvement.
c. To access and ensure the employment of competent and well qualified staff that care able, willing and capable of working with the best of their ability toward achieving greater productivity as well as organizational objective according to the required standard.
d. To access and ensure the total eradication of bias and favouritism and also to exhibit justice and fair play in terms of recruitment and selection exercise undertaking to fill in, the vacant spaces in an organization.
e. To determine the judicious maintenance of both human and material resources in the organization.
1.4 STATEMENT OF THE HYPOTHESIS
This project is an attempt to find out how a recruitment and selection procedure is conducted in first Bank Plc. In this regard, the researcher formulated hypothesis. These hypothesis are classified into null and alternative hypothesis.
Ho: Effective recruitment and selection procedures have no effect on employees’ productivity.
Hi: Effective recruitment and selection procedures have effect on employees’ productivity.
1.5 SIGNIFICANCE OF THE STUDY
The importance of this study stems from the fact that employment of workers involves first of all a deliberate process of manpower planning to determine the right kind of workers and right number of workers required for efficient and effective operation of the organization work.
It also provide further lectures to students and general public at large for a critical assessment of the importance and vital role of recruitment and selection of workforce and its impact on organization with particular reference to first bank of Nigeria Plc.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
The geography of this research work is confirmed to the First Bank Plc Kaduna headquarter. But however as a financial institution that have live above board for many decades, it has several branches both within and outside the state, but with its headquarters at Lagos. All branches are however answerable to
the headquarter as major managerial decisions are often initiated there. As such first hand information for this research for this research would have been readily available there.
In writing this research thus, one is bound to be confronted by certain constraints which often become a “clog in the wheel of progress”. The study is not exempted from these obstacles. Time constraints, school schedules, financial handicap and all other culminates in dwarfing my effort. At the bank again, getting the attention of the top management, other staff and customers readiness divulge information often turn difficult as most are completely engaged in their ever demanding duties. Equally, the preparation and administering questionnaires all attracts cost which constituted to limit its spray.
1.7 HISTORICAL BACKGROUND OF FIRST BANK PLC
For over a century now, first Bank Nigeria Plc has remain a distinctive banking institution and a major contributor to the economic advancement and development in Nigeria. A shipping Mogule sir Alfred Jones from Liverpool founded the bank. At infancy the bank commence as a small operation in the office of Elder Demster and company in Lagos. In March 31st 1894, it was incorporated as a limited liability company with head office in Liverpool. Under the corporate name of the Bank of British west Africa (BBWA) to started business with a paid up capital of 12,000 pounds sterlin after absorbing its predecessors the African banking corporation which was established earlier in 1892. this giant step signaled the pre-eminent position which the bank was to occupy in the banking industry in west Africa.
In its early years of operation, the bank recorded an impressive growth and work abreast with the colonial government in performing the traditional function of a central bank. These functions includes among others. Issuance of spaces in the west Africa sub region to justify its west Africa coverage. A branch was opened in Accra (Gold coast) Ghana in1896, and in Freetown, sierra Lenone in 1898.
These heralded the genesis of the bank’s international operations. Progressively in Nigeria a branch was opened in the old Calabar in 1900 and two years later, service were extended to the northern Nigeria. With 336 branches spread throughout the federation, the bank maintains the largest network in the industry in Nigeria. To satisfy the needs of its customers, First Bank has diversified into a wide range of banking service and activities which include among others: corporate and retail banking registrar ship, trusteeship and insurance brokerage. In addition, as part of its strategy to progressive internalization in November 2002, the bank became the fist financial institution in Nigeria to establish a subsidiary bank in the UK. Over the year the bank has experience a blossoming growth. With a share capital of N55.6 million in 1980, the banks share capital grew to N813 million as at March 2001. The bank’s total assets – base was N212 billion while its deposit base stood at N148.3 billion as at March N41.55 billion i.e. N22.5K/share as at March 2001.
To reposition and take advantage of opposition in the changing environments, the bank embarked on several restructuring initiative in 1957, it changed name from bank of British West Africa to bank of West Africa. In 1969, the bank was incorporated locally as standard bank of Nigeria limited in line with the company’s decree of 1968. Changes in the names of the bank also occurred in 1979 and 1991, to first bank of Nigeria limited to first bank of Nigeria Plc respectively. In 1985, the introduced a decentralized structure with five regional administrations. This was reconfigured in 1992 to enhance the bank’s operational efficiency in 1996, the bank introduced the FBN Century II project to revolutionize its operations in line with the dynamics of the environment. FBN got listed on the Nigerian stock exchange NSE in March 1971 and has won the NSE president merit award nine times for the best financial report in the banking sector.
The bank has continued to be a leader in financing long-term development of the economy, which was demonstrated in 1947 when the long term loan was advanced to the then colonel government.
1.8 DEFINITION OF KEY TERMS
To make a research work such as this comprehensive to even an average reader, it became every important to define some salient features involved in the theme. These salient terms are defined as follows:
a. MANAGEMENT: The term management is defined as a process of planning, organizing, directing, coordinating and controlling material and non-material resource toward achieving organizational objectives.
b. RECRUITMENT: Is the process of searching for prospective employees stipulating them to apply for job in an organization.
c. SELECTION: Is the process which involves series of activities aimed at identifying the best candidate for job or positions from the pool of the recruits.
d. MANPOWER: The number of workers needed or available to do a particular job.
e. POLICY: A plan of action agreed or chosen.
f. PRODUCTIVITY: Unit of output per work machine hour or total output/total input.
g. EFFECTIVENESS: Is producing the result that is wanted or need in producing a successful result.
h. ORGANIZATIONAL: Structure of relationship so as to get the work done. | CHAPTER ONE
HISTORY OF DEVELOPMENT
In Nigeria their so many form of taxation dating back of the
days of our great ground father whose by communities dated themselves through communal labour to prosecute community projects.
Taxation is process on machinery by which group or communities made contribution from their income in some agree amount and method for the purpose providing amentias for the society. It is because of this it I often referred to as civic responsibility.
It is important to note that the present tax has in Nigeria was been out of the Rouseman’s Commission of inquiry of last.
But before that, we only had what was called the income tax ordinance for the colonies and which was very similar Raismars recombine nature was the basis for providing in section to, subsection of the Nigeria prospects for reform (Anarticle published in Business Time on May 20, 1786).
Taxation can be divided in two basic profiles we have the direct taxation sand indirect tax is based on ascertainment of income rather on individual a group of individuals co-operate bodies and institution under this was have personal income tax and company income tax. The personal income is one which of individual is assessed and resident by the state on those individual resident in the state, which the companies income tax is cleared on corporate bodies is the responsibility of federal government through the federal board of inland revenue indirect taxation is lived on consumption of goods or services and each of consumption.
In various countries, various government rely heartily on taxation on as in aid to encouraging capital formation policy.
In a developing economy, tax may be collected strutted in such way that the high may be collected and even raise revenue for the economy of the country.
PRESENT DAY TAXATION IN NIGERIA
Taxes are one of the major sources or revenue for all
government in Nigeria.
The taxes collected income back to the tax payer in the form of social amenities, like building as school, hospital.
Nigeria tax is an assessment imposed by the State of Federal Government to enable them provide service for Nigeria citizens present day tax administration in Nigeria is guided by the following Act Decree:
1. Income tax management Act (ITNIA) 1961. This governs the taxation of individual. (Individuals, trustees, executors, partnership and families) the Act was amended by the finance (miscellaneous taxation provision) Decree 1986,1983,1990,1992, 1994 and 1996.
2. Company Income Tax act (CTA) 1979, this registered companies. It also suffered some amendments.
3. Petroleum Profit Tax Act (PPTA), 1959 as amended this Act regulates the assessment and collection of petroleum. Tax payable by entries that engage in the secretion and sale of petroleum oil in Nigeria.
4. Capital Gains Decrees (CGD), 1976, this was introduced by Decree 44 of 1967. it takes care of gain accruing to any person on or after 1st of April 1967 on the disposal of fiscal assets.
STATEMENT OF PROBLEM
The existence of tax evasion and tax avoidance in Nigeria tax
system poses a lot question in the inquisitive mind of some people especially in the board of inland revenue as to the way and how of this existence.
This brings about reactions from various sections of the economy. This reaction are the problems this research work going to address itself to.
OBJECTIVE OF STUDY
Based on the statesman of problem this study, the write
intends to x-ray the following issues as decide the mind of the public:
Reason for tax evasion and avoidance
To x-ray the impact of tax avoidance
To make recommendations the board on Inland Revenue.
15. HYPOTHESIS
The null hypothesis (Ho): revenue generated form tax has a negative impact on the development of Nigerian Economy. The alternative hypothesis;
>Revenue generated from tax has a positive impact on the development of Nigerian Economy
Hypothesis II
Null hypothesis (Ho): that tax aviation and avoidance has created a reduction in the revenue generated from tax
(Ha) the alternative hypothesis; that the revenue generated from tax is more merger compare to revenue generated from other source as such government cannot do without tax.
SIGNIFICANCE OF STUDY
The way in this term paper has been planned and carried out
off enough information and explanation to inquisitive minds. This project is aimed to beneficial to the following:
Though this term paper, enough awareness will be created so that the public attitudes of not paying tax will be nullified.
This term paper will offer a source of secondary data collection forming research student
The Board of Inland Revenue, this enable to know how they will treat any tax evader they come across.
DINIFITION OF TERMS
Tax is defined as a levy imposed by the government against
the income profit or wealth of the individuals, partnership and organization, also it is a levy the government makes no direct benefit to the tax payer.
Taxation is divided into various types such income tax, corporate tax, capital transfer tax.
Classification Of Taxes
proportional Tax
regressive tax
Direct Tax
Indirect Tax
Progressive Tax
1. PROPORTIONAL TAX: This is a system of taxation where by people pay tax in proportional to their incomes for instance if a cocoa farmer who earns N20,000 should pay N2,000.
2. REGRESSIVE TAX: This is a system of taxation whereby the poor man pays some amount as the rich man and also where the amount paid is not recited to the person’s income, e.g. community tax.
3. DIRECT TAX: This is a system of taxation born or paid directly by the payer to the government, in this people know what they pays annually. It is also a tax the impact and incidence of taxation fail on and the same person that pays it. E.g. personal income, company tax, expenditure tax.
4. INDIRECT TAX: This is tax imposed on person but paid partly or wholly by another person. The impact and incidence falls on different person e.g. impact duties, export duties, exercise duties, purchase tax, custom duties and entertainment tax.
5. PROGRESSIVE TAX: This is a system of tax which taxes a large portion of higher income than that of lower income. The more income a person earns, the higher tax which he/she will pay, in the people suffer more than the poor people.
CHARACTERISTICS/OBJECT OF MORDERN TAX SYSTEM
Adam Smith and down certain principles funding taxation and
those principle are canons of taxation for memory purpose the ECCEEA.
EQUALITY: - This is on of the characteristics of taxation which state that the tax payer in the same income group should pay equal tax. Here there is no room for favouritism.
CERTAINITY: - This means that the tax payer should know the amount of tax due to him, when to pay it and method of payment.
GOVENIENCE: - This time of tax payment should convenience to the tax payee. The pay-as-you earn (PAYE) is a good example of the convenience.
ECONOMY: - This principle recognize the need to prevent the cost of collecting the tax not be more the revenue from tax. That is to say the cost of collecting tax should no be excessive.
ENFORCEABILITY: - It says that the government should be able to enforce the tax as levied.
ACCEPTABILITY: - The tax should acceptable to the tax payer as a way of raising revenue for the government.
OBJECTIVE PF MORDEN TAX
The objectives of modern tax include the following: -
provision of free – social service like health and education
achievement of desirable social ends, that is help in discouraging excessive and drinking.
Generation of revenue it need to carry out its function
To protect home industries by imputing discrimination tariffs.
To provide incentive for industries and investment e.g. granting of allowance for capital investment
Maintenance of favorable balance of payment that is help encouraging more export than import.
DEFINITION OF RELEVANT TERMINOLOGIES
Tax Avoidance: Tax avoidance is the reorganization of economic activity possibly at some cost to lower tax payment.
Tax Evasion: This means that the tax payer is doing something that is against the law that is illegal something and if found he/she will be dealt with under the law.
Tax Code: - This is total relief and alliance grant to an individual tax payer divided by two.
Income Tax: This is tax on income. It may be personal or company income.
Person: This includes an executor, company partnership families or individuals.
Collectors of Tax: This does not handle money or collect taxes but their effect result in taxation paying in the casher.
Inspector of Tax: Under the control of the board are a large number of inspector who
(i). receive and return other information from tax payer; (ii). Make assessment;
(iii). Deals with claims for repayment and defect errors
They tackle down evasion
Nigeria Company: means any company that control and management of whose business are exercised in Nigeria.
Tax Authority: This mean the person or body of people responsible under the law.
Internet working means an individual who works at any time during a year of assessment other than or member of Nigeria army on the Nigeria. For a daily wage or customarily earns his live hood in more than one place in Nigeria and his total income does not exceed at N600. | CHAPTER ONE
INTRODUCTION
Taxation has long been practice in Nigeria. Initially, only men were expected to pay taxes but now all people working and anybody found in the capacity of paying tax are obligated to pay tax.
Tax in a mandatory levy on income charged for the purpose of carrying out government activities losses incurred by government in recent times through tax evasion are increasing rapidly despite the pathetic financial and economic state of the country. There are daily report on newspaper and magazines that government losses billions of naira yearly due to tax evasion and the fraudulent practices of the tax officials. This has attributed to many factors. Most people attribute this to the fact that the country’s tax system in highly income base and since income is taxed only at one point or stage, a lot of evasion results.
In Nigeria, many different goods are consumed. For this reason, tax experts see consumption as the actual habit and as such, the need to shift tax base from income tax to consumption tax. This necessitated the introduction of sales tax in Nigeria through degree N0. 7 of 1986.
However, it was discovered that sales tax is narrow because it does not cover a lot of goods and services. This prompted the introduction of Value Added Tax (VAT) in Nigeria.
The idea of introducing VAT in Nigeria came from the report of the study group set up by the Federal Government in 1991 to review the entire tax system, VAT was proposed and a committee was set up to carryout feasibility studies on its implementation. In January 1993, government agreed to introduce VAT through instrumentality of the VAT Degree 102 of 1993. This was meant to be effective from January 1 1994. It came on stream as a replacement to its antecedent, the sales tax, which was characterized by a lot of lapses inadequacies and restrictive coverage. VAT is a consumption tax imported on all manufactured goods, industrial raw material and other imported into or product in Nigeria a single rate of five percent. Potentially, its draguel cover virtually everybody, since one thing or the other except in the cases of specific items that are exempted.
Several benefits which the government expected to derive from value added tax (VAT) were enumerated. During several others they are
i. Increase in revenue generation
ii. Facilitation of administrative enforcement
iii. Reduction in revenue losses through tax evasion
iv. Enhancement of documentation of transaction
v. Encouragement of rapid industrial growth by allowing credit for input taxes for capital goods.
vi. Maintenance of neutrality in tax payment since it is broad based and has a single rate.
The government has conveyed these benefits to the public and has also organized workshops and seminars to educate the producers, suppliers, consumers, tax officials and the general public on VAT system in Nigeria. However, the perception of taxpayers is necessary at this stage and this is what this research is to find out.
1.2 STATEMENT OF THE PROBLEM
The Federal Government has made prantic efforts to convince the public of the need for VAT system in Nigeria. It has informed the public of the benefits which have been derived from VAT, for example, a reduction of tax evasion, increase in government revenue and so on. This implies that the government sees VAT as a good tax system. But the tax payer may not have the same view as the government, they may they will most definitely be reluctant to pay.
The problem or the question therefore, is what is the perception of the taxpayers or the public on tax systems? Do they see it as being important as the government does? It is in view of the above questions that the researcher has decided to find out and evaluate the perception of the public or tax payers on the valued added tax in Nigeria.
1.3 PURPOSE OF THE STUDY
It was the purpose of the study to evaluate the views of the tax payers on Value Added Tax (VAT). On the basis of this, the researcher will be able to say if VAT has done more harm than good on the part of the tax payers. The finding will also enable me make recommendations that will bring about modification if necessary, that will strengthen the machinery for the administration of VAT and also to its acceptance by the public.
1.4 SIGNIFICANCE OF THE STUDY
Every research work has to be significant. It must either create some form of new knowledge, or add to an already existing body of knowledge. To this end, this study will serve as information to the government to known the perception of the tax payers on VAT. It will also reveal areas in the VAT system that require correction in order to achieve a more effective and efficient tax system
1.5 ORGANISATION OF THE STUDY
For the information presented in a research work to be clearly understood and appreciated, a systematic and chronological presentation of the work is of greater importance. In keeping with this, this research has been organized and presented in five chapters;
Chapter One: This is the introduction chapter and it informs the reader on what the entire study is about. According to Ochei C.A. (1994:5) the chapter specifies the problems that prompted the study, the assumptions of the study and the operational definition of terms.
Chapter Two: This contains the review of all related literature, or previously existing materials or the subject. This chapter establishes clearly the nature of the already existing body of knowledge, thoughts, ideas, concepts on the subject thereby highlighting the new knowledge to be generated by the research.
Chapter Three: information on the method employed in the collection of data and their analysis can be found in this chapter. Also in this chapter, justification is provided for the adoption of the methods and analytical techniques employed.
Chapter Four: this involves the presentation and analyses of data findings from the testing of hypothesis are also presented here.
Chapter Five: This is the final chapter and it contains the summary of the entire work done, the conclusions down, and the recommendations made by the researcher based on the findings of the research work.
Appendices: it is usual practice that in the final pages of research work, reproductions of some document such as questionnaire relevant tables, statute, letters and so on attached for a better appreciation of the research work by the reader. This can also serve as a means of verification work done.
1.6 RESEARCH QUESTIONS
The questions below are to be answered in the course of this work. If at the end of this research, appropriate answers are provided to these questions, the aim of this research shall have been realized. The questions are: -
1. To what extent has VAT curbed tax evasion?
2. To what extent has the government been able to generate excepted revenue?
3. Is the administration of VAT in Nigeria preceded to be efficient?
4. To what extent is VAT a good replacement of sales tax?
5. Is VAT a fair and equitable tax?
6. What impact does VAT have on the revenue generation of the government?
7. Has the institution and implementation VAT affects con consumption habits of consumer.
1.8 HYPOTHESIS
1. H0 : Value Added Tax is not expected tax evasion
2. H0: Tax payers are not perceived to be favoured
with VAT system
3. H0: Tax payers do not believe the merits of VAT affect their response to payments.
1.8 DEFINITION OF TERMS
a. VAT: This is a consumption Tax which is charged 5% on goods and services, which are not exampled by the VAT degree of 1993.
b. Vatable goods: These are goods and services, which VAT is paid
c. Supplies: This refers to any transaction whether it is the sale of goods or the performance of a service for a consideration.
d. Vatable person: One who trades in vatable goods or services for a consideration.
e. Output VAT: This is VAT that is due on vatable supplies. It is derived by multiplying the tax value of the aggregate supply by the tax rate.
f. Input VAT: This is charge on business purchases and expenses
g. Federal Inland Revenue Service (FIRS): This is the authorized body for the collection of taxes.
1.9 TEST OF DATA
Since this study involves the significance between two means, which are summary measures of continuous variables, the Z test, which is a parametric test, will be used. The formular is:
X - U
Z = r
n
where X is the means, U is the assume d mean or assumed value, r is the standard deviation, n is the sample size. The study has three different samples; the producers, consumers and VAT officials. This means of each sample will be compared with assumed mean to find out is the different respondents in each category have the same view or not.
1.10 LIMITATION OF THE STUDY
Nobody can claim to have knowledge of and access to everything, nor can anybody claim he can get whatever he wants at anytime he wants it. This study is therefore, cannot be exclusive from these limitation which are stated below:
1. Finance required for an extensive work are not available and I had to concentrate on specific area.
2. The possibility of inaccuracies in respondent cannot be ruled out.
3. There will be no access to some information due to restriction in the organization concerned.
4. Time factor was another factor.
According to Baridam (1980:18) people who make up organisations may behave differently if they become aware of the researcher’s hypothesis all them, these people being hum an beings are always sensitive to their environment “such awareness according to Belling (1980:486) may create self fulfilling prophecies whereby participants change their behaviour to increase the chances of support the hypothesis”.
However, inspite of these problems, relevant information were got from the respective bodies.
1. Baridam D.M. (19900 Research methods in Administration Sciences.
2. Behling .O. (1980) The case for the natural science model for research in organisation behaviour and organisation theory.
3. Ochei C.A. (1994) A study of the impact taxation on the growth and developments of company in Nigeria.
4. Federal Inland (1999) Information circular on revenue service VAT (N0. 9901)
5. VETOWELL Consultants (995) Development Course for VAT Inspectors. | ABSTRACT
The study was carried out to find out the impact of taxes on performance of small scale business enterprises in Nigeria (SSBs), taking a case study of River State. The study aimed at assessing the performance of business enterprises in Rivers state, finding out if tax payers are aware of all their tax obligations, policies and problems affecting them as well as their businesses.
The study applied both qualitative and quantitative research designs where interviews and questionnaires were used. Data was collected from both primary and secondary sources. Data was processed and analysed using formal tables, pie charts, narrative text, and correlation to find out the relationship between the impact of taxes and performance of small scale businesses. A total of 50 respondents were considered out of the entire population in Rivers state. The findings indicated that the performance of small scale business is affected by stock levels, capital employed, daily expenses, daily sales and the average amount of taxes paid annually.
Most business owners are aware of taxes paid, uncertain of the mode of assessment and little assistance is given as regards tax awareness.
The findings revealed the problems faced by the tax payers as regards mode of assessment, collection and tax collectors, inefficiency by tax collectors, loss of equipment, loss of sales and loss of stock as a result of taxes.
Recommendations on impact of taxes included; improvement on the method of collecting taxes, educating the business community about its different tax rates, introducing a scheme that allows tax payers to pay the tax obligation in installment, and finding a way of assessing the tax the small scale businesses should pay early in the financial year in order to give enough time to the business to pay up their duties rather than make an assessment and demand for payment spontaneously.
CHAPTER ONE
1.1 Background of the study
Taxation increases incentives for public participation in the political process and creates pressure for more accountability, better governance, and improved efficiency of government spending. Taxation also creates incentives for governments to upgrade their institutions for tax collection and administration and to provide more public services (Moore, 2007).
Taxes have existed virtually as long as there have been organized governments. The first tax law legislation was introduced in 1919 and ever since then taxes have evolved through a number of reforms. The government in an attempt to widen the tax base and collect more revenue has had to levy several taxes especially on business enterprises in Nigeria which constitute a large part of the formal sector. The taxes charged on business enterprises in Nigeria include; corporation tax, value added tax, presumption tax and exercise duty. In 1997 the Income Tax Act was made. This was to give guidance in assessment and computation of taxes (Campsy, 1997). The Nigerian government has made some recommendable efforts to promote development through taxation since the inception of the current taxation laws for purposes of promoting development. The main objective of taxation in Nigeria has always been to mobilise resources needed to meet the aspiration of government. This is because for any government to be effective, strong, competent and capable of spearheading development, resources have to be readily available in its treasury so as to be in position to provide goods and services to the people adequately. The Nigerian government has always had to ensure proper resource mobilization (Musa, 1992).
According to Manasseh (2000), a tax is generally referred to as a compulsory levy imposed by government upon assessees of various categories and taxation is a compulsory and non refundable contribution imposed by government for public purposes. In Nigeria a considerable fraction of the businesses are sole traders operating small scale business, locally owned and managed by individuals or families and often with very few employees working at a single location (Nigeria development bank report, 1988). Taxation in Nigeria is based on system that existed in Britain as it was a British colony. This also applied to other colonies elsewhere and for East Africa, one tax system operated under British administration. This process began in 1900 with the hut tax regulation which imposed a standard charge for every hut/dwelling.
During that period, taxation was aimed at raising revenue for the administrative structure imposed by the colonial government but also as a means of encouraging monetary/economic activities. It was the Local Authority Ordinance of 1991 that governed the collection of taxes. In September 1991, after a period of review the URA was established. All taxes including income tax came under the umbrella of the URA. From 1992, URA has been organizing and strengthening the administrative procedures and in 1993 this process assisted by a grant from the British government of approximately US$ 10million.
Rivers state is located in Nigeria. At least 50 small scale business enterprises were selected in Portharcourt, capital of Rivers state and almost all of them employ 2-4 people. These small scale businesses are locally owned and managed by private individuals who sometimes employ their family members. These small scale businesses bear a wide tax burden which has led to poor performance. Therefore, it was against this background that the researcher undertook the study to investigate more about the problem using Rivers state as a case study to evaluate the impact of taxes on performance of small scale business enterprises.
1.2 Statement of the problem
Taxes are raised by the government to generate revenue used to provide services to the public such as; Health centers, telecommunication, roads, schools and electricity and this have helped to improve on the performance of small scale business enterprises. Despite the services provided, small scale business enterprise’s performance in Rivers State is still poor. This could be due to the increasing tax burden brought about by tax rates which are revised annually. These rates seem to be taking an upward trend (Gordon and Dawson, 1987) which has led to winding up of some small scale business enterprises. This prompted the researcher to investigate more about the impact of taxes on performance of small scale business enterprises.
1.3 Purpose of the study
The purpose of the study was to evaluate the impact of taxes on performance of small scale business enterprises in Rivers State.
1.4 Objectives of the study
To assess the performance of small scale business enterprises in Rivers State.
To find out if tax payers are aware of all their tax obligations and policies.
To find out problems affecting tax payers and their business.
1.5 Research questions
What is the performance of small scale business in Rivers State?
Are tax payers aware of all their obligations?
What are the problems faced by tax payers?
1.6 Scope of the study 1.6.1 Subject scope
The study covered small scale businesses in Rivers State. Specifically, the study investigated the performance of small scale businesses, the awareness of the tax payers regarding their obligations, problems faced by the tax payers and the relationship between the taxes paid and the performance of the small scale businesses.
1.6.2 Geographical scope
The study was carried out in Rivers State, Nigeria. The area was purposely selected because the researcher worked within the vicinity and therefore this eased data collection.
1.6.3 Time scope
The study considered a period of 3 years 2009-2011. This period was selected to enable the researcher come up with coherent information from the respondents as it would enable them (Respondents) to give responses that are typical of their opinion from the observations made over this period.
1.7 Significance of the study
The findings of the study are significant on the following ways;
To scholars and researchers, the findings of the study are expected to contribute to the existing literature about taxation and the effect it causes to the economy as a whole.
To the tax authority and government, the study will guide them in adjusting tax policies so that they suit requirements of small scale businesses.
To future academicians especially of Nigeria University students, the study will help in gaining insight about taxes and performance of small scale business enterprises.
The accomplishment of the study will enable the researcher to acquire hands on skills about processing of research work and data analysis. This proficiency will enable the researcher to handle such related work with a lot of precision and proficiency. | 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. | ABSTRACT
After the economic depression of the 1930’s the concept of economy. Many nations began to implement policy measures aimed at both raising revenue for the government and encouraging investment via investment tax credit.
In Nigeria, the concept of taxation, especially as it relates to tax incentive had been an important topic for discussion both in the government circle and in the private sector. A review of the annual budgets of the federal Government reveal that the government usually give tax concessions and incentives to firms/ corporations in the following lines of business: manufacturing, agriculture and the mining sector. Over the years, successive administrations in the country had continued to reduce rate of effective taxes. In 1996 for instance, the highest rate of income tax was further reduced to 25% from 30% because increasing revenue from consumption taxation would compensate the military regime them felt that the loss in revenue as a result of the income tax cut. Would be compensated by increasing revenue from consumption taxation.
The purpose of this project/ research, therefore is to ascertain the effects of tax incentives to the development of manufacturing industries in Nigeria by using Emenite (NIG) Limited as a case study. The project/ research consists of five chapters.
While chapter one served as the introductory part of the project/ research, chapter two dealt with the literature review where the various forms of tax incentives in Nigeria and the school of thoughts on the subject matter were discussed. Chapter three discussions the methodology for the research and chapter four dealt with data analysis. Finally in chapter five, the researchers discussed the findings of the research, summary, conclusion and recommendations.
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY:
The concept of taxation sharp momentum after the great would of economic depression of 1930’s. After the depression aimed at raising enough capital to provide for social overhead expenses and at the same time embarking on several ways to lift the standard of living of their citizens.
In Nigeria, there are many forms of taxations in practice dating back to the days of our great grand fathers, that is before the coming of our colonial masters, whereby communities tax themselves through labour to execute community projects or to help the community suppress external attack or aggression. Therefore, taxation can be referred to as machinery by which communities or groups are made to contribute part of their incomes in some agreed amount and method for the purpose of administering the society. This accounts for the reasons why taxation is often referred as civic responsibility.
The present tax laws in Nigeria was borne out of the Raisman’s fiscal commission of inquiry of 1957. Before them, we only had what was called the income tax colonies with similar providing section 70, subsection 1 of the Nigeria constitution, order in council of 1960 which conferred an exchange power upon parliament to make laws for the whole Nigeria or any part of the country with respect to personal income tax. In the exercise of these powers the federal government enacted the income tax management act of 1961 (ITMA) and because Lagos territory was being administrated as a region it enacted the personal income tax (Logos). Act 1961.
On April 1961, the income tax management act came into operation and all the existing laws at the regional level had to be amended to bring them into conformity with what the Raisman fiscal commission recommend in 1958, the introduction of uniform basic principle of taxing income of persons other than limited liability companies throughout the country. Oliver Wendell Homlmes, United States Supreme Court judge said, “Taxes are the price we pay for a civilized society”.
Nigeria and been an encouragement by the government to attract individuals and corporate bodies to invest in the country. The idea of the research was to assess how the incentives had helped industries grow and how companies had availed themselves of these opportunities.
STATEMENT OF PROBLEMS
The study entitled effects of tax incentive in the development of manufacturing industries attempt to determine the way by which some organization or firm especially Emenite Ltd. Emene has utilized huge amounts of money. Nigerian government sacrifice every year by way of tax incentive towards the development of manufacturing industries.
Some of the problems, which they encounter, are as follows.
Liability of the tax incentives scheme to redirect the investment patterns of individuals and corporate bodies towards the development of manufacturing industries.
The level in efficiency in administering tax incentives scheme has made it impossible using it to attract foreign investors to the manufacturing industries.
Liability to use tax incentives in generating employment in manufacturing industries.
Most manufacturing industries are unable to apply tax incentives in a flexible manner.
PURPOSE / OBJECTIVE OF THE STUDY
The purpose this study is as follows:
To ascertain the extent tax incentives have redirect investment of individuals and corporate bodies towards the development of manufacturing industries.
To establish how inefficiency in administering tax incentive scheme has made it impossible using it to attract foreign investors to manufacturing industries.
To ascertain the extent by which most manufacturing industries are unable to apply tax incentive in a flexible manner.
RESEARCH QUESTIONS
The research questions of this study are as follows:
To what extent does tax incentives redirects the investment pattern of individuals and corporate bodies towards the development of manufacturing industries?
To what extent does inefficiency in administering tax incentive scheme distorts foreign investors to manufacturing industries?
To what extents does tax incentive help in employment generation?
To what extent does most manufacturing industries were unable apply the tax incentives in a flexible manner.
SIGNIFICANCE OF THE STUDY.
This work will be very useful to the government. It will enable the government to know the extent manufacturing industries have been responding to the available tax incentives.
Government, through this research could evaluate the profitability of the tax incentives that is whether the revenue in other words, it will enable government to know whether tax investment patterns of individuals and corporate bodies towards the development of manufacturing industries.
This study will also enable government to compare the identify those that are profitable to the Nigerian economy at large.
This study will go a long way to sensitize companies and individuals on the existing tax incentives available to the manufacturing industry and their companies to make qualitative investment and tax decision modeled to elevate the organization’s growth patterns.
SCOPE / DELIMITATION OF THE STUDY
For the scope if this study, the researcher will restrict himself to the corporation tax incentive available to the manufacturing company in Nigeria. With particular reference to Emenite (NIG) Ltd. As a case study.
DEFINITION OF TERMS
Incentive: - According to advanced learner’s Dictionary, the word incentive is “that which incites or rouses a person action”
Therefore, tax incentive, encompasses all the measures adopted by the government to motivate tax payer or manufacturing companies to respond to their tax obligations. This may includes adjustments to tax policy aimed at lessening the effects on an industry.
The taxation of consumption rather than income may, for instance be considered as an incentive by people who believe that tax payers find it more difficult to bear their income tax burden or direct taxes exert a harsher incidence on the tax base. An incentive is created when the government deliberately manipulates the tax system to the advantage of a potential investor or corporate body by adopting favorable tax policies.
Manufacture: According to the award illustrated dictionary (COZA), manufacture is defined as making of articles by physical labour or machinery especially on large scale; branch of such an industry.
Industry: the same dictionary defined “industry” as a branch of trade or manufacture, especially one employing much labour and capital infect, manufacturing in general. |
