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Effect of Tax Administration on Revenue Generation Capacity
Chapter One
Introduction
1.1 Background to the Study
Revenue Generation is the life wire of
every organization all over the world. It is the bedrock of every successful
organization; therefore, its importance cannot be over-emphasized. The revenue
that accrues to the Nigerian local government areas are broadly divided into
two categories, external sources, which include statutory allocation from the
federation account and statutory allocation from the state government. Other
external sources are: grants from international organizations, Aids from NGOs,
Civil societies, and others and internal Sources; this is also called
internally generated revenue which includes: tax, levies, fines, rents, rates,
fees etc. Due to the over reliance on oil, little effort has been made to
generate sufficient revenue from taxation. An effective local government system
rests majorly on the availability of human and material resources which could
be harnessed and mobilized for its development. Jumare (2006) stated that, the
importance of sound and effective tax administration and finances of the local
governments cannot be over emphasized. He further noted, where there is proper
implementation, it might create a stimulus for policy implementation. This
study is focused on the effect of tax administration on revenue generation
capacity of local government areas of Kaduna State. Section 64 (1) of Kaduna
State Tax (Codification and Consolidation) Law, 2016 states that, subject to
the provision of this law, there is imposed a land based charge, to be called
Land Use Charge which shall be payable on all real property situated in the
state. Sub-section (2), for the purpose of this law, each Local Government
Revenue Committee in the state is required to assess and levy Land Use Charge
within its jurisdiction. 2 These new tax laws have empowered the local
governments of the state through the Local Government Revenue Committee to
assess and levy (impose) some tax (Land Use Charge) within their jurisdiction.
These local governments have also been empowered to ensure that, tax payers pay
or comply with their payment. This committee is directly under the control and
supervision of the local government chairmen of the state. The Kaduna state
local government areas collect taxes and other charges through the Local
Government Revenue Committee; they are responsible for the assessment and
collection of all taxes, fines, charges and rates under its jurisdiction and
account for all revenue collected to the chairman of the local government. To
ensure an effective and efficient tax administration, the Kaduna State
Government reviewed her tax laws to have a Harmonised Tax Laws for the twenty-three
(23) local governments of the state in 2016. Tax Administration in this study
refers to basically three variables such as: Quality personnel, use of material
resources such as ICT and enforcement of tax or revenue laws. The quantum of
revenue generated by the local government areas is largely depended on the
effectiveness and efficiency of the tax system. A good and sound tax
administration requires quality personnel, effective (ICT) application and a
well-designed tax law enforcement. A simple and unified specific tax system can
be ensured in various ways, including adopting a state of art of monitoring,
tracking and tracing system (ICT), supported by an increase number of
enforcement officers on ground, (Johnson, 2009). The expenditure of any
government especially local government areas; in form of the provision of
economic, political and social infrastructures to her citizenry depends on the
amount or quantum of revenue generated by that government. One way of
generating adequate revenue by the government is through well-structured tax
system. Tax plays a vital role in every nation’s economy and constitutes
primary source of revenue for developed countries (Abata, 2014). But in most
developing economies, revenue from tax has been moderately low, this is because
the countries are characterized by inadequate personnel and modern facilities
(Ogbonna and Appah, 2012). Revenue generation in most local government areas of
Kaduna state especially Giwa, Kachia and Zaria local government areas is
seriously affected by corruption and distrust from tax administrators, inefficient
outcomes that change tax payers‟ attitude towards compliance, Bird (2015).
However, Ogbonna and Appah (2012), Aminu and Eluwa (2014), suggested that lower
tax revenue can be addressed through Tax Administration Reform.
NB: The Complete Thesis is well written and ready to use.
