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This study examines the effect of tax administration and revenue on economic growth of Nigeria. To achieve the

objective of this paper, data was collected from primary and secondary sources. The secondary sources were

from scholarly books and journals while the primary source involved a well structured questionnaire of three

sections of sixty five items with an average reliability of 0.78. The data collected from the questionnaire and

secondary data were analyzed using relevant regression analysis. The results reveal that there is a significant

relationship between there is significant relationship between Personal income tax revenue (PITR) and per capita income, Company income Tax Revenue and Gross Domestic product of Nigeria, VAT revenue and PCI of

Nigeria, Petroleum Profit Tax revenue and GDP of Nigeria and tax administration and Gross domestic product of

Nigeria. Hence, the study concludes that tax administration and revenue does affect the economic growth ofNigeria for the period under study. The paper recommends amongst others that more reforms in the tax

administrations and collection is needed so as to eliminate, if possible the areas that can cause revenue leakage as

a result of loopholes in tax collection and remittances from the authorities, and this is capable of limiting the

economic growth of the nation. Keywords: Taxation, Economic Growth, Tax Administration, Tax Revenue



Title page

Certification                                                                              i

Dedication                                                                                 ii

Acknowledgement                                                                             iii

Abstract                                                                                     iv

Table of content                                                                       v-vi


CHAPTER ONE: Introduction

1.1        Background of  the study                                                    1

1.2        Statement of the research problem                                            3

1.3        Research objectives                                                             4

1.4        Research questions                                                             5

1.5        Research hypothesis                                                           5

1.6        Significance of the study                                                     6

1.7        Scope of the study                                                                7

1.8        Definition of terms                                                               8


CHAPTER TWO: Literature review

2.1        Conceptual review of the study                                         10

2.2        Theoretical review of the study                                         22

2.3        Empirical review of the study                                                      27


CHAPTER THREE: Research methodology

3.1       Introduction                                                                           38

3.2        Research design                                                                   38

3.3        Research population                                                           38

3.4        Sampling techniques and sampling size                                   38

3.5        Method of data collection                                                    39

3.6        Model specification                                                              39

3.7        Measurement of variables                                                  40

3.8        Method of analysis                                                              40


CHAPTER FOUR: Data Presentation, Analysis and Interpretation

4.1        Descriptive Analysis                                                            42

4.2        Correlation Matrics                                                             43

4.3        Effect of personal income tax                                             44


CHAPTER FIVE: Summary, Conclusion and Recommendation

5.1        Summary of research finding                                                      46

5.2        Conclusion                                                                            46

5.3        Recommendation                                                                 48


BIBLIOGRAPHY                                                           50

APPENDIX                                                                     53-54





Tax is defined as money that has to be paid to the government by the people according to their profits on goods and services provided. Chris and Elizabeth (2001) also defined taxes as a forced proportional contribution from persons and property levied by virtue of its severity for the support of government and for all public needs. (Cited in Angahar and Alfred 2012).

The serious decline in price of oil in recent years has led to a decrease in the funds available for distribution to the federal and state Government. The need for state and local governments to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and important. This need underscores the eagerness on the part of state and local governments and eve the federal government to look for new sources of revenue or to become aggressive and innovative in the mode of collecting revenue from existing sources. (Afuberoh and Okoye 2013).

Aguolu (2014), states that though taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derived from taxation, however, taxation is the most important source of revenue to the government, from the point of view of certainty, and consistency of taxation. Aguolu (2014) further mentioned that taxation is the most important source of revenue to the government. Owing to the inherent power of the government to impose taxes, the government is assured at all times of its tax no matter the circumstances. (Cited in Afuberoh and Okoye 2013).

The desire to uplift one’s society is the first desire of every patriotic citizen. Tax payment is the demonstration of such desire. The payment of tax is a civic duty and an imposed contribution by government on their subjects and companies to enable her finance or run public utilities and perform other social responsibilities. (Adebisi and Gbegi 2013).

The tax administrations in Nigeria are weak, corrupt and nontransparent (Kiabel 2009). This inefficiency reflects on the mix of taxes and the faulty design in their structure and in there operational systems (Kiabel 2009). The tax administration is also affected by policies relating the salary, the attitude, the reward and the punishment system of personnel. The tax administration in Nigeria is driven by detailed revenue targets not by tax laws and accounting records. The tax officials are allowed to earn money and still meet their revenue targets. Many things are done through negotiation rather than basis of information processing (chartered institute of Taxation of Nigeria).

In addition, low tax compliance is a serious issue in Nigeria, limiting the capacity of the government to raise revenue for development purposes. It is commonly acknowledged that many factors contribute to this weakness such as corruption, weak legal system, high marginal tax rate, paucity of adequate information, accounting system and ineffective tax administration (chartered institute of Taxation of Nigeria Website). However, it has never been easy to persuade tax payers to comply with requirement of tax system.

Furthermore, taxpayer tends to have low level of literacy, low tax morale and negative attitude towards government. (UNSW law Research paper no 2009-17). It is therefore felt that personal income taxation in Nigeria requires radical handling to ensure that a large chunk of the taxable population does not escape tax. An effective tax system, aside from maximizing revenue for development is expected to be well structured and managed with a feeling of common purpose, joint responsibility or obligation amongst the taxable person in a country.

From the foregoing, the future prospects of the study can be established. A key component of any tax system is the manner in which it is administered. No tax is better than its administration, so tax administration matters a lot. An essential of objective tax administration is to ensure the maximum possible compliance by tax payers of income.

In summary therefore, according to Chris and Elizabeth (2011) tax has three basis features namely; a compulsory levy imposed by government, or local authority, for public purpose and to encourage social justice. A tax according to Ayua (2016) is not a voluntary payment but a compulsory pecuniary burden placed on taxpayer for the benefit of the society.

Generally, taxation can be describe as a form of levy imposed on all residents living and nonresidents doing business within a tax jurisdiction. It is a civic and patriotic responsibility of citizens to pay taxes imposed which also come to the government as income or revenue yielding device to finance the provision of socio-economic and infrastructural amenities and also to enhance industrial efficiency.







Tax collection no doubt pose lots of challenges in the tax system, the Nigeria situation in general and Ogun state in particular, seems unique when viewed against the scale of corrupt practices prevalent in country. Under direct taxation as practiced in Nigeria, the major problem lies in the collection of the taxes especially from the self-employed such as the businessmen, contractors, doctors, accountant, architects and traders in shop among others in Ogun state. As observed by Ayua (2011), civil servants and other salaried workers are the only class of people that actually pay tax in Nigeria. However, even among the salaried workers, he added, many have turned the statutory personal allowances and relief into a fertile ground for reducing taxable income. Almost all tax payers are married with four children. Similarly, despite the provision meant to plug loopholes through which taxable persons can minimize tax liability, the self-employed persons employ all kind of schemes to escape tax liability and make one wonder whether there are still any tax official working in that capacity.

The Nigerian tax system also lacks competent and honest administrators. The problem of tax avoidance and evasion has reached an alarming proportion. The need to improve the administration of our tax system cannot be over emphasized. Hence, this study aims at examining the impact of personal income tax administration on Nigeria economy.



The major focus of this study is to examine the impact of personal income tax administration on Nigeria economy. Accordingly, among other reasons, the objectives of this study include the following:

  1. To examine the nature of tax administration in Nigeria.
  2. To identify the impediments to effective and efficient tax administration.
  • Determine the effectiveness of personal income tax collection.
  1. Identify the possible causes of ineffective tax collection system.




  1. Is the collection of personal income tax effective?
  2. What are the possible causes of ineffective tax system?
  • What are the possible ways of ensuring an effective tax system in the state?





The hypotheses for the study are stated here and they are stated in null forms

H0: Personal income does not contributes significantly to Nigeria revenue.

H1:Personal income contribute significantly to Nigeria revenue.

H0: There are no problems associated with personal income tax administration in Nigeria.

H1: There are problems associated with personal income tax administration in Nigeria.



Although several research works have been carried out on the personal income tax administration in Nigeria but most have not researched on the performance and contribution of personal income tax to the Nigeria revenue profit. This study will broaden this area of research and lay more emphasis on problems and laws revolving around facing personal income tax administration in Nigeria. The possible prospects of personal income tax in Nigeria will also be thoroughly examined and investigate the techniques that are involved in the administration of person income tax in Nigeria which has been neglected by past researchers.



The population of this study is large, but due to certain factors such as time, financial, and academic constraint, this research work will concentrate only on the staff of Ogun State Board of Internal Revenue.



Tax: A tax can be defined as a compulsory levy imposed by public authority on incomes, consumption, and production of goods and services.

Basis period: This refers to the accounting period of a business where income is assessable to tax in the year of assessment.

Earned Income: This refers to the income derived by an individual from a trade, business, vocation, or employment as well as incomes derived from a previous employment by a way of pension.

Assessment: This refers to the procedure by which tax payable by taxable person or company is computed.

Tax avoidance: This is considered as a way of identifying the loopholes in the tax laws and then takes advantages of such loopholes to reduce the tax payable.

Tax evasion: This is a deliberate act on the part of the tax payer not to pay tax.

Pay as you earn (PAYE): This means that tax is deducted from the income of an employee at source. The tax deducted is then remitted to the relevant tax authority on a monthly basis.



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