1.1   Background of the Study

Traditionally, taxation is a main source of revenue to government all over the world, tax thus becomes a burden that every citizen must bear to support the government.

        According to Olaofa (2008), the government has certain functions to perform for the benefits of those its government.  The scope of these functions will depend on the political and economical orientation of the members of the society, their needs aspiration, unwillingness and ability to pay amongst others.  Among the traditionally functions of the government is the provision of collective or public goods, goods that cannot be divided among the separate members of the society but which must be used for the benefit of all.  Such goods include the maintenance of law and order, defence against external aggression, regulation of trade and business to ensure social and economic justice.  As the functions of government increase, the revenue to finance those institution must necessarily increase.  Thus, tax is a fact of life which is as old as the institutions of government for a fact, it is said, “tax is as certain as death” (Olarfe 2008).

        Abubakar (2008) posits that tax policies represent key resource allocation between the public and private sectors in a country.  It is usually imposed on individual and confities that make up a country.  The fund provided by tax are used by the state to support certain state obligations such as education system, health care system pension for the elderly, unemployment benefits and public transportation.  A nations tax system is often a reflection of its commercial values of the values of those in power.

        Adekaula (1997), state that in Nigeria the taxation system dates back to 1904 when the personal income tax was introduced in Northern Nigeria before the unificiaries of the implemented, through the Native revenue ordinance to the western and eastern regions in 1917 and 1928 respectively.  Among other amendments in the 1930’s it was later incorporated into direct taxation ordinance No. 4 of 1940.  The need for personal income tax promoted the income tax management tax Act.  (TIMA) 1961.  An amendment followed in 1993 of section 27 now called section 85 other amendment, of PITA were that on 1996 and 1998.  Apart from the personal income tax (PIT) other taxes charged in Nigeria include companies income petroleum profit tax, education tax, capital grains tax, information and technology tax etc.  Those taxes are collected by different levels of governments depending on their areas of jurisdiction.  The essences of amending tax laws is to amend for the loopholes existing in the tax system and to improve on the system of taxation in the country.

1.2   Statement of Difficult

        Several difficult affect the present day tax administration in Nigeria as will be revealed by this research work.  The following difficult appear outstanding.

-             Many people who collect taxes in Nigeria are not well trained for the job and this lead to huge leakage in revenue generation.

-             Ignorance sometimes due to high level of illiteracy of the part of payers, ask why they should pay tax.

-             Shortage of efficient manpower in the revenue department.

-             There are loopholes in the laws governing the tax administration, the effect or loss of revenue to the government.

-             Many self employed persons if at all, they pay tax but they do not pay the amount commensurate with their income as generated from business, trade, vocation or as the case may be incidence of tax evasion on the part of some individuals and corporate bodies.

-             There is loss of government revenue through insuring of take receipts.  Many people have been duped and government made power by the sharp practices of the operators.

Therefore, the researchers want to examine the difficulties.

1.3   Objectives of the Study

        The purpose of the study includes:

-             To find out the proportion of taxable adults from both the salary earners and the self employed that pay their taxes and if they do, whether they pay correct amounts.

-             To find out if the amount of taxes collected are correctly and promptly remitted the government coffers.

-             To identify the loopholes in the administration of tax in Nigeria the total revenue collected.

-             To find one the root causes of non payment or inadequate payment of taxes.

-             To evaluate the extent to which tax proceeds have improved the revenue base of the state.

-             To offer policy recommendations that shall enhance the efficiency of tax system in the state.

1.4   Significance of the Study

        The study could be of significance of the tax authority since it highlights the difficulties of tax administration and the recommendation will help them improve their performance thereby increasing revenue yielding to government.

-             Tax payers shall know their rights and obligation as with regards to tax.

-             It is common to discover that a majority of taxable individuals do not understand the whole concept of taxation and this ignorance may be a major reason for their reluctance to pay taxes.  This work will in no doubt help to clear such ignorance.

-             This study shall be great importance to self-employed persons because it will encourage them to keep adequate accounting records of their enterprises and makes tax assessment processes easier.

1.5   Research Questions

        This study will be guided by the following questions:

(i)                The level of tax evasion by individuals and corporate bodies, can it significantly affect the revenue collected/

(ii)               Is there any significant relationship between the level of fraudulent practices by tax officials and the amount of revenue collected?

(iii)             What are the benefit of the self employed persons for making tax assessment processes

1.6   Scope and Limitation of Study

        The scope of this study will be administration of tax in Nigeria during which the problems and prospects will be looked at.  Also the machinery of tax collection will be covered in brief.  This study is limited to Abia State board of internal revenue.

1.7   Limitations of the Study

        The difficulties encountered include the following:

(i)                The state board of internal revenue delayed in their response to the questionnaire.  Some of the respondents refused to fill their questionnaire and so returned them blank.

(ii)               Another constraint is that of finance with which to travel extensively, make sufficient copies of materials to enable the researcher draw on all embracing conclusion.

(iii)             The time is not adequate for the study because of combining lecturers with making necessary research for this work.

(iv)             There is unavailability of a previous (reference) material on the topic.

(v)              There is lack of adequate information on the research.

1.8   Definition of Terms

Fiscal Policy: This is the use of government expenditure taxes borrowing and financial administration for further national economics objectives.

Hypothesis: These mean an assumption about a certain population parameter which would be tested in order to accept or reject the assumption.

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