COVER PAGE

EFFECTS OF PERSONAL INCOME TAX ADMINISTRATION ON REVENUE

TABLE OF CONTENTS
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Cover Page..................................................................................................................................i
Title Page...................................................................................................................................ii
Declaration................................................................................................................................iii
Dedication.................................................................................................................................iv
Certification................................................................................................................................v
Turnitin Certification................................................................................................................vi
Acknowledgements..................................................................................................................vii
Table of Contents....................................................................................................................viii
Abstract......................................................................................................................................x

CHAPTER ONE
INTRODUCTION
1.1 Background of the Study.................................................................................................1
1.2 Statement of Problem......................................................................................................3
1.3 Objective of the Study.....................................................................................................4
1.4 Research Questions.........................................................................................................4
1.5 Research Hypothesis.......................................................................................................4
1.6 Significance of the Study................................................................................................5
1.7 Scope of the Study..........................................................................................................6
1.8 Limitation of the Study...................................................................................................6
1.9 Definition of Operational Terms.....................................................................................6

CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction.....................................................................................................................8
2.1 The Personal Income Tax in Nigeria..............................................................................8
2.1.1 Personal Income Tax (Amendment) Act, 2011...............................................................9
2.1.2 Key Changes.................................................................................................................11
2.1.3 Concept of Tax Evasion/Avoidance..............................................................................13
2.2 Conceptual Framework.................................................................................................14
2.2.1 Types of Personal Income Tax on Revenue Generation...............................................15
2.2.2 Effects of Personal Income Tax Administration on Revenue Generation....................15
2.2.3 Imposition of Personal Income Tax Administration on Revenue Generation..............16
2.2.4 Chargeable Income........................................................................................................16
2.2.5 Relief and Allowance Available Under Personal Income Tax on Revenue Generated 17
2.2.6 Allowable Allowance Upper Limit of Tax Exempted..................................................17
2.2.7 Personal Income Tax on Revenue Generation Rate Structure (1st January (2019)).....17
2.3 Review of Previous Studies/Literature..........................................................................18
2.4 Empirical Review..........................................................................................................20
2.5 Theoretical Framework.................................................................................................21

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 CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction...................................................................................................................25
3.1 Research Design...........................................................................................................25
3.1.1 Source of Data..............................................................................................................25
3.1.2 Population of Study......................................................................................................26
3.1.3 Sample Size and Sampling Techniques.......................................................................26
3.1.4 Instrumentation/Data Collection Procedure.................................................................26
3.2 Reliability Test.............................................................................................................26
3.3 Validity Test.................................................................................................................27
3.4 Method of Data Analysis.............................................................................................27
3.4.1 Decision Rule...............................................................................................................27

CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.0 Introduction...................................................................................................................29
4.1 Data Presentation..........................................................................................................29
4.2 Analysis of Questions...................................................................................................37
4.3 Test of Hypotheses........................................................................................................39

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary.......................................................................................................................42
5.2 Conclusion.....................................................................................................................43
5.3 Recommendations.........................................................................................................44
5.4 Limitations of the Study................................................................................................44
5.5 Suggestions for Further Studies....................................................................................45
References................................................................................................................................46
Appendices...............................................................................................................................49
Questionnaires..........................................................................................................................50

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 ABSTRACT

The purpose of this project is to investigate the Effect of Personal Income Tax Administration
on Revenue Generation of Niger State Government using Niger State Internal Revenue
Service as a case study. Personal income tax has contributed immensely to the increase in
revenue base of all state government in the federation especially in Niger state internal
revenue service. The major problem of the study is that Niger state internal revenue service
has been able to appreciate Personal Income Tax (PIT) as an important fact to the
development of the state. The main objective of the project work is to establish the extent to
which Niger state internal revenue has profited from PIT proceeds. The methods used in
carrying out this work are the use of structured questionnaires. The study issued 25 copies of
questionnaires and a total of 15 copies were filled and returned. Statistical techniques
percentage and numbers was used to analyze the data collected. Chi-square test was used to
determine the association between variables and Statistical tests, such as analysis of
variance (ANOVA) was used to evaluate the significance of the research hypotheses.
However the response gathered from my questionnaires shows that PIT have significantly
contributed to the growth of the economy in Nigeria. The summary of findings was that PIT
is effective as source of financing government project. This recommendation should not be
relied upon because it was based on limited information obtained by the researcher in the
case of his study.

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 CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The idea of introducing personal income tax on revenue generated in Nigeria came from the
report of the study group set up by federal government in 1991 to review the entire tax
system. The decree was promulgated as decree No. 104 and became effective on 25th
August, 2003. The law repealed and replaced the income tax management act of 1961.
The purpose of the decree is to regulate the administration of personal income tax on revenue
generated throughout Nigeria. In January, 1993, government agreed to introduce personal
income tax on revenue generated by the middle of time the relevant legislation would have
been made and proper ground work done. Tax is an income to government; taxes collected by
the government are divided into two main groups. I.e. direct and indirect taxes are those taxes
imposed on the income of an individuals, companies, co-operate bodies, et.c. While indirect
taxes are those taxes on goods and services. But for the sake of this research the investigation
will be base on direct tax.
In Nigeria, the personal income tax act 2004 was in operation until its amendment in 2014.
Major changes were made to change the act to reflect the current situation in the economy.
According to Usman (2018), it is certain that the existence of large-scale tax evasion
characterized the operation of the personal income tax act. It is a well-known fact that the
most difficult component of Personal Income Tax is the Direct Assessment which
comparatively is far below expectation in terms of revenue generation. This can be clearly
seen when you compare the number of those on government employment and those on
personal business and for which are supposed to be charged based on direct assessment as the
payment of their personal income tax.
A lot of reasons had been proffered as causes of low income generation via Personal Income
Tax in Niger State. In a survey carried out by Usman (2018), he opined that it was due to
inept tax administration, Salawu (2017) opined that low income generation is due to the fact
that taxes collected are not in line with economic realities. Jide (2019) corroborates this idea
by stating that the tax table rate is not ideal. Baba (2020) on the other hand is of the opinion
that majority of Nigerians are not used to paying tax while Aderibigbe (2022) posits that tax
payers are discouraged from paying taxes because government are not using the revenue
generated from taxes to meet their social/infrastructural needs as expected.
In view of the foregoing, the Personal Income Tax Act, 2014 is now amended by the Personal
Income Tax (Amendment) Act, 2011. This follows many years of agitation for the Personal
Income Tax Law in Nigeria to be brought in line with present day economic realities. One of
the major changes identified from the amendment is the window that encourages higher
increase in voluntary compliance levels by the new tax law therefore making the voluntary
tax payment easier. Furthermore, the new law expands the revenue base of the personal
income tax by mandating the payment of tax by those earlier exempted for example, the
official emoluments of the President, Vice President, Governors and Deputy Governors, also
temporary staff such as casual workers, interns and other contract staff are now specifically
liable to tax, and the non-formal sector is now properly structured.
Direct taxation was introduced in 1904 by Lord Lugard with the establishment of the
protectorates of northern Nigeria. Nigeria's tax administration was subsequently overseen by
four primary bodies: the Federal Board of Inland Revenue, the State Board of Internal
Revenue, the Local Government Revenue Committee, and the Joint Tax Board. These
institutions played essential roles in the governance and management of both direct and

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indirect taxes in the country, contributing to the overall fiscal structure and revenue collection
system of Nigeria.
The relevant tax authority responsible for the administration of personal income tax on
revenue generation in the state board of internal revenue of each state in Nigeria. The
personal income tax on revenue generation is one of the major sources of revenue to the state
government. But to this fact, a lot of problems have surrounded the system and trying to
make it ineffective. Therefore, it is the intention of this research to investigate and come up
with dependable solution on the impact of personal income tax on revenue generation of the
state government with a particular reference to Niger State Internal Revenue Service.
1.2 Statement of Problem
The poor administrative of personal income tax on revenue generation in Niger State Internal
Revenue Service need to be checked because; it is one of the major sources of income to the
state. Though the problems of personal income tax on revenue generation administration is a
global phenomenon.
In developing countries like Nigeria, the challenges related to tax administration are
particularly complex and exacerbated by several factors. These include inadequate staffing
levels within tax authorities, widespread illiteracy among taxpayers, corrupt practices within
tax administration agencies, a shortage of qualified personnel to manage tax processes
effectively, and insufficient working facilities for tax officials. These challenges collectively
hinder the efficient collection and management of tax revenues, impeding the country's fiscal
capabilities and economic development efforts.
Addressing these issues is crucial for enhancing the effectiveness of tax collection and
ensuring that tax revenue is utilized for the country's socio-economic development.
Therefore, personal income tax on revenue generation is surrounded with certain problems in
Niger state internal revenue in particular have not been able to appreciate personal income tax
on revenue generation as an important impact to the development of the area, to this effect,
therefore it is the researcher’s intention to explore its contribution based on findings and
making recommendation and suggestions to the organizations concerned.
1.3 Objective of the Study
The primary objective of this study is to examine the effect of personal income tax
administration on the revenue generation of the Niger State Government, focusing on the
Niger State Internal Revenue Service. Specifically, the study aims to:
i. Assess the efficiency and effectiveness of personal income tax administration in Niger
State.
ii. Identify the challenges faced by the Niger State Internal Revenue Service in revenue
collection.
iii. Analyze the impact of tax compliance behavior on revenue generation in Niger State.
1.4 Research Questions
To guide this study, the following research questions will be addressed:
i. How efficient and effective is the administration of personal income tax in Niger
State?
ii. What are the main challenges encountered by the Niger State Internal Revenue
Service in the collection of personal income tax?

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 iii. How does tax compliance behavior among taxpayers affect revenue generation in
Niger State?
1.5 Research Hypothesis
H01: There is no significant relationship between the efficiency and effectiveness of personal
income tax administration in Niger State and revenue generation.
H02: The challenges faced by the Niger State Internal Revenue Service in the collection of
personal income tax do not significantly impact revenue generation.
H03: Tax compliance behavior among taxpayers does not have a significant effect on revenue
generation in Niger State.
1.6 Significance of the Study
Firstly, this study provides a valuable platform for governments at various levels, including
federal, state, and local, as well as organizations like the Niger State Board of Internal
Revenue (NSBRS), to assess the performance of personal income tax in revenue generation.
By evaluating its contribution to economic development, both at the state and national levels,
policymakers can make informed decisions and shape tax policies that align with broader
development objectives. This assessment becomes particularly critical in the context of global
economic dynamics.
Secondly, the research equips organizations like NSBRS with the means to gauge the actual
performance of personal income tax administration against established standards. Such
insights are invaluable for management decision-making, enabling the organization to refine
its strategies, enhance efficiency, and optimize revenue collection processes. Thirdly, the
study also benefits taxpayers, often referred to as valuable persons. It allows them to gain a
clearer understanding of whether their contributions through income tax align with the
intended purposes and benefits as envisioned by government policies and economic
development initiatives. This transparency fosters trust and accountability between taxpayers
and tax authorities.
Lastly, the research serves as a vital resource for future researchers and scholars interested in
taxation, revenue generation, and economic development. It contributes to the body of
knowledge in these fields and provides foundational insights for further exploration,
contributing to the continuous enlightenment of the public on taxation and its impact on
society.
1.7 Scope of the Study
In this research work, the scope of the study is limited to investigate the impact of personal
income tax on revenue generated by the state government. The research work was conducted
at Niger State Internal Revenue Service.
The research work was conducted at Niger State Internal Revenue Service from January 2023
to August 2023. The study focuses on assessing how personal income tax administration
practices within this time frame influence the revenue generation for the state government.
1.8 Limitation of the Study
This study has several limitations. Firstly, it relies on data obtained from the Niger State
Internal Revenue Service and taxpayers, which may have completeness and accuracy issues.
Secondly, the findings may not be universally applicable, as they primarily pertain to Niger
State and may not fully represent other Nigerian regions with distinct tax policies and
socioeconomic contexts. Thirdly, constraints in data collection, including taxpayer

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reluctance, may impact data quality. Fourthly, time limitations could restrict the study's
ability to capture long-term trends, while external factors such as changing tax laws may
influence results. Lastly, sample size constraints may affect data representativeness.
1.9 Definition of Operational Terms
Niger State Internal Revenue Service (SBRS): This is the state agency responsible for
overseeing the administration and collection of personal income tax in Niger State.
Personal Income Tax Administration: This term refers to the set of processes, policies, and
activities involved in the collection, management, and enforcement of personal income tax by
the Niger State Internal Revenue Service.
Revenue Generation: This term encompasses the income derived from personal income tax
collection within Niger State. It includes taxes paid by individuals and entities as well as any
related fees, penalties, or fines.
Revenue Impact: This refers to the tangible consequences of personal income tax
administration on the economic development and financial capacity of Niger State, including
its ability to fund public services and development projects.
Tax Compliance Behavior: This term relates to the actions and behaviors of taxpayers in
fulfilling their tax obligations, including timely payment, accurate reporting, and adherence to
tax laws and regulations.
Tax Efficiency: This refers to the effectiveness and productivity of the tax collection process,
including the accuracy and timeliness of revenue collection.
Tax Policy: The overarching framework of rules, regulations, and guidelines established by
the state government to govern the administration, collection, and utilization of personal
income tax revenues.
Taxpayers (Valuable Persons): These are individuals, businesses, and entities within Niger
State that are obligated to pay personal income tax as per the state's tax laws.