Personal Income Tax Generation and Utilization in Taraba State Board of Internal Revenue, Nigeria

ABSTRACT 

The personal income tax is one of the major sources of income to the government. However, personal income tax has not yielded the much expected results in Taraba state. The study focused on how personal income tax generation affects tax utilization in Taraba state, Nigeria. The objectives of the study were; to assess the relationship between tax identification and tax utilization: to examine the relationship between tax assessment and tax utilization: to investigate the relationship between tax collection and tax utilization in Taraba state, Nigeria. The study employed a descriptive survey design using quantitative method of enquiries. The study population comprised of 600 people, from which a study sample of 234 respondents were selected using simple random and purposive sampling methods. To ensure reliability and validity of the instrument cronbach alpha and Content validity index calculation were used. The outputs of the cronbach alpha were above 0.70 for the instrument, which declare the instrument reliable. The content validity index is 83.3%, which declare the instruments used to be valid. Data was analyzed using SPSS, descriptive, bi-variate and multivariate analysis was done. The findings of the study showed a positive relationship between tax identification and tax utilization (r = 0.616). It also showed a positive relationship between tax assessment and tax utilization (r = 0.673), and a positive relationship between tax collection and tax utilization (r = 0.650). The study concluded that the various components of income tax generation, that is tax identification, tax assessment and tax utilization have positive and significant influence on tax utilization. The researcher recommended that the need for reductions in the direct tax rates and increases in the indirect tax rates, that government should pass new tax laws, that tax authorities should properly review and evaluate the assessment and collection procedures so as to encourage compliance by the tax payers, that qualified personnel with the right attitude should be recruited, trained and retrained to man the Internal revenue board, and that deliberate effort should be made to educate tax payers on the need to pay taxes while the government should embark on aggressive infrastructural development to justify taxes received. This study contributes to the existing knowledge/research on taxation in Nigeria and Taraba state, it as well provide befitting recommendations to improve the taxation system.

TABLE OF CONTENTS

DECLARATION .............................................................................................................. ii

APPROVAL..................................................................................................................... iii

DEDICATION ................................................................................................................. iv

ACKNOWLEDGEMENTS ..............................................................................................v

LIST OF ACRONYMS ................................................................................................... vi

TABLE OF CONTENTS ............................................................................................... vii

LIST OF FIGURES........................................................................................................ xii

ABSTRACT.................................................................................................................... xiii

CHAPTER ONE................................................................................................................1

INTRODUCTION .............................................................................................................1

1.0 Introduction....................................................................................................................1

1.1 Background to the Study ...............................................................................................1

1.2 Problem Statement.........................................................................................................7

1.3 Purpose of the Study......................................................................................................8

1.4 Specific Objectives of the Study....................................................................................8

1.5 Research Questions........................................................................................................9

1.6 Hypotheses.....................................................................................................................9

1.7 Scope of the study...........................................................................................................9

1.7.1 Geographical Scope ....................................................................................................9

1.7.2 Content scope..............................................................................................................9

1.7.3 Time Scope ...............................................................................................................10

1.8 Significance of the study .............................................................................................10

1.9 Operational Definition of Key Terms..........................................................................10

CHAPTER TWO.............................................................................................................12

LITERATURE REVIEW ...............................................................................................12

2.0 Introduction..................................................................................................................12

2.1 Theoretical Review......................................................................................................12

2.2 Conceptual Framework................................................................................................14

2.3 Relationship between tax identification and tax utilization in Taraba state, Nigeria. .14

2.4 Relationship between tax assessment and tax utilization in Taraba state, Nigeria......19

2.5 Relationship between tax collection and tax utilization in Taraba state, Nigeria........20

2.6 Empirical Review ........................................................................................................23

2.7Research Gaps ..............................................................................................................26

CHAPTER THREE.........................................................................................................27

METHODOLOGY ..........................................................................................................27

3.0 Introduction..................................................................................................................27

3.1 Research Design ..........................................................................................................27

3.2 Research population.....................................................................................................27

3.3 Sample size ..................................................................................................................27

3.4 Sampling Procedure.....................................................................................................28

3.5 Research Instruments...................................................................................................28

3.5.1 Questionnaires ..........................................................................................................28

3.6 Validity and reliability of instruments.........................................................................29

3.6.1 Validity .....................................................................................................................29

3.6.2 Reliability .................................................................................................................29

3.7 Data Gathering Procedure............................................................................................30

3.7.1 Before data gathering................................................................................................30

3.7.2 During data gathering ...............................................................................................30

3.7.3 After data gathering ..................................................................................................30

3.8 Data Analysis...............................................................................................................31

3.9 Ethical Consideration...................................................................................................31

CHAPTER FOUR ...........................................................................................................32

DATA PRESENTATION, ANALYSIS AND INTERPRETATION ..........................32

4.1 Introduction..................................................................................................................32

4.2 Bio Data .......................................................................................................................32

4.2.1 Gender of Respondents.............................................................................................32

4.2.2 Age Group of Respondents.......................................................................................32

4.2.4 Occupation of the Respondents................................................................................33

4.2.5.Duration……………….……………………………………………………………34

4.3 Factor Analysis............................................................................................................34

4.3.1 Factor Analysis for Tax identification......................................................................35

4.3.2 Analysis of Variance.................................................................................................37

4.3.2.1 Analysis of variance for tax identification.............................................................37

4.3.2.2 Analysis of variance for Tax assessment...............................................................37

4.3.2.3 Analysis of variance for Tax collection.................................................................38

4.3.2.4 Analysis of variance for Tax utilization ................................................................39

4.4 Regression Model ........................................................................................................39

4.4.1 Model Fit for tax identification and utilization.........................................................39

4.4.2 Model Fit for tax assessment and Utilization ...........................................................40

4.4.3 Model Fit for tax collection and tax utilization ........................................................41

4.5 The relationship between variables using Pearson‘s Correlation ................................42

4.5.1 Relationship between tax identification and utilization............................................42

4.5.2 Relationship between tax assessment and utilization ...............................................42

4.5.3 Relationship between tax collection and utilization .................................................42

4.6 Hypothesis testing.........................................................................................................43

CHAPTER FIVE .............................................................................................................44

DISCUSSION, CONCLUSIONS AND RECOMMEDATIONS.................................44

5.0 Introduction..................................................................................................................44

5.1 Bio-data of respondents...............................................................................................44

5.2 The Factor Analysis on income tax generation and utilization ...................................45

5.2.1 Analysis of Variance for tax identification...............................................................45

5.2.2 Analysis of variance for Tax assessment..................................................................45

5.2.3 Analysis of variance for tax collection .....................................................................45

5.2.4 Analysis of variance for Tax utilization ...................................................................46

5.3 Relationship between variables ....................................................................................46

5.3.1 Tax identification and tax utilization........................................................................46

5.3.2 Tax assessment and tax utilization ...........................................................................47

5.3.3 Tax collection and tax utilization .............................................................................48

5.4 Conclusion ...................................................................................................................49

5.5 Recommendations........................................................................................................50

5.6 Contribution to new knowledge....................................................................................51

5.7 Limitations of the study...............................................................................................51

5.8 Suggestions for further research ..................................................................................51

REFERENCES ..................................................................................................................52

APPENDICES ...................................................................................................................58

APPENDIX I: QUESTIONNAIRE...................................................................................58