The study examines the effect of Tax Administration on Revenue Generation in Enugu State (A case study of the State Board of Inland Revenue Service Enugu State). The level of revenue generated in the state has been in a declining form due to poor tax administration and collections of taxes and lack of proper return of accounts. These are the negative effects that affect government revenue generation which are targeted to meet her basic functions like provision of basic amenities for her citizenry in the state. The research design adopted in this study was survey research method. Primary and secondary sources of data were used in collecting information which was analyzed using simple percentages and hypothesis tested using chi – square statistical method at 0.05 level of significant for validity and to make decisions. Findings show that there was rampant incidence of tax evasion and avoidance in the state, and the tax administration in Enugu state is inadequate, not effective and not efficiently managed thus: inadequate staff and facilities also hinder tax administration and collection. The researcher, in the final analysis drew a lasting conclusion, some of which are: – the apathy of Enugu state people towards payment of tax could be reduced by involving them in the decision making of tax administration, collection and utilization of the tax revenue. The environment should be made better by both the government and its agencies. The staff of the SBIR Enugu should be well remunerated and ensure adequate administration of tax laws in accordance with the laid down rules and regulations. 





  • Background to the Study

Recently the revenue that accrues to state government is derived from two broad sources, viz: the external sources and the internal sources. The increasing cost of running government coupled with dwindling revenue has left various state governments in Nigeria with formulating strategies to improve the revenue base. More so, the near collapse of the national economy has created serious financial stress for all tiers of government. As a result of fall in the international price of oil and the collapse of the national economy, the direct allocation from federation account to the states has fallen. Despite the numerous sources of revenue available to the various tiers of government as specified in the Nigeria 1999 Constitution, since the 1970s till now, over 80% of the annual revenue of the 3 tiers of government come from petroleum. However, the serious decline in the price of oil in recent years has led to a decrease in the funds available for distribution to the states. The need for state and state governments to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance (Raji, 2015). This urgent need for improvement in revenue generation has underscored the reason why revenue from tax has been the focus of state government in improving the revenue generation. The importance of taxation as a source of revenue to any government cannot be overemphasized. The study of the teachings of Christianity, Islamic and other prominent religions in the world shows that tax is a religious duty based on social and civil responsibilities (Agbetunde, 2004). The world over, taxes is one major source of government revenue, however, not every national government has been able to effectively exploit this great opportunity of revenue generation. This can be attributed to a number of reasons including the system of taxation; tax legislation; tax administration and policy issues; over reliance on other sources of revenue (such as foreign aid and grants); corrupt practices in the system especially as it relates to the system of tax collection and behaviour of citizens towards tax payment; and ease of tax payment (Akintoye & Tashie, 2013). Nigeria is richly endowed with natural resources chief of which is oil and gas. This oil and gas dominate the country’s economy as it accounts for over 80% of the country’s revenue thereby making government to lose its sense of reasoning in exploring other revenue sources. The overdependence on oil and gas has led to low GDP and economic retardation. According to Okoyeuzu (2013) taxes are the major tools required to overcome such and also to control other market imperfection, and achieve social justice by wealth redistribution. Due to the over reliance on oil, little effort has been made to generate sufficient revenue from taxation. Popoola (2009 cited in James Abiola) opines that Nigeria tax administration and practice be structured towards economic goal achievement since government budget for the year centres on the oil sector while decrying the low productivity of the Nigerian tax system. According to Jhingan (2008) to meet up with their numerous commitments and live up to their responsibilities, governments thus, require a substantial amount of funds; such funds are usually raised from various sources such as issuing of public debt, creation of money or levying of various types of taxes, fees, fines and specific charge. Ariyo (1997) opines that Nigeria’s overdependence on oil revenue to the total neglect of other revenue sources was encouraged by the oil boom of 1973/1974. This was unsustainable due to frequent negative fluctuation in the price of oil in the world market; this fluctuation has led to low revenue from oil and resulting in budget deficit. Financial resources are needed for the developmental goals of any successive and successful government to be achieved. Such goals may include provision of infrastructure, security of life and properties and maintenance of law and order. Fagbemi, Uadiale & Noah (2010) opine that government needs money to execute their social obligations which include provision of infrastructure and social services. Ogundele (1999) views taxation to be the process or machinery by which communities or groups of persons are made to contribute some agreed amount of money for the purpose of administration and development of society. Aguolu (2004) states that though taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derivable 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.

Apart from the over reliance on oil, mismanagement of tax revenue has scared many honest payers away from performing their civic responsibility of paying tax. In many parts of Nigeria, citizens are opposed to the payment of any form of taxes and rates on the ground that government had been unfair in the provision of amenities for which tax is primarily collected. Evidence of wastage of public funds abound in the form of inflated contracts or in the criminal acts of using diverse methods and loopholes exhausts funds voted for ministries and government departments before the financial year runs out (Ovute & Eyisi, 2014). The cumulative effect thereby produced is the resolve of many honest tax payers never to pay their due taxes again or at most pay under compulsion (Kiabel and Nwokah, 2009 cited in Ovute & Eyisi, 2014).

1.2     Statement of the Problem

It is true that problem of tax collection and administration in developing countries seems to be more plagued and inflicted, these problems can be identified as improper system of keeping accounts and records in the internal Revenue office, which was seen to be quite mechanical and outdated, inadequate staff and training of the available tax collectors, no enlightenment on the part of tax payers as regards the importance of taxation is another problem of tax generation and administration in Enugu state. Tax collection and administration in Enugu state is not efficient and efficiently managed. Also corrupt alliance of tax collectors with tax payers to avoid tax, for them (tax collectors) to make fast money.

Thus inadequate enforcement power on the board makes tax laws useless and hence not serious to tax offenders /defaulters. This research work primarily involves identifying the problems of the personal income tax generation and administration in Nigeria taking a case study of Board of Internal Revenue, Enugu state.




1.3     Research Questions

Upon the following research questions, hypothesis where formulated.

  1. To what extent has the use of mechanical and outdated system of keeping and recording accounts affected tax administration on revenue generation in Enugu state?
  2. To what extent does lack of adequate staff and inadequate training of the available tax collectors affect tax administration on revenue generation in Enugu state?
  3. To what extent has lack of improper enlightening of tax payers affected tax administration on revenue generation in Enugu state?
  4. To what extent has tax administration in Enugu state been effective and efficiently manage?

1.4     Objectives of the Study

The general objective of the study is to ascertain the effect of tax administration on revenue generation in Enugu state, using the state board of internal revenue as a case study. The specific objectives of the research work are to;

  1. To examine if the use of mechanical and outdated system in recording and keeping accounts affect tax administration on revenue generation in Enugu state.
  2. To ascertain whether lack of adequate staff in the SBIR affect tax administration on revenue generation in Enugu state.
  3. To examine if enlightening the tax payers on the importance of taxation affect tax administration in the state.
  4. To examine if the effectiveness and efficiency of personal income tax collection and administration in the state is properly managed.
  5. To ascertain whether they are corrupt alliance of tax collectors with tax payers to avoid tax, for them (tax collector) to make fast money.

1.5     Research Hypothesis

The following are the research hypothesis;

Hypothesis 1:

HO: The use of mechanical and outdated system by tax collector has no significant impact on tax administration and revenue generation in Enugu State.



Hypothesis 2:

HO: Lack of adequate staff and inadequate training of the available tax collector has no significant impact on tax administration and revenue generation in Enugu state.

Hypothesis 3:

HO: Lack of proper enlightening of the tax payers has no significant impact on tax administration and revenue generation in Enugu state.

Hypothesis 4:

HO: Tax collection and administration in Enugu state is effective and efficiently managed.

1.6     Significance of the Study

The researcher is motivated to study the ways through which internally generated revenue in Enugu state could be enhanced. The information contained here will benefit the society at large as it will expose the society to the need to pay tax and consequence of failure to pay tax. The study will no doubt charge the aggressive attitude of an average Enugu man towards the payment of tax and collectors of taxes who were hitherto regarded as enemies. Owing to the present steps taking by federal government in re–branding the economic activities, the research work will recommend measure that will be taken by the state Board of internal Revenue, Federal Inland Revenue Services, budget and Planning department and other government decision – making bodies ways to enhance effective administration of her services and achieve immensely her stated objectives, especially in the area of tax administration on revenue generation.

1.7     Scope and Limitations of the Study

The research will focus on the effect of tax administration on revenue generation in Enugu State and also why tax payers avoid or evade tax payment in Enugu state. This research also focuses on how tax evasion and avoidance are carried out and the rate of revenue generation. The research also look at the manner of sourcing for tax in Enugu state for the past few years and what are responsible for poor tax collection in the state. This study will place a particular focus in State Board of Internal Revenue Enugu State.

The limitations encountered in the course of this study include the following:

  1. Inadequate time due to the combination of class schedule and project work.
  2. Uncooperative attitude of some employees when approached.
  • Financial constraints.
  1. Another limitation to the study is the outright inability of respondents to complete the questionnaires in time.
  2. Also, traffic congestion is one of the limitations to the study. The researcher faced challenges of meeting up the respondents in their offices due to traffic.

Despite all this limitations mentioned above and hindrances, the research study no doubt turned out to be successful.