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This research work is aimed at evaluating taxation as a major source of government funds and the impact on management decision making with particular reference to Enugu State Board of Internal Revenue. This work examined the impact of taxation on management decision making, evaluation of the role of taxation in the development of Nigeria, Enugu state in particular, and the various problems associated with taxation in Enugu state. Data for the study were sourced from two main sources which include Primary and Secondary sources. Primary data were questionnaires and oral interviews. Secondary data were Journals, magazine and other relevant materials. Extensive literature review was carried out. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended questions. Simple tables and percentages were used in the analyses while chi-square was also used in the analyses. The researcher found out that taxation has significant impact on management decision making. Taxation also has so many roles to play in the development of Nigeria, Enugu state in particular. The researcher equally found out that many individuals and companies evade tax in Enugu state. Based on the findings, it is recommended that more tax offices should be opened at strategic positions in the state, staff should be continuously trained and motivated, and more customary courts and revenue courts should be established in the state.


Title Page-       -       -       -       -       -       -       -       -       -       -i

Approval Page  -       --     -       -       -       -       -       -       -       -ii

Dedication               -       -       -       -       -       -       -       -       -iii

Acknowledgment     -       -       -       -       -       -       -       -       -iv

Abstract   -       -       -       -       -       -       -       -       -       -       -v    

CHAPTER ONE INTRODUCTION                                                     

1.1   Background of the Study-       -       -       -       -       -       -1

1.2   Statement of the Problem-       -       -       -       -       -       -6

1.3   Objective of the Study -   -       -       -       -       -       -       -7

1.4   Research Questions-        -       -       -       -       -       -       -       -8

1.5   Hypotheses      -       -       -       -       -       -       -       -       -8

1.6   Significance of the Study-        -       -       -       -       -       -9

1.7   Scope and Limitations of the Study         -       -       -       -10

1.8   Definition of Terms -       -       -       -       -       -       -       -10



REVIEW OF RELATED LITERATURE 2.1      The Concept of Taxation in Nigeria  -       -       -       -       -13

2.2 Importance of Taxation in Nigeria      -       -       -       -       -14

2.3 People’s View about Taxation     -       -       -       -       -       -18

2.4 Theories Purporting the Nature of Taxation-      -       -       -21

2.5      Ascertainment of Income for Tax Purposes-     -       -       -27

2.6      Tax Administered in Enugu State    -       -       -       -       -31

2.7      The Rural Income Tax Notice and Receipt (RITAN) and

Agent Debit-     -       -       -       -       -       -       -       -       -32

2.8      Duties and Powers of the Board of Internal

Revenue Enugu State      -       -       -       -       -       -       -35

2.9 The Goals and Objective of the Board of Internal Revenue-       -36

2.10Organs of the Board  -       -       -       -       -       -       -       -37



3.1      Research Design/Research Method Used  -     -       -       -44

3.2      Sources of Data       -       -       -       -       -       -       -       -44

3.2.1Primary Sources of Data -        -       -       -       -       -       -44

3.2.2Secondary Sources of Data-     -       -       -       -       -       -45

3.3      Population and Determination of Sample Size-       -       -       -46

3.4      Sample Size Determination -   -       -       -       -       -       -47

3.5      Methods of Investigation -       -       -       -       -       -       -       -47



4.1      Analysis of Data/Data Analysis-      -       -       -       -       -50

4.2      Testing of Hypothesis               -       -       -       -       -       -59


5.1      Summary of Findings -    -       -       --     -       -       -       -65

5.2      Conclusion      -       -       -       -       -       -       -       -       -67

5.3      Recommendations   -       -       -       -       -       -       -       -67






Taxation is a major instrument for the conduct of both developed and developing countries. Taxation is known to accomplish a number of objectives such asrevenue generation for government, economic stabilization and income re-distribution. Taxation as an instrument of public policy is essentially concerned with the manipulation of financial operations of both the government and private sectors with a view tofurthering certain economic objective.

        In Nigeria, these economic objectives include the attainment of appreciable level of full employment, avoidance of excessive inflation, achievement of satisfactory balance of payment position,appreciable increase in the national income and a reduction of extreme inequality among the citizens, provision of other essential necessities of life like water, school, building of bridges, roads and others.

        In every country, there are certain services which the government must provide to the citizens because of their essential nature. The services are so indispensable in life that individuals or corporate bodies are not allowed to provide them or where they are allowed, theyare not allowed to monopolizethe supplies or the production. Government does this to ensure that the supply of such goods and services are evenly distributed in any given society so that the rich and the poor alike may benefit.                                               

        The provision of such essential goods and services involve huge expenditure. One may ask; how does government get such huge amounts to finance the supply of such essential goods and services to her citizens? It is true that government mints money but there are other important economic factors that should be considered so that excessive money is not in circulation in an economy. For an economic balance to be maintained in an economy,government must find ways of financing her activities. One source of such finance is the contribution made by the private sector to government coffers in form of fees,levies or taxes. The question now arises, how does the funding of these activities come about?

       The primary source of government revenue is tax. Taxes which loyal citizens pay account for more than seventy percent of government revenue in Nigeria.

      Definition of Tax

       Tax has been defined in many ways by different authors. But in the real sense, the different definitions suggest the same thing.

      According toWinfery (1991), “Tax is regarded as a compulsory charge imposed by the public authority (Federal, State and Local Government) for the general purpose of government”. It is a levy regularly imposed and regarded as contribution to the general pool from which most government expenditures are financed.

Buhari(1993) defined tax as “a compulsory contribution from individuals and/or business organizations for the purpose of financing government expenditure”. According to him, government of almost every country engages in a number of activities which require the expenditure of funds. In order for the government to be able to undertake most of these activities, it raises funds through taxation.

     In summary, tax can be defined as the transfer of resources and income from the private sector to the public sector in order to achieve some of the nation’s economic and social goals. Some of the economic and social goals may be in the form of provision of additional government basic services particularly in education, public health, transportation, capital formation and in the provision of facilities. Generally, the ultimate aim of taxation is to raise high standard of living.

Maccnaghten(1967) said “income tax is on income and it is not meant to be taxed on anything else”. However, Dalton (1954:23) defined tax as a compulsory contribution imposed by a public authority irrespective of service rendered in return. With regards to this,Njokamma(1983)defined income tax as a measure of creating status upon any nation. As such, interpreting its provisions “No equity, no intendment” or anything else should be implied. The clean terms of the law should be applied but not necessarily restricted against the revenue.

Okpe(2009) stated that income tax is payable in accordance with section 3 of the PITD 1993, as amended, on the following sources of income inside or outside Nigeria.

(a)Gain or profit from any trade, business, profession or vocation for whatever period of time such trade, business, profession or vocation may have been carried on or exercised.

(b) Salaries, wages, allowances or other remuneration of an employment which are paid or payable in money by the employer to the employee, subject to certain deductions that may be approved.

(c)Gains or profits including any premiums arising from a right granted to any other person for the use or occupation of any property (e.g. rents and royalties).

(d) Dividends,interests or discounts.

(e)  Pensions, charges or annuities.

(f)Any profits or gains not falling within the preceding categories.

It should be noted generally that income from the sources listed underto (b) above are subject to income tax either:

They arise in Nigeria; or       

They arise outside Nigeria but remitted to Nigeria.

Nevertheless, tax is not the only source of government revenue;   other sources include:

Fines and fees

Motor licensing fees

Interest and payments

Dividends and royalties on government 

Share holdings

Miscellaneous income

State share of federal government disbursement loans and grants

School fees

Hospital fees etc.

        Revenue from governmentslike the Water Corperation and others subjugate the government sources of funds.

        The private sector is not left out in the fund generation because their own fund comes inform of borrowing and private savings etc.

        The absence of well-organized and locally controlled money market for borrowing has forced private sectors in most developing countries especially Nigeria to rely primarily on fiscal measures to mobilize domestic monetary resources for revenue generation. For instance, if profit on taxation and the marginal efficiency of investment are not well declined, these will consequently bring a fall on investment and as well affect the economy especially where there is decrease in tax rate.(i.e number of tax payers)

However,Duke man (1962 : 462) said that for an effective tax system that government should encourage investors or individual to pay tax to some extent for that will adhere to high rates of income thereby enabling government tocarryout its  function. Therefore, as long as this is significantly quantitative and psychologically substantial, the suggestion may not augur well for investment activities especially where retained profit and savings from the bank of capital formation exaggerated.


        Tax constitutes the greater percentage of the internally generated revenue in Enugu state and as well the major source of revenue for the government in financing its activities.

Tax however has its fundamental problems in the area of administration.

        There is some problem in planning, control and adequate information flow of tax collection generally. Since the government financial policy and objectives are to ensure adequate revenue and conduciveenvironment for the populace through progressive taxation and other fiscal measures designed to aid the rapid growth and development of the society for the benefit of the citizenry.   It is therefore necessary that these avenues of revenuecollection are solidified. But on the other way round the implementation of the government taxation policy and the realization of the taxation goal most atimes run at variance with the policy outlined in the tax laws. Many individuals as well as organizations see taxation policy as being harsh and unfavorable.  They argue that while few enterprises especially large companies continue to benefit from the government support through grants, subsidies and other tax incentive, others find the policies unbearable and as a result any little opportunity by such people to evade or avoid tax is highly utilized.

        The results of all these tax evasion and avoidance are that less revenue than envisaged is collected through tax by the government and thereby less social amenities than proposed are made available.

        These problems will be solved as soon as an efficient machinery is set in motion for effective administration and review of state tax laws.


The main aim of this study is to identify taxation as a major source of government revenue and ascertain its impact on management decision making. The specific objectives of this research work include the following;

1.  To examine the impact of taxation on management decision making.

2.  To identify taxation as a major source of government income in Nigeria.

3.  To determine the various problems associated taxation in Enugu state.

4.  To ascertain possible solutions to the problems identified.


The researcher formulated the following research questions.

1.  What is the impact of taxation on management decision making?

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