AN APPRAISAL OF THE IMPACT OF PAYE ADMINISTRATION ON INTERNAL REVENUE GENERATION

CHAPTER ONE

1.1 Background to the Study

With the increasing focus on the good corporate governance and emphasis on revenue generation by the government, it is more critical now than ever to comply fully with the law including ensuring that tax filling and payment deadline are met.

This assertion should not be overemphasized when considering a great deal of concerned show by the Board of Internal Revenue when it comes to personal income tax such as PAYE in Nigeria today.

PAYE , being an acronym for Pay As You Earn, it is simply a method collecting personal income tax from employees salaries and wages through deduction at sources by an employer as provided by relevant section of Personal Income Tax Act2011(vanquard2012) it means for raising revenue in order to finance public expenditures such as building of governments state house, construction roads and other form of amenities. Considering this, it is that PAYE must have yield huge amount of revenues to the government, but transparency is one big question in the manner and ways PAYE is remitted
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because a number of loopholes exist as to due date of remitting PAYE and the charges made on the level of income from one ministry to another (under payment and over payment )

Therefore, this study is on the appraisal of the impact of PAYE administration and revenue generation in kebbi state with implication for transparent tax administration a case study of Kebbi State Board of Internal Revenue, this study embark on with a view to analytically present the tax mechanism in place especially as it relate to PAYE, the challenges there in and also make recommendation at the end.

1.2 Statement of the Research Problems

This research aimed at appraising the impact of Pay As You Earn PAYE system of revenue generation with special reference to kebbi state

For many years the issue of revenue generation whch is one of the income yielding venture have been one aspect of debating thus a large sum of money is being realized.

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Despite the important and effect of Pay As You Earn PAYE system of revenue generation in Kebbi with the sole aim of development of the state. The practices which has been widely used in the state is bedeviled with the problems of

Underpayment and over payment of tax by an employee is a serious problem facing Kebbi State Board of Internal Revenue. An overpayment occur when you have paid more tax than you were liable to pay, which constitute serious problem to the Board.

Another problem bedeviling the PAYE administration in Kebbi State Board of Internal Revenue could be lack of in build process of complain and redress, in Kebbi State Board of Internal Revenue there is no appropriate medium of complain mechanism if an employees encounter error in the payment system.

Another problem that is encounter by the Kebbi State Board of Internal Revenue could be lack of transparency in the administration of PAYE, lack of accurate number of employees under the tax administration and the amount or sum generated, this problem is as a

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result of lack of adequate supervision and accountability of the tax administration.

1.3 Research Question

i.  How can an employee avoid the inherent problem of overpayment?

ii. What best complain or redress mechanism should be in place to address employee dissatisfaction?

iii.    To what extent will transparency in the PAYE tax administration enhance the revenue base of the state?

1.4 Objectives of the Study

i.  To determine the possible solution to the inherent problems of paying too much or too little by employee and tax authority respectively.

ii. To examine the extent to which transparency in the PAYE tax administration will enhance the revenue base of the state.

iii.    To ascertain the most appropriate medium for complain and redressing the problem of under and over payment of PAYE.
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1.5 Research Hypotheses

i.  That the employee can avoid the inherent problems of paying too much or too little by bridge the gap of payment between the employees and tax authority.

ii. That in build systemic PAYE redress mechanism should be in place to address employee dissatisfaction.

iii.    That adoption transparency in the PAYE tax administration will enhance the revenue base of the state.

1.6 Significance of the Study

This research work is of great significant not only to the Board of Internal Revenue Kebbi State but also to other similar Boards in Nigeria as it will be of great aid to the theoretical and policy formulation framework of tax administration especially PAYE system of internal revenue generation of the state. It will also richly benefit the revenue sources analysis of the authority to discover how best it can effectively discharge it duties.

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