1

The Effect of Personal Income Tax Amendment Act on

Revenue Generation in Nigeria

By

ZAINAB DABO
Department of Business Administration, Kaduna State University
Email:zeemuhdabo@yahoo.com
+2348036444125

AIMUYEDO MARY
National Open University Kaduna Study Centre
Email: yedoprecious@yahoo.com
+2348069576649

MUHAMMAD TANKO
Department of Accounting, Kaduna State University
Email: ztanko2003@yahoo.com
+2348077262667



Abstract
The Personal Income Tax Act Cap P8, LFN 2004, 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, and also to increase the compliance
levels and the amount of tax voluntarily paid and or collected by the Nigerian government. This paper
therefore evaluated the impact of the amendment on the revenue generated by the kaduna state board
of internal revenue. Both primary and secondary data were used as sources of data collection. The
chi-square and t-test were used in the analysis. The paper found that the personal income tax law
2011 has not successfully encouraged tax payers to voluntarily comply with self-assessment and
compliance. The new law has not succeeded in driving the force of change that will minimize the
incidence of tax avoidance and tax evasion. It has therefore not improved the revenue generated by
the state boards of internal revenue. It is the recommendation of the paper that more has to be done
on the law to reduce the loop holes that allow tax payers to manipulate the law to their advantage.
Again, the law must be reviewed to have stringent punishment for defaulters. Authorities must also
provide services to the tax payers to convince them that the tax they pay provides benefit to them.
Furthermore, the Kaduna State Board of Internal Revenue Service (KSBIRS) staff should undergo
training and workshop on proper administration of Personal Income Tax in the state.
Keywords: Personal Income Tax, Tax avoidance, Tax evasion and Revenue Generation


Introduction
In Nigeria, the personal income tax act 2004 was in operation until its amendment in 2004. Major
changes were made to change the act to reflect the current situation in the economy. According to
Usman (2008), 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
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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
Kaduna State. In a survey carried out by Usman (2008), he opined that it was due to inept tax
administration, Salawu (2007) opined that low income generation is due to the fact that taxes collected
are not in line with economic realities. Jide (2009) corroborates this idea by stating that the tax table
rate is not ideal. Baba (2010) on the other hand is of the opinion that majority of Nigerians are not
used to paying tax while Aderibigbe (2002) 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, 2004 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.
In the light of recent development, our study would like to elicit the justification for this amendment
to discover whether it will truly enhance tax compliance by citizens and hence improve revenue
generation in Kaduna State.
Literature Review
In a tax system, responsibility is assigned to three key entities; these are tax payers whose obligation is
payment of the assessed taxes promptly and correctly, tax authorities which ensure the collection of
taxes to the government and the government whose duty is the imposition of taxes to finance the
activities that ultimately benefit the citizens. Thus, the tripartite constituents of an effective tax system
include tax administration, tax collection and tax policy and law (Olaofe, 2008). It is on the parameter
of administration and collection that an assessment of the effectiveness of personal income tax system
in Kaduna state would be investigated.

Several studies have been conducted on taxation generally and especially on personal income tax, its
contributions to income generation and economic development. Festus & Samuel (2011) considered
personal income tax and Nigerian Economic Development and concluded that there is a significant
relationship between personal income tax and Nigerian economic development and that tax evasion
and avoidance are major hindrances to revenue generation. Asada (2005) examined the problem areas
of the Administration of Personal Income tax in Nigeria and mentioned among others tax avoidance
and evasion perpetrated with the deep seated knowledge and connivance of the best minds in
accountancy, law firms, insurance companies, etc all in the name of tax planning or tax mitigation
as major problem areas. Joses (2002) assessed the administration of personal income tax and its legal
structure in the Maiduguri metropolitan council of Borno State and found that non-compliance with
tax laws and regulations by tax payers is deep in the system because of weak control suggesting need
for a general tax reform in the state. Usman (2003) also assessed the effectiveness of personal income
tax administration in Zamfara State and found that fraud and misuse of public funds by public officials
and widespread tax evasion and avoidance are evidences that tax administration in the state is
ineffective and inefficient. Ariyo (1997) in his study on productivity of the Nigerian tax system
reports a satisfactory level of productivity of the Nigerian tax system before the oil boom. The advent
of the oil book encouraged some laxity in the management of non-oil revenue resources such as
personal income tax and company income tax. The report underscores the urgent need for the
improvement of the tax information system to enhance the evaluation of the performance of the
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Nigerian tax system and facilitate adequate macroeconomic planning and implementation. Musa
(2004) examined Tax planning and Economic Development and found that effective tax planning
will enhance tax collection and hence economic development.
Our study differs from the above studies because none of them had considered the effect of the
amended law on tax avoidance, evasion and income generation. Moreover, the main aim is to find out
whether the purpose of the amended tax law had been achieved or not.
The Personal Income Tax in Nigeria
Adejuwon (1998) defined personal income tax as the tax charged on the income of individuals and
such an income is divided into two major groups when determining the statutory income of individual
or partners in partnership which are earned income and unearned income.
In Nigeria, State Governments receive payments in respect of personal income taxes of individuals
resident in those states on the first day of the fiscal year, excepting members of the Armed Forces and
residents of the capital territory who pay to the Federal Government (Samuel 2010).
James (2001) states that section 1 of the Personal Income Tax Act, 1993 which repealed the Income
Tax Management Act 1961 provides that there is hereby imposed a tax on the income of (a)
Individuals, communities and family and (b) Trustee or estate, which shall be determined under and be
subject to the provision of this Decree . Thus, the Personal Income Tax Act imposes taxes on
individuals who have taxable incomes, partnerships, trustees and executors of settlements, and on
family and community incomes (Samuel, 2010).
According to Samuel (2010), the liability to income tax extends in general to: All persons resident in
Nigeria, whether Nigerians or not as long as income is derived from Nigeria; All persons not resident,
whether Nigerian or not in so far as they derive income from property, trade, profession, vocation or
employment in Nigeria.
Personal income tax is often collected on a pay as you earn basis, with small corrections made soon
after the end of the tax year. Theses corrections take one of two forms: payments to the government
by tax payers who did not pay enough during the tax year; and tax refunds from the government to
those who overpaid. Income tax systems often have deductions available that lessen the total tax
liability by reducing total taxable income. They may allow losses from one type of income to be
counted against another. For example, a loss on the stock market may be deducted against taxes paid
on wages.

Personal Income Tax (Amendment) Act, 2011
The Personal Income Tax Act Cap P8, LFN 2004, 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, and also to assist to increase the
compliance levels and the amount of tax voluntarily paid and or collected by the Nigerian
government.
Olugbenro (2012) observed that taxpayers in Nigeria heaved a sigh of relief when the news of the
amendment to the Personal Income Tax Act (PITA) spread across the length and breadth of the
country. He furthered that the announcement came after a prolonged wait as the Bill was passed by
the immediate past sixth Assembly.
The House of Representatives passed the Bill on 25
th
May, 2011 while the Senate passed it on 1
st
June,
2011. The news of the Presidents assent to the Bill to amend the Personal Income Tax Act, Cap P8
LFN 2004 was made public on Tuesday, 13
th
December, 2011, during the presentation of the 2012
budget proposal by the President to a joint session of the National Assembly.
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Expectedly, the Personal Income Tax (Amendment) Act, 2011 has generated series of reactions and
flurry of comments, including differing views on some of the controversial aspects. As soon as the
Personal Income Tax (Amendment) Act was made public, it was discovered that the date of assent by
the President was 14
th
June, 2011. Till date, it was unclear why taxpayers have to wait for six months
before the news f the signed bill became public (Olugbenro, 2012).
Curiously enough, before the Presidents assent, there were agitations and appeals from taxpayers for
its signing. For example, one national newspaper published on 28
th
October, 2011, reported that
Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) appealed to the
President to sign the Personal Income Tax (Amendment) Bill into law without further delay.
Some commentators have mentioned that the indicated date of assent helps to avoid a breach of
Section 58 of the 1999 constitution which requires the president to signify his assent or the
withholding of his assent within thirty (30) days of a Bill being presented to him. Another point is
that, it may have been impossible for the president to assent to the bill at any period later than June,
2011 which signified the end of the sixth National Assembly. The legislative rue that was then
applicable is to the effect that any Bill that could not be passed at the end of a session of a particular
Assembly would go through a fresh legislative process when a new Assembly is inaugurated.
Thankfully, taxpayers do not need to suffer a second round of the waiting game as the President has
done justice to the Bill. The new Assembly has also modified its rule which now allows a new
Assembly to continue the consideration of Bills that could not be completed during a legislative cycle.
A Bill could now survive beyond the lifespan of a particular legislative cycle.
Key Changes
i. Introduction of a consolidated tax free allowance of N200,000 or 1% of gross income, whichever is
higher, plus 20% if the gross income. Gross emolument is defined to include benefits in kind,
gratuities, superannuation and any other incomes derived solely by reason of employment as against a
personal relief of N5,000 plus 20% of earned income in the old law.
ii. Deleting paragraph 2 & 3 under the third schedule that hitherto exempts the official emoluments of the
President, Vice President, Governors and Deputy Governors for personal income tax purposes.
i. Personal income exempted from tax include: National Housing Fund (NHF), National Health
Insurance Scheme (NHIS), Life Assurance Policies, the National Pensions Scheme and Gratuities.
ii. Principal place of residence is now redefined to include places where branch offices and operational
site of companies are situated. Operational sites are defined to include oil terminals, oil platforms,
flow stations, construction sites, etc with a minimum of 50 workers.
iii. Increase in minimum tax rate from 0.5% to 1% of gross income
iv. Benefit in kind now specifically included in gross emolument and by implication, taxable income.
v. Temporary staff now specifically liable to tax. This will include casual workers, interns and other
contract staff.
vi. Reimbursement and expense claims still applicable as the relevant provision of the law was not
deleted by the amendments. Also it cannot be argued that reimbursements (by their nature) are
included in consolidated allowance. This means that employees will continue to enjoy tax free cost of
passage, medical and dental expense etc.
vii. Conditions for exemptions from personal income tax for any employment wholly or partly performed
in Nigeria now modified to require evidence that such individuals are liable to tax in another country
under the provisions of a double tax treaty. Also, where the remuneration is borne by a fixed base of
the non- resident employer in Nigeria, the individuals will be deemed to be liable to tax in Nigeria. In
addition, the 183 day residency rule has been modified to include periods of temporary absence or
leave.
viii. Appeal against unresolved assessment to be handled by the Tax Appeal Tribunal
ix. 1% bonus for early filing of assessment by individuals has been removed.
x. Provision for the refund of excess withholding tax (WHT) and interest on withholding tax (WHT)
default to be at the Central Bank of Nigeria Monetary Policy Rate (MPR).
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xi. Interest on default in payment of tax due to be at bank base lending rate to be imposed on an annual
basis from the date when the tax becomes due until it is paid. This means simple interest will now be
charged against the current practice of a flat rate (one off) interest.
xii. Filing of annual returns now 31
st
January (previously, 31
st
March).
xiii. Minimum of 5% retention of revenue collected by tax authorities for administrative purposes. It is not
clear whether this would cater for tax refunds.
xiv. Tax Officers now required to apply to the High Court for a warrant of distrain before exercising their
powers to distrain for failure by taxpayers to pay final and conclusive tax liability under the law.
xv. Itinerant worker redefined to include any individual irrespective of status who works in more than one
state for at least 20 days in at least 3 months of every assessment year.
xvi. Tax exemption for individuals on interest income on debt instruments including corporate bonds.
xvii. Individual tax clearance certificates to be demanded for change of ownership of vehicles and
application for land title transfer or perfection.
xviii. New tax table rate is as below
NEW BANDS (N) NEW RATES (%)
First 300,000 7
Next 300,000 11
Next 500,000 15
Next 500,000 19
Next 1,600,000 21
Above 3,200,000 25
xix. Enhanced power of administration of State Boards of Internal Revenue.
xx. Strengthening the offences and penalties provisions.
Tax Evasion/Avoidance
Tax avoidance is the legal use of tax laws to reduce ones tax burden. Turner (1990) described it as
using whatever legal means you choose to reduce your current or future tax liabilities. Murray (2010)
defined it as the legitimate minimizing of taxes, using methods approved by Inland Revenue Service
(IRS). Albinet (1996), opined that it is generally the legal exploitation of the tax regime to ones own
advantage, to attempt to reduce the amount of tax that is payable by means that are within the tax law
whilst making a full disclosure to the tax authorities.
In contrast, tax evasion is a deliberate act on the part of the taxpayer not to pay tax due (Festus, 2011).
Tax evasion is the illegal evasion of taxes by individuals, corporations and trusts. Tax evasion often
entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to
reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or
gains than the amount actually earned, or overstating deductions. Tax evasion is an activity
commonly associated with the informal economy such as Nigeria.
This is considered as a criminal offence on the part of the taxpayer. The relevant tax authority may
take such steps as it deems fit to recover any such tax and the taxpayer penalized if found guilty. Tax
evasion can be partial or total and its degree varies from person to person. It is partial evasion when a
taxpayer under declares his/her earnings for the purpose of tax, while total evasion occurs when a
taxable individual refuses to pay tax. One measure of the extent of tax evasion (the tax gap) is the
amount of unreported income, which is the difference between the budgeted and the actual income as
reported by the tax authorities. According to Ronan (2010) tax evasion is a global phenomenon and it
is difficult if not impossible to tax authorities to entirely eliminate it.
Both tax evasion and avoidance can be viewed as forms of tax noncompliance, as they describe a
range of activities that intend to subvert a states tax system, although, such classification of tax
avoidance is not indisputable, given that avoidance is lawful within self-creating systems.
According to Festus (2010) the following are some of the reasons why people evade tax: Total
ignorance of the law; Lack of faith in the ability of the government to use the money well; High rate
of tax; Absence of visible benefits accruing to the tax payers; Outright unwillingness to contribute
6

towards the development of the society, and Low penalties prescribed in the law for late payment of
tax.


Research Methodology
The population of the study is the taxable individuals and business units in Kaduna metropolis. The
population also covers the records of taxes collected in Kaduna State within 2011 2013. The total
population of taxable individuals in Kaduna State according to 2006 census figure is 760,084.

The determination of sample size is a common task for many applied researchers. Inappropriate,
inadequate, or excessive sample sizes could influence the quality and accuracy of research. An
efficient and robust formula for selecting the sample size for a research problem based on a level of
significance and a predetermined margin of error was proposed by Cochran (1977) and Lemeshow
(2011). In order to obtain the most efficient, representative sample, for our paper, we use the
following Cochrans formula for sample size determination.
2
2 /
4
1

Z
n
Where, n is minimum sample size required,
2 /
Z is the value of the standard normal ordinate at %
level of significance and is the predetermined margin of error. Hence, at the 5%level of
significance, 96 . 1
025 . 0 2 /
= = Z Z

and at 8% margin of error, 08 . 0 = . The following

computations give the sample size determination;
150
08 . 0
96 . 1
4
1
4
1
2 2
2 /
=

Z
n
That is, we need a sample size of at least 150 to arrive at a sample with a sampling error of at most
8%. Hence, our sample size is 150 taxpayers. Also, the annual collections from January 2010 June
2013 were used.
Two types of data are collected for this paper. Primary data are obtained from the population sample
in the study area and questionnaires were administered on them to validate the information. The
questionnaires were delivered by hand for effective collection. Also, secondary data are obtained from
the record of collection of the Kaduna State Board of Internal Revenue Service, published journals,
articles, text books, and surfing of internet. The demographic data of respondents were analyzed using
tables, charts and percentages while Chi square was used to test the significance of the descriptive
statistic and to validate the research hypotheses at an alpha level of 5% and (n-1) degree of freedom.
Furthermore, T-test was used to validate the research hypothesis on revenue generation. The t-test is a
procedure used for comparing a pair sample means to see if there is sufficient evidence to infer that
the means of the corresponding population distributions also differ.

Discussion
7

The main objective of this paper is to evaluate the major effect of the amended personal income tax on
the revenue generated by kaduna state board of internal revenue. The independent sample t-test is
applied to investigate the increase or otherwise in revenue generation as a result of the Personal
Income Tax (amendment) Act, 2011.

At a level of significance of 0.05, the decision criterion is to reject H
0
if |t| > t
0.05
at n
1
+ n
2
- 2 degree
of freedom.


Where:
1
X = mean of pre- amendment revenue generated
2
X = mean of post-amendment revenue generated
sp = Pooled Standard Deviation. Where
sp =
2
) 1 ( S ) 1 (
2 1
2 2 1 1
+
+
n n
S n n

where :
S
1
2
=
1
) (
1
1 1

n
X X


S
2
2
=
1
) (
2
2 2

n
X X


1
n = Number of items in pre-amendment revenue generated
2
n = Number of items in post-amendment revenue generated
Table 1: Calculation of Variance of Revenue generation - Pre- amendment
Quarters N000,000
X
N000,000
X
1
X
N000,000
(X
1
X )
2

1 1,170 (438) 191,844
2 1,248 (360) 129,600
3 1,245 (363) 131,769
4 1,468 (140) 19,600
5 1,689 81 6,561
6 1,600 (8) 64
7 1,737 (129) 16,641
8 2,086 478 228,484
9 2,227 619 383,161
2 1
2 1
1 1
n n
sp
X X
t
+

=
8

Total 14,470 1,107,724
Source: Statement of Internal Revenue Collection KSBIR
1
X =
Z1
n

1
X =
14,470
9
= 1,608


S
1
2
=
1,107,724
8
= 138,466




Table 2: Calculation of Variance of Revenue generation - Post- amendment
N000,000
X
N000,000
X -
2
X
N000,000
(X
2
X )
2

1 1,664 (83) 6,889
2 1,735 (12) 144
3 1,773 26 676
4 1,794 47 2,209
5 1,769 22 484
TOTAL 8,735 10,402
Source: Statement of Internal Revenue Collection KSBIR

2
X =
8,735
5


= 1,747

S
1
2
=
1,42
4
= 2,601
Therefore, in order to arrive at our calculated |t| we will first find the value of SP
sp =
2 5 9
601 , 2 ) 1 5 ( 138,466 ) 1 9 (
+
+

Sp = 305.25
Therefore, our calculated |t| will now be:


|t| = 1.46
5
1
9
1
25 . 305
747 , 1 608 , 1
+

= t
9

From tables, the critical value at an alpha level of 5% set at a degree of freedom of (n
1
+ n
2
-2) i.e. 12
is 1.782. This is higher than the computed |t| which suggests that the null hypothesis should be
accepted.
This indicate no any significant increase in terms of voluntary compliance by tax papers neither does
the new tax regime increase the amount of revenue generated by the state. To furthermore, explain
why the outcome of the paper we investigated the tax papers view on the effect of the new tax regime
on tax avoidance and tax evasion.

The Taxpayers View on effect of the Personal Income Tax (Amendment) Act, 2011 on Tax
Avoidance
Table 3: Inferential statistic of the taxpayers view on the effect of the Personal
O E O
E
(O
E)
2

(O
E)
2

E
40 35.5 4.5 20.25 0.57
38 35.5 2.5 6.25 0.18
39 35.5 3.5 12.25 0.35
25 35.5 (10.5) 110.2
5
3.11
25 23.3 1.7 2.89 0.12
24 23.3 0.7 0.49 0.02
23 23.3 (0.3) 0.09 0.00
21 23.3 (2.3) 5.29 0.23
19 22.5 (3.5) 12.25 0.54
20 22.5 (2.5) 6.25 0.28
22 22.5 (0.5) 0.25 0.01
29 22.5 6.5 42.25 1.88
18 20.8 (2.8) 7.84 0.38
20 20.8 0.8 0.64 0.03
18 20.8 (2.8) 7.84 0.38
27 20.8 6.2 38.4 1.85
TOTAL 9.93
Income Tax (Amendment) Act, 2011 on tax avoidance in Kaduna State
The critical value from table at an alpha of 5% set at a degree of freedom of (C-1) (R-1) i.e. 9 is 16.9.
The computed X
2
(see table 1) is 9.93 which is lower than the tabulated X
2
. This result suggests that
the taxpayers responses is statistically insignificant, thus, the null hypothesis is accepted. i.e. the
taxpayers do not agree that the amended Act will curb tax avoidance in any way.


The Taxpayers View on effect of the Personal Income Tax (Amendment) Act, 2011 on Tax
Evasion
Table 4: Inferential statistic of the taxpayers view on the effect of the Personal Income Tax
(Amendment) Act, 2011 on tax evasion in Kaduna State
O E O
E
(O
E)
2

(O
E)
2

10

E
40 36 4 16 0.44
38 36 2 4 0.11
39 36 3 9 0.25
27 36 (9) 81 2.25
25 22.7
5
2.25 5.06 0.22
24 22.7
5
1.25 1.56 0.07
23 22.7
5
0.25 0.06 0.00
19 22.7
5
3.75 14.0
6
0.61
19 22.2
5
3.25 10.5
6
0.47
20 22.2
5
2.25 5.06 0.22
22 22.2
5
0.25 0.06 0.00
28 22.2
5
5.75 33.0
6
1.48
18 21 3 9 0.43
20 21 1 1 0.05
18 21 3 9 0.42
28 21 7 49 2.33
TOTAL 9.35

At an alpha level of 5% set at a degree of freedom (C-1) (R 1), the critical value from tables is 16.9.
The computed X2 (see table 7) is lower than the tabulated X2. This result suggests that the null
hypothesis should be accepted i.e. the taxpayers do not agree that the amended Act will curb tax
evasion in any way.
The findings of the research work revealed that the taxpayers do not see any positive changes that the
Personal Income tax (amendment) Act, 2011 can have on tax avoidance neither do they agree that the
changes has any positive effect on tax evasion. In the spaces left for further suggestion, some opined
that Nigerians are used to avoiding and evading tax, so since it is their habit, a reduction in the tax will
not make them change. Moreover, JTB admin (2013) opined that some taxpayers hide behind the
lapses of the Act to avoid tax since the Act allows an employee who maintains dual residence to have
a right to exercise discretion as to where he declares as place of residence in his employment records
with an employer as a result they will choose a state that they know they will pay less tax as a place of
residence. Others opined that as long as the Government does not solve the problem of multiple
taxation in Nigeria, Nigerians, will keep on avoiding and evading taxes. While some others advised
that measures such as effective campaign on the importance of paying tax, and using the taxpayers
money for physically evidenced infrastructures will do the great job.
Not only that, from the records of income generated gotten from the Kaduna state Inland Revenue
Service, when subjected to statistical test, it was discovered that the Personal Income Tax
(Amendment) Act, 2011 does not improve revenue generation in Kaduna State. Therefore the paper
found no any significant increase in terms of voluntary compliance by tax paper neither does the new
tax regime increase the amount generated by the state.
Conclusion and Recommendation
11

The personal income tax law 2011 has not successfully encouraged tax papers to voluntarily comply
with self-assessment and compliance. The new law has not succeeded in driving the force of change
that will minimize the incidence of tax avoidance and tax evasion. It has therefore not improved the
revenue generated by the state boards of internal revenue. Although, personal income tax (PIT)
constitutes 80% of total income generated in Kaduna State, revenue generated from direct assessment
constitutes only about 3% despite the large number of people in business, trade, and vocations in
Kaduna State. This goes a long way to tell us that either tax evasion/avoidance has eaten deep into the
fabrics of our system or that the tax administration is poor. This was corroborated by the fact that in
spite of the amendment of Personal Income Tax (PIT) Act which was aimed at increasing revenue
generation, it does not impact positively on tax evasion, nor tax avoidance neither does it improve
revenue generation in Kaduna State from our findings.
For any organization to achieve its objectives, a lot depends on its financial strength and its manpower
that must be willing, qualified and sufficiently motivated. Therefore, Kaduna State Board of Internal
Revenue Service (KSBIRS) needs to be financially supported and should employ suitable and
qualified personnel who are willing and capable to use acceptable method of income generation. It is
the recommendation of the paper that more has to be done on the law to reduce the loop holes that
allow tax papers to manipulate the law to their advantage. Again, the law must be reviewed to have
stringent punishment for defaulters. Authorities must also provide services to the tax payers to
convince them that the tax they pay provides benefit to them.
Furthermore, the Kaduna State Board of Internal Revenue Service (KSBIRS) staff should undergo
training and workshop on proper administration of Personal Income Tax in the state and how to curb
tax evasion and minimize tax avoidance at regular intervals. Kaduna State Board of Internal Revenue
Service (KSBIRS) could also infuse into the tax force, professional tax administrators of diverse fields
who will assist the Board beef up income generated. Members of the public are also to be educated
and awareness created through various means such as publications, electronic media, community
leaders and the likes, in order for both the rural and urban dwellers know the need to pay their taxes as
at when due. Self-assessment forms which are filled by individuals should be carefully scrutinized
before issuance of tax clearance certificates. Proper investigations and calculations should be carried
out by the Kaduna State Board of Internal Revenue Service (KSBIRS) into the accounts of business
units in the state when returns are made in order to avoid over/under assessment of tax payers.
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