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This study shows the results of the impact of personal income tax. The study population consists of 100 of her randomly selected individuals. Data were collected using a self-constructed questionnaire and the results obtained were analyzed using a simple percentage method. The efficacy and reliability of the instrument were established. The survey found that people pay very little income tax and personal income tax is also affecting Nigeria’s economic development. The results show that there is a positive relationship between tax contribution and economic development, with tax revenue having a significant impact on Nigeria’s GDP. However, it is recommended to support tax return notices at the beginning of each fiscal year with leaflets and posters in local languages ​​such as Yoruba, Hausa and Igbo.




A tax is defined as money that people pay to the government for their profits from the goods and services provided. Chris and Elizabeth (2001) also define taxes as compulsory pro rata contributions from individuals and property, levied by states to support the government and for all public needs by virtue of national sovereignty. rice field.

Generally, taxation can be described as a form of levy levied on all residents and non-residents of the tax jurisdiction in which they operate. Paying the taxes levied is a citizen’s civic and patriotic responsibility, which also flows into the government as an income or source of revenue, to finance the provision of socio-economic and infrastructure facilities, and to increase industrial efficiency. It will also be.

The history of taxation in Nigeria dates back to pre-colonial times. According to Lekan and Sunday (2006) before the colonization of the different entities which were later amalgamated under the name Nigeria, there were different systems of taxation existing in the form of compulsory services, contribution of goods, money, labour and so on amongst the various kingdoms, groups and tribes controlled by the Obas, Emirs, Ezes, Attah of Igala, Tor of Tiv, Ohinoyi of Ebira and so on in order to sustain the monarchs.

The various taxes levied by the different ethnic groups by the kings according to Ola (2004) took several forms such as ‘Zakkat’ levied on Moslems for educational, charitable and religious purposes, ‘kudin-kasa’, a form of an agricultural tax levied on utilization of land, ‘shuka-shuka’ levied on the ownership of cattle based on the member of cattle, ‘Ishakole’- contribution of farm products as a form of land tax in exchange for the use of land for agricultural purposes payable to Obas, chiefs and family community heads, community tax payable by all adults in order to execute projects beneficial to the community; ‘Oko-ane’ payable to Attah Igala for hunting in a particular forest, ‘Osusu Imachi-Nkwu’ payable to Ezes in Igbo land by those who harvest palm fruits and are expected to contribute proportion of the harvested palm oil. In Tivland in Benue state certain taxes are paid by couples during marriage ceremonies which are used for various community development projects.

The present form of taxation in Nigeria could be traced to the establishment of a British colony in Lagos on August 6, 1861 and subsequent amalgamation of the Southern and Northern protectorates of Nigeria in 1914.

During the colonial era according to Yerokun (1997), the imposition of any type of tax on citizens (individuals and corporate) took the form of promulgation of laws by the colonial authority. An example of such a law is the Indigenous Peoples Act Ordinance Cap 74 of 1917 applicable to western Nigeria. The current form of taxation in Nigeria can be traced to the establishment of the British colony of Lagos on August 6, 1861, followed by the 1914 merger of the southern and northern protectorates of Nigeria.

According to Yerokun (1997), during the colonial period, the collection of all kinds of taxes on citizens (individuals and businesses) took the form of promulgation of laws by the colonial authorities. Examples of such laws include the Indigenous Peoples Act Ordinance Cap 74 of 1917, which applies to western Nigeria.Following Ola (2004), the same law was re-enacted in 1929, and for the first time women was taxed on 1929. Another law was the Non-Aboriginal Protection Tax Ordinance of 1931. This ordinance was later repealed and incorporated into Tax Act No. 4 of 1940 and then re-enacted as the Income Tax Act of 1943 (ITO).

His Yerokun (1997) tax law, mentioned above, has been applied to individuals and corporations by various tax and financial authorities in various states and territories. According to Lekan and Sunday (2006), the colonial government established the Raisman Commission in his 1958 to promote uniformity in taxation across the geographical entity called Nigeria. At the end of its work, the Commission recommended the introduction of a uniform income tax principle applicable to all regions of Nigeria, a recommendation accepted by the Government and incorporated into her 1960 Constitution of the Federal Republic of Nigeria. Incorporated. This resulted in the promulgation of the Income Tax Administration Act of 1961 (ITMA) and the Corporate Income Tax Act of 1961 (CITA).

The above laws (ITMA and CITA) 1961 were later repealed and revived as the Personal Income Tax Act 1993 (PITA) and the Corporate Income Tax Act 1990 CAP 60 LFN respectively. As a result of the work of the Tax Review Board, these laws were reviewed, updated and incorporated into the Federal Republic of Nigeria Act 2004. The current law regulating the administration of Income Tax (PIT) is the Income Tax Act P8 LFN 204, which taxes the income of individuals and corporations.

Tax according to Nightingale (2000) under any jurisdiction is discriminatory in the sense that it is assessed on persons or property based on profits/incomes or gain, the benefit derived by citizens from tax payment is without reference to the contribution of individual tax payers. In line with this, according to Ariwodola (2000) it is accurate to say that the primary objective and purpose of taxation in most nations of the world is essentially to generate revenue for government expenditure on social welfare such as provision of defense, law and order, health services and education. Revenue from taxation can also be spent on capital projects otherwise called consumer expenditure, creating social and economic infrastructure which will improve the social life of the people.

In Nigeria today, tax administration has been a challenge Naiyeju, J.K. (2010) highlight the various Challenges of the Tax collection and Administration in Nigeria Today as Administrative Challenge, Compliance Challenges, Lack of Equality, Challenge of Multiple taxes, Poor Taxation Drive by tiers of Government, Challenge of Bad Governance, Challenge of Corruption and Challenges of Human Capacity Building and Training.

The aim of this research project is to look into various constraints faced in the administration of Personal Income Tax and examine its economic benefits to the development of Lagos State. Solutions are also provided in relation to the strategies adopted by the tax authorities to expand the Nigerian tax network to improve tax revenues.


There is no denying that income tax is a global and pervasive problem that requires research and provision of possible solutions to issues related to effective tax administration. Most tax authorities (especially state and local governments) have the institutional capacity (human resources, skills, salaries, other funds, computing and IT infrastructure) necessary to effectively manage taxes in their jurisdiction. Ability related to structure, etc.).

Employers not registering their employees and remitting these taxes to the appropriate tax authorities. Many people evade taxes in cities and rural areas. Small businesses, the informal sector, and even large corporations have evasive practices. Currently, the majority of PIT is paid only by employees. Politicians, the rich, professionals, and a few privileged classes are not taxed fairly. Multiple taxation remains a major problem in our tax collection and administration.

Bad taxation by level of government:
The political economy of revenue allocation discourages aggressive revenue generation, especially by states and local governments. They rely heavily on their share of oil revenue.

Bad Governance Challenges:
Taxpayers are not encouraged to pay more in taxes because there is no visible evidence of good governance. Corruption Challenge:
Tax collection and administration are often prone to corruption. The risk of corruption undermines tax revenue and trust in the system. Challenges in building and training human capabilities:
State and local governments lack qualified personnel to effectively manage their corresponding taxes.

The identified issues can be summarized as follows:

1. Bad tax administration

2. tax evasion

3. Corruption of tax collectors

4. Violations of Tax Laws by Taxpayers


The main objective of this study is to assess the impact of income tax on the economic development of Lagos State.


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