Assessing the Productivity of Personal Income Tax System in Nigeria.
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This study involves an assessment of the personal income tax system in Nigeria. To generate the data for the study, the ex-post factor research design was adopted. Hence, the data on personal income tax (PIT), total tax revenue (TTR), and Gross Domestic Product (GDP) for the study were collected from secondary sources such as the Central Bank of Nigeria (CBN) Statistical Bulletin and Annual Reports for 14 years. The time series data covered the periods 2000 – 2013. In this study, we adopted Oloidi and Oluwalana (2014) model of assessing tax productivity with little modification. In the model tax productivity is measured by applying somewhat cross elasticity between some economic indexes such as GDP and TTR. Our findings showed that personal income tax in Nigeria is unproductive. It generate serious economic burden on the tax payer to be able to yield maximum revenue for the government. However, we believe that the new legislation (the Federal Capital Territory Internal Revenue Act 2015), which establishes a new tax authority for the Federal Capital Territory (FCT) to administer and collect taxes from residents of the FCT will improve personal income tax particularly from high net-worth individuals. Based on the above, it is therefore recommended that the Nigerian Government should intensify effort to further improve revenue generation through personal income tax. The government should ensure that all self –employed individuals and traders register their businesses, and appropriate monitoring system should be put in place to ensure maximum compliance with personal income tax to promote its productivity.
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