ABSTRACT
The
adverse situation in the various local government areas of Nigeria has led
the researcher to go into this very topic. Hence, the purpose of this work is
to enlighten people, mostly students in the school of financial studies on how
revenue is generated in local governments, problems confronting them as regards
revenue generation as well as prospects to the problems.
However, local governments are expected to use the fund
generated in embarking on income earning projects, projects, that come under
fee or bill charging utilities like portable water, electricity, construction
of market squares etc.
However,
before fund can be generated, one must make ways of getting the funds like
grants given to local governments for some purposes by the federal government.
The central government also determines the sources, extent, purpose and maximum
duration for which borrowing is to embark upon by the local government and not
just going ahead to borrow.
Local
government raise loans to purchase plants and equipment, as well as other
projects whose costs are too great for them to embark on at a time.
Furthermore,
local authorities in Nigeria
are responsible for the establishment and maintenance of public motor parts,
bad roads, market squares etc.
It
is therefore recommended for students in the school of financial studies at all
level (who will be opportune to lay hands on this write up) as a ground for the
much needed funds internally generated revenue to facilitate projects execution
by local governments.
TABLE OF CONTENTS
TITLE PAGE i
APPROVAL
PAGE ii
DEDICATION iii
ACKNOWLEDGEMENT
iv ABSTRACT v
TABLE
OF CONTENTS
CHAPTER ONE:
1.0
INTROUCTION 1
1.1
STATEMENT OF PROBLMS 3
1.2
OBJECTIVE OF THE STUDY 5
1.3
SIGNIFICANCE OF THE STUDY 6
1.4
SCOPE, LIMITATION AND DELIMITATION 7
1.5
DEFINITION OF TERMS 8
CHAPTER
TWO:
REVIEW
OF RELATEDLITERATURE
2.0
EXTERNAL SOURCES OF FUNDS 10
2.1
FINANCIAL TRANSFER 11
2.2
GRANTS 14
2.3
LOANS 17
2.4
INTERNAL SOURCES OF FUNDS 19
2.5
PERSONAL INCOME TAX 19
2.6
COMMUNITY TAX
20
2.7
LOCAL RATES 21
2.8
FEES AND CHARGES 22
2.9
COMMERCIAL UNDERTAKINGS 24
2.10
COURT FINES AND FEES 26
CHAPTER THREE:
RESEARCH METHODOLOGY
3.0
SOURCES OF DATA 29
3.1
LOCATION OF DATA 30
3.2
ANALYSIS OF DATA 30
3.3 RESEARCH POPULATION
31
CHAPTER FOUR:
SUMMARY OF FINDINGS
4.0 SUMMARY 32
CHAPTER FIVE:
RECOMMENTION AND CONCLUSION
5.0
RECOMMENDATION 35
5.1 CONCLUSION
35
BIBLOIGRAPHY 37
CHAPTER ONE
1.0 INTRODUCTION:
BACKGROUND
OF THE STUDY:
Nigeria has three-
tiers of government systems,
These are; (i) The
federal government
(ii) The
state government and
(iii) The local government.
The essence of this division of government into federal,
state and local levels is to enable the government exercise her administration
easily and effectively. However the 1979 constitution spells out the functions
of each level of government. Generally it can be said that the governments are
responsible for the provision of the collective (social) goods and services on
a non- commercial basis as well as the provision of other social and economic
services. In order to meet up with the
foretasted goals and services, the government needs to collect revenues.
Local government, which this work emphasizes on, can be
described as the government at the local level, exercised through
representative council, established by law to exercise specific power within
definite areas. The government of such body is selected or otherwise locally
selected.
The administering of government at local level in Nigeria traced
as far back as colonial period, when native authorities were established in
their rudimentary forms, that is in their own ideas. They represented a system
of indirect rule, which sought to establish a form administration through
traditional authorities
Between 1950 and 1955, the first elected local government
council based on the model was shadbushes in logos and in the former Eastern
and western Region. Though, the traditional members constituted a maximum of 25
percent in most of the councils, the emergence of members elected on a
political basis instigated the traditional rulers to gradually withdrawn from active
participation in local administration in Nigeria.
Presently, local government administration is still in
existence assigned with numerous. Responsibilities like, bawling of market
square, provision of pipe-born water, motor parks, rehabilitation of local and
rural roads, sanitary and health inspection, maternity home and dispensaries e
t c.
Finally, local governments have two (2) main sources of
revenue or fund. They are
(i) External sources of fund.
(ii) Internal sources of fund.
The External sources of fund include;
(a)
Statutory
allocations from the federal and state government (i.e., 20% considered federal
revenue and 10% of internally generated state revenue).
(b)
Special grants
which aim at assisting local government finance their aforementioned projects.
In addition, local government source fund internally through receipts on rent
and rates on their properties, tenement tax, earning from commercial
undertaking, interest payment and dividend, licenses, fees and fines e t c.
1.1 STATEMNT OF PROBLEM:
The problems that confront most local governments on
revenue generation cannot be over-emphasized. Hence local government having
numerous means of sourcing fund, are also, faced with a lot of problems and
difficulties in generating its revenue. These problems affect mostly its
internal sources of revenue.
Tax avoidance and delinquencies are among the
problems confronting most local governments on revenue generation, as most
people of the society device some means source maximum reduction in the amount
to be paid as tax obligation on the date it is due, there by, escaping tax
liabilities.
Inability of most people of the society to pay up
amount due for rent and rates on local governments properties. This hinders
local governments as regards revenue generation, as most people lack fiancé and
others not willing to pay – up.
Inadequate operational vehicles and other facilities
confront local governments as a problem in generating revenue. Revenue
generation needs mobilization and most local government do not have enough,
which would have enable them to move easily from one part of the area to
another for the collection of various fees.
Another problem hindering local government revenue
generation lies among the staff. Many staff lack job related in service
training, and some have poor educational background, some are not dedicated,
deligent and honest. Often they do collude with tax or ratepayers to defraud
the government.
All these problems will not only affect the local
governments but, every member of the society and the nation in general. This
ids because, these problems will not enable most local governments to carry out
or problem their statutory assigned functions effectively thereby, leading to
and definitely, affects the economic growth and development of the nation (Nigeria).
1.2 OBJECTIVE OF THE STUDY:
From experience and the prevailing circumstances or
situation of the economy, it can be clearly observed that no central government
can carry-on or exercise her administration effectively without the assistance
of the state, and mostly, the local governments as to reach easily to the
welfare of the people in the rural areas, that is, people at local level.
Hence, the objectives of this study are:
- To
critically examine and know why most people of the society do not comply in
payment of tax, rent and rates and other fees or charges.
- Also
to examine how staff of local governments contribute to the problem of revenue
generation, and as well, to know how inadequate operational vehicles/machines
contribute to the problems of revenue generation in local government areas.
- To
know the effects or impacts of these problems, that is, how they will affect
the cost and standard of living of the people, as well as, economic growth and
development.
- To
make recommendations or prospects on these problems of revenue generation in
local governments in order for them to perform their statutory assigned
function effectively.
1.3 SIGNIFICANCE OF THE STUDY:
The inhabitants of the various local government
areas of the nation (Nigeria)
will have the course to enjoy the affirmative results to certain extent if all
or part of these problems to revenue generation in local governments are
properly tackled. Hence, such myriad of problems of revenue generation, which
also, give rise to untold hardship will generally be under control or a thing
of the past.
This will become a tool for most local government
areas to a speedy set-up of some strategies which will enable them to generate
their revenue easily, and as well as executing their projects effectively. This
study will be of paramount significance to the society, mostly to those
students in school of financial studies (Banking and finance) who are making or
intending to carry out research in the problems that confront most local governments
in Nigeria
on revenue generation.
This will also give potential market men and women
as well as other residence of various local government councils as regards
payment of tax, rates, charges, etc.
Finally, it will enable the researcher to have an
in-depth knowledge of the study. Therefore, the significance of this study is
by no virtue, exhaustive.
1.4 SCOPE, LIMITATION AND DELIMITATION:
Nigeria has been in existence, colonized by the colonial
masters, had her independence in 1960 with total population 88.5m people as at
“census 91†and today, consisting of over 100m people. It is made up of 36
states including Enugu
State, which the
researcher has taken as his scope of study.
It may not augur well if the researcher fails to
record some of the limitations encountered during the study within the
aforementioned scope. These include: time, finance, un-cooperative attitude by
the respondents to some relevant data.
The very time left for the researcher to carry on
this very work was very limited, which could not give chance for everything
needed. The finance disposed was too small and restricted the researcher in
visiting many places.
The unco-operation
attitude of some of the respondents hindered greatly the effective
gathering of relevant data. Some feel much reluctant to answer some question
posed to them, while others doubted the sincerity of the researcher and the
usefulness of the study.
1.5 DEFINITION OF TERMS:
(i) TAXATION:
This is one of the ways local government generate revenue. It is a compulsory
levy imposed by the local government on most of the entire members of the
society who are capable of paying tax or who are expected to pay tax.
(ii) PERSONAL
INCOME: This is a form of direct tax, which is levied on the wages,
salaries and other earnings of individuals. In assessing this kind of tax, certain allowances (wife,
children, dependent relative allowance, etc) are deducted; the balance is then
taxed to determine the amount to be paid as tax.
(iii) LOANS:
Loan can be described as a financial aid with interest payable. Sometimes local
governments borrow money in form of loan from other bodies like: Banks, State
Government, Federal (if possible) etc to enable them execute their projects
when they are in short of fund. However, this loan is payable at a given
interest rate over a specified period of time.
(iv)
RENT AND
ROYALTY: these are payments made
to local government properties or revenue, such as land, building, etc.
(v) GRANTS:
Grant are said to be financial aids without interest. This simply means
that grants are form of gift granted to local governments by a body (federal,
state or any other body) without paying back.
(vi) CHARGES,
FINES & FEES: These are among the means of generating revenue by the
local government. They are payments made to local governments by those who
indulge in one commercial activity or the other. Such fees are: motor license
fees, Road / bridge tolls, market fees etc.
REFERENCES
Odoh Nick N (2004) Introduction
to public financie. Enugu J.T.C. Publishers Ltd Pg 978.
Iloh
(2000) Business
finance (Issues & applications Enugu,
Glanic Venture Pg 59.
Okorie
(2001) Principles
and practice of personal income tax, Enugu.
Sunny enterprises Pg 8.
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