The Impact of Personal Income Tax on State Governments Revenue Profile in Nigeria
15 Pages Posted: 4 Jan 2016
Date Written: November 13, 2015
Personal income tax is the tax paid by individuals from both the formal and informal sectors of the economy. While those on employment pay as they earn which is popularly known as PAYE, those in formal and informal sectors are directly assessed based on the income they generate from their entrepreneurial ventures, which is also known as Direct Assessment. The aim of this paper is to assess the contribution of personal income tax as a source of revenue for state governments in Nigeria. Data for the analysis were derived from published secondary sources. The paper has established a significant difference between the amount generated as internally generated revenue and the inadequacies of the internally generated revenue to cater for the states’ total expenditure profiles. There is also an indication of a higher reliance on the federation account for the states revenue profile. It is recommended that the states must look inwards and develop new strategies to enhance their internally generated revenue base, most especially given the current dwindling prices of oil in the international market.
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