AN ASSESSMENT OF THE EFFECT OF TAX MANAGEMENT ON REVENUE GENERATION

1.1 Background of the Study Taxation serves as a cornerstone for national development by providing the financial resources necessary for government spending on various initiatives aimed at fostering growth and advancement across all sectors of the economy. As noted by Adedokun and Oyesiji (2015), taxation plays a pivotal role in driving a nation’s internal development, irrespective of its geographical size. This development may stem from both direct and indirect tax sources. According to Ibadin and Oladipupo (2015), taxation is a powerful tool that underpins socio-economic development in every nation, regardless of how developed or underdeveloped the country may be. Darono (2015) asserted that a key responsibility of any capable government is to ensure economic stability, redistribute wealth, and provide essential public services for the benefit of its citizens. As development efforts continue to expand, it becomes imperative for governments to adopt a proactive strategy in generating revenue. Efficient revenue mobilization delivers numerous benefits to both the government and the citizenry. Gurama and Mansor (2015) emphasized that effective revenue collection mechanisms enhance financial inflows, improve cash management, allow for accurate cash flow projections, increase interest earnings, ensure fairness in taxation, enable stronger budgetary controls, and facilitate the successful execution and completion of public projects. However, as Isaac (2015) pointed out, revenue collection is a complex task, involving tax assessments, collection processes, and legal disputes arising from delayed or unpaid taxes. For a government to balance its income with its expenditures, it must explore multiple revenue streams, including federal excise duties, corporate and individual income taxes, borrowing, interest earnings, customs duties, and various fees and levies. Yet, while revenue generation may seem straightforward, the challenge often lies in the efficient management and utilization of these funds. Tax administration involves a systematic and impartial approach by tax authorities to assess and collect taxes from individuals and businesses alike. The core objective of tax administration is to maintain fairness and objectivity while minimizing incidences of tax evasion. According to Soyode and Wausi (2015), tax administration encompasses the full array of processes implemented by the government to effectively plan and execute programs that serve the public interest. In Nigeria, tax administration responsibilities are distributed across various levels of government. At the federal level, the Joint Tax Board and the Federal Inland Revenue Service (FIRS) are responsible, while each state has a State Internal Revenue Service, and local governments have their respective revenue collection authorities. These agencies are legally mandated to gather tax revenues on behalf of the government to finance a wide range of developmental initiatives. Tax revenue includes funds collected from different sources, such as levies, PAYE (Pay-As-You-Earn), rental income, property transactions, and social security contributions (Wikipedia, 2019). However, despite the considerable revenues generated through these various streams, the absence of an efficient and effective tax administration can undermine the entire system. Proper revenue collection and management are essential for achieving desirable outcomes. As Odusola (2016) observed, the Nigerian government has acknowledged a persistent shortfall in financial resources to meet its obligations to citizens. Even though significant revenue is derived from taxes, it often proves insufficient to cover recurring government expenses. Odusola also pointed out that the Nigerian economy has heavily relied on oil revenues over the years, and this reliance subjects national income to fluctuations based on global market demand and supply dynamics, which have often stalled development efforts. Appah (2010) argued that a nation's socio-economic development is closely tied to the funds it can mobilize for infrastructure and public services. In a similar vein, Emmanuel (2018) contended that the achievement of government developmental objectives hinges on effective tax collection strategies. Ganyam, Ivungu, and Anongo (2019) posited that governments must leverage revenues from both internal and external sources in a strategic manner to pursue their development goals. A government’s foremost responsibility is to avert economic stagnation by creating an environment conducive to the growth of all macroeconomic and microeconomic sectors, a goal that can only be realized through a solid revenue base and a skilled workforce (Samuel, Adewole & Idih, 2019). To strengthen compliance and enhance efficiency, the government has introduced an integrated tax management system leveraging technology for filing and registration, payments, electronic taxpayer accounts, and internal audit systems. This modernization also features electronic tracking for shipments, a risk detection and management framework, and a unified cash receipting platform. Further strategies include the comprehensive collection of turnover-based taxes and improved taxation of the real estate and mining sectors. The aim of modernizing Nigeria’s tax system is to optimize the efficiency and effectiveness of tax administration, thereby improving revenue mobilization to support government programs at federal, state, and local levels (Muthama, 2016; Gitaru, 2017). Despite advancements in automation, the Nigerian tax system has yet to meet its annual revenue targets (Adam International, 2018). In light of these developments, this study seeks to evaluate the impact of tax management on revenue generation. 1.2 Statement of the Problem Tax administration plays a critical role in influencing a taxpayer’s willingness to comply with tax obligations, especially when taxpayers are fully aware of the legal and financial consequences of noncompliance (Sulman, Akintayo, Kasum & Bamigbade, 2019). A poorly functioning tax administration can reduce taxpayer compliance, open avenues for political interference, and ultimately diminish government revenue (Adedoyin & Adekanmi, 2016). In Nigeria, tax revenues form a significant part of government income, making an efficient tax administration system crucial. However, the current state of tax administration in Nigeria is a cause for concern. Several challenges hinder its effectiveness, including inadequate tools for tax officials, lack of trained personnel in tax collection, poor road infrastructure limiting access to remote areas, insufficient training programs, and the absence of a comprehensive taxpayer database. Additionally, issues such as low public awareness on tax matters, understaffing, inadequate remuneration of tax officials, delayed taxpayer payments, weak methods for detecting tax evasion, and ineffective internal control mechanisms further complicate the situation (Nto, 2016). Osunwole, Oluwatosin, and Adeyemi (2019) also highlighted the problems of poor planning and rigid taxation laws in Nigeria, which contribute to disorganization in tax assessment and collection processes. This disarray opens the door to political interference, where politicians and public officials may influence tax matters, sometimes appointing unqualified or inexperienced personnel to handle complex tax duties. These systemic flaws mirror the broader tax administration challenges faced in Nigeria. Therefore, this study aims to examine the impact of tax management practices on revenue generation in Nigeria. 1.3 Objective of the study The broad objective of the study is to assess the Effect of Tax Management on Revenue Generation. The specific objectives is as follows i. To examine the effect of efficiency and effectiveness of tax administration on revenue generation of Bayelsa State. ii. To ascertain the relationship between tax payers’ enlightening on tax payment and revenue generation in Bayelsa state. iii. To determine the effect of tax evasion and avoidance on revenue generation in Bayelsa state. 1.4 Research questions The following questions have been prepared for the study i. What is the effect of efficiency and effectiveness of tax administration on revenue generation in Bayelsa state? ii. Is there a relationship between tax payers’ enlightening on tax payment and revenue generation in Bayelsa state? iii. What are the effect of tax evasion and avoidance on Revenue Generation in Bayelsa state? 1.5 Research hypotheses The hypotheses have been formulated for the study Ho1: Efficiency and effectiveness of tax administration has no significance effect on revenue generation in Bayelsa state. Ho2: There is no significant relationship between tax payers’ enlightenment on payment of tax and revenue generation in Bayelsa state. Ho3: Tax evasion and tax avoidance have no significant effect on revenue generation in Bayelsa state. 1.6 Significance of the study The study's results will assist practitioners in formulating suitable policies and procedures to mitigate obstacles in tax compliance. The study's findings contribute to the current information and provide essential suggestions. These recommendations are not only intended to aid regulators in policy creation but also to enhance the efficiency of tax administration for non-residents. Presently, the overall amount of income collected from the states is influenced by tax management methods, which include self-assessment practises. The reported results will assist federal and state governments in evaluating tax regulations pertaining to the self-assessment of people and the collection of tax income from firms and individuals. Furthermore, it will serve as a valuable point of reference for researchers interested in doing future studies on the issue. 1.7 Scope of the study The study focuses on assess the Effect of Tax Management on Revenue Generation. Hence, the study will examine the effect of efficiency and effectiveness of tax administration on revenue generation of Gombe State,ascertain the relationship between tax payers’ enlightening on tax payment and revenue generation in Gombe state and determine the effect of tax evasion and avoidance on Revenue Generation. 1.8 Limitation of the study Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection (internet, questionnaire, and interview), which is why the researcher resorted to a moderate choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced. 1.9 Definition of terms Tax: a compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions. Tax management: the management of finances, for the purpose of paying taxes