Personal Income Tax in Nigerian Fiscal Federalism: Matters Arising

Abstract

Fiscal federalism is a by-product of federalism. Federalism is a political concept in which power to govern is shared between national and sub-national Governments creating what is often called a federation. Federalism is a political concept in which the power to govern is shared between Federal, States and Local Governments, creating what is often called a federation. Fiscal federalism is characterized by fiscal relations between central and lower levels of Government. The progression in taxation in Nigeria is from personal income tax to taxation on other sources such as petroleum, companies etc. Personal Income Tax Act identifies taxable persons, chargeable incomes, determines assessable income and tax that income. The Act also determines the residence of the tax payer for the purpose of payment and or collection of personal income tax. This paper contains primary and secondary sourced materials, such as laws, statutes, and other resource materials. This paper revealed the aspect of personal income that raises concerns on the ownership of funds collected by State Governments through the State Boards of Internal Revenue under personal income tax regime. Though it is argued by some school of thought that the rules of agency suggest that an agent acting under a delegated authority cannot be heard contesting the subject matter of agency with the principal. However, due to the combined provisions of sections 80(1), 120(1) and 163 of the Constitution which direct that the personal income tax collected by the State Government be paid into the Consolidated Revenue Fund of the State and used for the benefit of the State lay to rest the issue of ownership of the personal income tax collected by the State Government.