The Effect of Personal Income Tax Amendment Act on Revenue Generation in Nigeria

Abstract

The Personal Income Tax Act Cap P8, LFN 2004, is now amended by the Personal Income Tax (amendment) Act, 2011. This follows many years of agitation for the Personal Income Tax Law in Nigeria to be brought in line with present day economic realities, and also to increase the compliance levels and the amount of tax voluntarily paid and or collected by the Nigerian government. This paper therefore evaluated the impact of the amendment on the revenue generated by the Kaduna state board of internal revenue. Both primary and secondary data were used as sources of data collection. The chi-square and t-test were used in the analysis. The paper found that the personal income tax law 2011 has not successfully encouraged tax payers to voluntarily comply with self-assessment and compliance. The new law has not succeeded in driving the force of change that will minimize the incidence of tax avoidance and tax evasion. It has therefore not improved the revenue generated by the state boards of internal revenue. It is the recommendation of the paper that more has to be done on the law to reduce the loop holes that allow tax payers to manipulate the law to their advantage. Again, the law must be reviewed to have stringent punishment for defaulters. Authorities must also provide services to the tax payers to convince them that the tax they pay provides benefit to them. Furthermore, the Kaduna State Board of Internal Revenue Service (KSBIRS) staff should undergo training and workshop on proper administration of Personal Income Tax in the state.