Project – Design and implementation of tax collection and management system

CHAPTER ONE

1.0   Introduction

Due to the dynamic nature of the world technology today i.e. the age of computerization of our society, there has been a need to automate the taxation systems. Broadly speaking, computer has effectively attracted a great deal of attentions in recent time, due to its automation processes and its effects in our society today.

Hence, the computer is an electronic device that works under the control of a stored program, automatically accepting information, which is outcome of the processor. According to “Principles Of Taxation (POT)”. Written by Kotsimpos (2009), taxation is a payment levied by government for which no goods or service is received directly in return-that is, the amount of tax people obtained from the provision of particular good or service. Up until the early 1930s, it was universally accepted in principle that governments should balance their budgets. Thus, the principle reason for taxation was to pay for government expenditure.

However, according to Olatunji(2006), electronic taxation (E-Taxation) is referred to the online payment of tax by taxpayers. E-payment facilitates payment of direct taxes online by taxpayers. To avail to this facility, taxpayers are required to have a net-banking account, with any of the authorized banks.

Computer based online tax payment (E-tax payment) system is a computerized online payment and collection system which allows fast and easy monitoring and payment of taxes online.

1.1   Background of the Study

The firm under study, Board of Internal Revenue (BIR) Jalingo is a sector under government of Taraba State which helps to generate revenue for the state government through tax payment, collection and other activities that they carry out.  This sector was established in 1976 by a group of an edict and they are government means of generating revenue for the state government.

Presently the firm has the following departments.

1. Commissioner of finance
2. Interim Management Committee (IMC)

• Interim Management Committee (Operations).

1. IMC (Corporate Services) etc.

The sector (BIR) under study are making use of manual methods which is slow in carrying out operation and also creates employment for individuals which is one of the fighting measures to reduce crime rate and unemployment rate in our country today.

 1.2   Statement of Problems

Due to lack of online tax payment/collection system, the sector has been encountering some problems which include:

1. Mentality of carrying out jobs manually which is inefficient, cumbersome (difficult or complicated), time consuming and at times in accurate.
2. Problem of poor communication between the various departments involved.

• Problem to ensure that taxpayers who need information can obtain it accurately and on time.

1. Difficulty to ascertain (find out for certain) the real income of employed staff.
2. Problem of proper identification of taxpayers
3. Poor funding by government to generate revenue

• Problem of logistics
• Lack of adequate enlightenment to tax payers

1. Tax avoidance i.e. using loopholes to bring down the law of tax payment.
2. Tax evasion i.e. willingly refusal to pay tax.

1.3   Aims and Objectiveof the Study

The main aim of this research is design a system that will increase revenue collection for the state government by ensuring better tracking, assessment, and collection of taxes owed by individuals and businesses to satisfy the user need and requirement as cost effective as possible.

Objective

1. A system that will be easy to use and user friendly.
2. A system that will process data accurately, so that the user can be confident of the information stored in the tax file database.

1.5   Scope and Limitation of the Study

The scope of electronic tax collection and management system is to use an online or net based tax payment system to carry out some of the activities of Board of Internal Revenue (BIR) that consumes time and that has been carried out manually which some of them are:

1. Revenue collection (all types of revenue).
2. Motor vehicle license.

• Change of ownership.

1. Plate numbers.
2. Registration of vehicles
3. Capital gains tax

• Stamp duties
• Pay-as-you-earn (PAYE)

Some limitations found during this research include:

Financial Limitation: – This is one of the major constraints, which has limited the extensiveness of this work, but due to my hard work and efforts, I was able to bypass it.

Time constraints: – The time given for this research work was not enough to get comprehensive information about the study because it is a broad work to be carried out.

1.5   Significance of the Study

Advantageous process of electronic tax (E-tax) payment system is to make sure that the duties of the sector under study, Board of Internal Revenue (BIR) is been carried out diligently and also to reduce the rate of manual method and time consuming. Automation of a system that is net-based (online system) for tax payers is introduced to save time and also ensure accuracy processing.

The purpose of electronic tax (E-tax) payment/collection and management system in the sector under study (BIR) is to develop an online based tax collection and management system that will help in solving some of the manual problems the sector is encountering. It is also aimed at solving the problem of queuing in tax payment and will also facilitate accuracy and time reduction.      

1.6   Definition of Terms

Adjusted profit: – This refers to that part of the company’s profit which is arrived at after adjusting for allowable and non-allowable income and expenses.

Assessable income: – This is the actual income relating to the tax year of assessment.

Budget surplus: – Here government revenue is expected to be more than the expenditure.

Direct taxes:- This is a government compulsory levy on the person intended to pay tax.

Earned income: – This refers to income derived form a trade, business, profession, vocation and employment carried on or exercised by an individual.

Indirect taxes: – This is levied on a particular person who pays it but later recoups (regains) this from members of the community, probably in most cases from his customers.

Pay as you earn (PAYE): – Every employer is required to deduct the tax from the emoluments paid or payable (by the employer) to the employees.

Relevant tax authority: – This is the tax office to which taxes and levies are paid.

Residence: – A person is deemed to be resident where he has a permanent place of abode.

Taxation: – This is a payment levied by government for which no good or services is received directly in return i.e. the amount of tax people pay is not related directly to the benefit people obtain form the provision of a particular goods or service.

Project – Design and implementation of tax collection and management system