ABSTARCT

There is now a large and complex literature on optimal income taxation, within the context of second-best welfare economics. This paper considers the potential role of this analysis in the practical design of direct tax and transfer structures. It is stressed that few results are robust, even in simple models, in view of the important role played by alternative social welfare functions, the nature of the distribution of abilities and the preferences of individuals. In view of these negative results, it is suggested that a range of empirical tax analyses, capturing particular issues, can provide helpful guidance for policy analysts. Numerical illustrations are provided, paying attention to the role of a ‘top’ marginal tax rate applied to higher-income groups. In particular, behavioral micro simulation models can be used to examine marginal direct tax reform. Such models have the advantages of capturing the full extent of population heterogeneity and the complexity of the tax structure.

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.

TABLE OF CONTENTS

Title page i

Declaration ii

Certification iii

Dedication iv

Acknowledgements v

Table of contents vi

List of Tables ix

Abstract x

CHAPTER ONE

INTRODUCTION 

1.1 Background to the Study 1

1.2 Statement of the problem 3

1.3 Objectives of the study 4

1.4 Research Questions 5

1.5 Research Hypotheses 5

1.6 Significance of the Study 5

1.6.1 Internal audit unit/department 5

1.6.2 Abia State Ministry of finance 6

1.6.3 General public 6

1.6.4 Researchers/students 6

1.7 Scope of the Study  6

1.8 Limitations of the study 7

1.8.1Time 7

1.8.2 Finance 7

CHAPTER TWO

LITERATURE REVIEW

2.1 Conceptual Framework 8

2.1.2 System Audit 10

2.1.3 InternalAuditTechniques 12

2.1.4 Application of Analytical Technique in Fraud Detection 14

2.1.5 Types of Fraud 15

2.1.6 Functions of Internal Auditor in corporate control of errors, irregularities and frauds 15

2.1.7 Problems of an Internal Auditor 16

2.2 Theoretical Framework 17

2.2.1 Agency theory 17

2.2.2 Stewardship theory 18

2.2.3 Stakeholders Theory    19

2.3 Empirical Review 20

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design 22

3.2 Population of the Study 22

3.3 Area of the Study 22

3.4 Methods of Data Collection 23

3.4.1 Personal interview 23

3.4.2 Questionnaire 23

3.5 Sample Size and Sample Size Determination 24

3.6 Validity of instrument 25

3.7 Reliability of the instrument 25

3.8 Model Specification 25

3.10 Data Analysis Techniques 27

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.1. Presentation of Data 28

4.2. Discussion of Findings on Hypothesis 1 32

4.2.1 Test of hypothesis 1 34

4.3. Discussion of Findings on Hypothesis 2 35

4.3.1 Test of hypothesis 2 37

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings 38

5.2 Conclusion 39

5.3 Recommendations 41

References 43

Appendix A