EFFECTS OF INFORMATION TECHNOLOGY ON THE EFFICIENCY AND EFFECTIVENESS OF TAX ADMINISTRATION AND MANAGEMENT IN TARABA STATE

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

The use of automated systems has been proven to be capable of introducing massive efficiencies to business processes at a minimal cost (Wasao, 2014), due to the bureaucratic structure of government which is costly to manage with little or no result, tax authorities as an agency of government are turning to e-government led solutions like electronic tax filing (e-filing) (Amabali, 2009), based on the arguments that it enhances the delivery of public services and fiscal profundity without incurring costly recurring overheads (Harrison & Nahashon, 2015). United Nations (2007) stated that e-taxation is a process where tax documents or tax returns are submitted through the internet, usually without the need to submit any paper return; it encompasses the use of internet technology, the World Wide Web and Software for a wide range of tax administration and compliance purposes. Electronic tax filing was first coined in United States, where her Internal Revenue Service (IRS) began offering tax return e-filing for tax refunds only (Muita, 2011). This has now grown to the level that currently approximately one out of every five individual taxpayers is now filing electronically. This however, has been as a result of numerous enhancements and features being added to the program over the years. Presently electronic filing has been enlarged to other developed countries like Netherlands, Australia, Canada, Italy United Kingdom, Chile, Mexico, Ireland, Germany, France, Finland, Sweden, Switzerland, Singapore, Brazil, India, China, Norway, Thailand, Malaysia and Turkey (Ramayah, Ramoo & Amlus, 2006). Nigeria and other developing countries such as Uganda, Rwanda and Kenya have also embraced electronic filing of tax returns (Muita, 2011). Dowe (2008) disclosed that tax authorities around the world are using electronic tax administration systems to interact with taxpaying public in tax collection, administration and compliance settings so as to improve effectiveness and efficiency in tax administration. Globally, previous studies on the suitability of information technology complied tax system have it that; a positive impact of automation system usage and the cost of tax administration, automation and effectiveness of revenue collection of Ghana Revenue Authority using a case study of customs division (Gidisu, 2012). Wasilewski cited in Muthama (2013) with focus on the economic development and taxation system by comparing the case of Brazil and Japan. Japan’s experience demonstrated that a country does not need to postpone a real change in the tax structure until it achieves a high stage of development, while in Brazil; low-income taxpayers bear most of the tax burden. Gasteiger (2011) indicated that automated system enhances administration with the provision of multiple scenarios that allow senior management in a multi-campus university system to generate multiple income scenarios, make well-informed decisions relating the running of their institution and timely calculation and allocation of resources to academic departments. Kioko (2012) indicated that the macro model performs better the variations in funds allocated to counties than the representative tax system, Kibe (2011) disclosed that planning for revenue collection can best be carried out by a system that combined spatial and attribute data management capabilities like geographical information systems, Harrison & Nahashon (2015) with focus on small tax payers revealed that online tax system does affect tax compliance level, while Otieno, Oginda, Obura, Aila, Ojera &Siringi (2013) stated that relationship existed between information systems and revenue collection efficiency and effectiveness and more so, there is a strong positive relationship between Internal Control Systems and revenue collection. In Nigeria, Oseni (2015) concluded that there is no hiding place for tax evaders with the use of this modern technology since all potential taxpayers are captured by the system, but the use of Information Technology can be disastrous if carelessly employed by both the tax payers and the tax administrators as scammers and hackers of the internet facilities can utilize the ignorance or the lax security of the system. Efunboade (2014) indicated that these emerging global infrastructures (Taxpayer Identification Number- TIN, Factual Accurate Complete Timely- Project FACT and Integrated System of Tax Administration- ITAS) could make it increasingly possible for eligible taxpayers to pay tax online anywhere and anytime. In respect of the above, the study examines the effect of information technology on the efficiency and effectiveness of tax administration and management in Taraba State.

1.2. STATEMENT OF PROBLEM

Information Technology has been identified as a solution to addressing most of the limiting issues of tax administration and management. The modernization of tax administration using Integrated Tax Administration System (ITAS) is aimed at enabling taxpayers to file their tax returns electronically, pay their taxes online, get instant credit for withholding taxes deducted on their income, generate tax clearance certificates and communicate with the FIRS local tax office through the “message centre”. In spite of the adoption of ICT as an institutional measure in tax administration, the problem of poor tax administration still persists. In Taraba State, corporate taxpayers have not fully embraced the use of Information Technology for tax administration and do not take advantage of the available Information Technology platforms to remit their taxes. The fundamental question is that, has the application of Information Technology enhanced the efficiency and effectiveness of tax administration and management in Taraba State? This is the central problem which the research intends to investigate.

1.3. OBJECTIVE OF THE STUDY

The major aim of the study is to examine the effect of information technology on the efficiency and effectiveness of tax administration and management in Taraba State. Other specific objectives of the study include;

1. To examine the efficiency and effectiveness of tax administration and management in Taraba State.
2. To examine the effect of availability of Information Technology infrastructure on tax administration and management in Taraba State.
3. To examine the effect of information technology on the efficiency and effectiveness of tax administration and management in Taraba State.
4. To examine the elements of a viable tax administration and management system.
5. To examine the relationship between information technology and  effective tax administration and management in Taraba State
6. To examine the benefits of adopting information technology in tax administration and management.

1.4 RESEARCH QUESTIONS

1. To examine the efficiency and effectiveness of tax administration and management in Taraba State.
2. To examine the effect of availability of Information Technology infrastructure on tax administration and management in Taraba State.
3. To examine the effect of information technology on the efficiency and effectiveness of tax administration and management in Taraba State.
4. To examine the elements of a viable tax administration and management system.
5. To examine the relationship between information technology and effective tax administration and management in Taraba State
6. To examine the benefits of adopting information technology in tax administration and management.

1.5 RESEARCH HYPOTHESES

Hypothesis 1

1. : There are is no significant effect of information technology on the efficiency and effectiveness of tax administration and management in Taraba State.
2. : There is a significant effect of information technology on the efficiency and effectiveness of tax administration and management in Taraba State.

Hypothesis 2

H0: There is no significant relationship between information technology and effective tax administration and management in Taraba State.

H1: There is a significant relationship between information technology and tax administration and management in Taraba State

1. SIGNIFICANCE OF THE STUDY

This study is significant because effective implementation of information technology in tax administration and management will be of immense benefit to tax authorities, especially in Taraba State. The effective use of information technology will invariably reduce work hours, enhance efficiency and reduce opportunities for corrupt practices in the system. This study would also be of immense benefit to students and scholars who are interested in developing further studies on the subject matter.

1.7 SCOPE OF THE STUDY

The study is restricted to the effect of information technology on the efficiency and effectiveness of tax administration and management in Taraba State.