1.1   Background of the Study

Personal income tax administration Akwa Ibom state is carried out by the board of internal revenue. The tax has been imposed on the income of individuals and corporate bodies for the purpose of generating revenue for the development  of the state other forms of generating revenue for the development of the state according to Ntegoho (2000) include sales of government property, miscellaneous collection rents, grants and share  from federation accounts.

Ola (2005) enumerates the various form of tax to include personal income taxes, capital gain taxes and petroleum profit taxes and here the attention is focused on personal income tax.

In Akwa Ibom State, tax administration or within jurisdiction of the state board of internal revenue. Tax assessment involves, according to Etim (2001) the assessment, collection and accountability of tax money collected from tax payers by the offices. The collection of taxes was the duty of the native administration before the establishment of the board of internal revenue. The board of internal revenue is a parastatal in the ministry of finance and economic planning set up by former Eastern region of Nigeria in 1965.

However, the state board of internal revenue is charged with the responsibility of raising assessment collecting taxes and accounting for collected (Ola 2004). Tax collectors and tax agents also pay a very important role in the collection of personal income tax from the payers. Personal income tax is a major source of government internally generated revenue.

Udofia (2012) maintained that this single source constitutes 70% of the total tax revenue derived in Akwa Ibom state. Haveman (2006) state that the backbone of the tax structure is the personal income tax. The realization of huge amount of revenue from personal income tax entails a lot of activities. The Akwa Ibom State board of internal revenue took its counterparts in other states is saddled with many problem and prospects in the administrative of this personal income tax.

To ensure effective administrator of taxes in Nigeria and indeed Akwa Ibom State, the Raisman fiscal commission of 1957 had to be formed. In 1959, the commission submitted its recommendation which called for the introduction of Nigeria basic principles for taxing income of persons other than limited companies. Ola (2004), states that this recommendation was accepted and it formed the basis of the prospect of the administration of personal income tax.

The problems of personal income tax administration in Akwa Ibom state include lack of proper accounting records kept by private business owners as well as inadequate finding of revenue generating machinery. Those problems have in their various capacities acted against the realization of enormous sum of money from professional income tax in Akwa Ibom State.

The background of the study stand from the fact that board of internal revenue is always facing a staff challenge on the administration of personal income tax. Even though the administrative prospects of its type of tax is high. In practicality it seems the problems faced by this kind of tax revenue of not properly managed could account for inefficiency on the part of the accountants.

Revenue generation which means more than bringing in revenue from known sources but implies bring in revenue from old sources and also looking for more ways of bringing revenue from the new source. In effect the Akwa Ibom State board of internal revenue is obsess with problem militating against successful administration of personal income tax and also how to handle the high prospect if seems to embedded in.

Each state of the federation is blessed with a tax authority. The authority is board consisting of public officers who may not be necessarily experienced in income tax matters. The functions of the board are income tax matters. The functions of the board are carried out by the states director of internal revenue who is a civil servant. The director of internal revenue is assisted by deputy director’s inspectors of taxes are delegated to the director internal revenue and his assistants (John 2007).

The state tax board and the officers of the internal revenue service are under the centre and direction of the state commission for finance in all administrative matter. The board and it officials are however independent in matters relating to assessment and collection of tax (Adesola, 2006).

It was not until 1987, of the 23rd of September the Akwa Ibom State began functioning and the state immediately had to run into the problem of having to struggle for survival. Therefore it was a question looking for funds to provide for the administrative takeoff, social services and particularly to cater for the large pool of skill labour which suddenly become apparent following their mass disengagement from the services, of the former cross river state.

A joint committee was set up to effect the disposal of assets owned by the former Cross River State Government on September, 30th, 1987. Governors Ibim Princewill (Cross River) and Tunder Ogbeha (Akwa Ibom) met in Calabar with civil commissioner’s during which they also agree to set up another in house committee to sort out the immediate need of office equipment and  vehicles for the two states, (Akwa Ibom, cross River) plan of disposal of common assets, 1987).

A third committee was worked out the modalities for the movement of the two states which was to be in three phases between September, 30th 1997 and December 31st, 1987. Parastatal was to remain as they were at the time while there was to be a joint salary payment for civil servants of the two state till December. The governor’s also agreed that joint agencies and services were to be maintained so as not to disrupt the administration of the two state governments (Cross River, Akwa Ibom Plan disposal of common assets, 1987).