Design and Implementation of a Computerized Tax Collection and Management System

Design and Implementation of a Computerized Tax Collection and Management System

CHAPTER ONE

1.0 INTRODUCTION

According to a world bank economic report on Nigeria published on the 1st of May 2013, it was stated that 95% of the government’s budgeted expenditure depended on its projected oil revenue based on current world oil prices. It was also recommended in the report that the Federal Government, through the improvement of the domestic tax system it can increase its internal revenue and provide in the event of a fall in oil prices a financial backup plan for the economy (The World Bank, 2013). Tax is a charge imposed by a government on persons, entities, or property, administered to generate revenue for that government (Black, 1999). Tax is a common source of income generation for financing government activities. Individuals and organizations are expected to fulfill their obligations on tax payment as required by law to give the government financial power, amongst other purposes of taxation. Effective taxation, therefore, becomes important as it is a source of required financial power for a government to rule its territory.

There are two forms of taxation common to most countries, direct taxes to be paid by the taxpayer on his income, profit, or asset owned. In the other form, indirect taxes are imposed on commodities before they get to the consumer, and are to be paid by the consumer not as taxes but as a part of the selling price per unit of the commodity (Money Control, 2013).

The Nigerian tax system is surrounded by countless problems which include: Little data available on the history of tax revenues or taxpayers due to a lack of a proper records keeping system (the Federal Republic of Nigeria, 1997). A lack of comprehensive tax statistics and a centralized database for the existing ones (the Federal Republic of Nigeria, 2002). Deployment of limited manpower and other necessary resources into redundant roles and job functions (Ariyo, 1997). Duplication of taxes and its negative effect on taxpayers is a problem resulting from a clash in the governments’ fiscal responsibility and its fiscal power (Odusola, 2002). Deliberate attempts by taxpayers to evade taxes (Odusola, 2003). The e-taxation system aims to provide the tax authority with a database with details of taxpayers and their transactions. This would reduce the issue of tax evasion and hence an increase in government tax revenue. It would also allow taxpayers to process their transactions online without having to visit the office of the FIRS, reducing the workload on the resources available to the FIRS and which consequently give room for the re-allocation of freed-up resources. The objectives considered during the development of the e-taxation system include the Creation and management of an effective and efficient database to provide taxpayers records, information/bio-data for easy referencing. The provision of alternative payment routes for taxpayers to encourage immediate tax payment and provide relief to those who find it an easier and more efficient payment route. This will be achieved by creating a web-based system in which registered entities log in and make payments. The availability of an alert system that to notify the regulatory body of outstanding payment by registered entities and workers.

The e-taxation system is to be developed for use by the tax authority at the federal level for tax payment, record keeping, and educational/awareness programs in under-developed and developing countries with a specific focus on the African continent.

1.1 BACKGROUND OF THE STUDY

Governments are as diverse as the people and cultures they serve. But when it comes to keeping a government running through efficient assessment and collection of taxes, they all face the same basic challenges. Whether you’re a county on Florida’s Gold Coast or a republic in Africa emerging from strife and putting comprehensive tax procedures in place for the first time, it all comes down to fair and transparent assessment and valuation of property; efficient, effective billing and collection procedures; and absolute transparency with your most important constituents – the public.

Breakdowns at any point in the system can lead to lower revenue, confusion, and perceptions of unfairness. Yet revenue departments face serious internal pressures since they are often compelled to get the most out of aging or outdated software and hardware systems. It’s the classic chicken-and-egg scenario: You need the best tools to get better at managing and collecting taxes. At the same time, how can you afford improved technology without collecting the appropriate revenue?

Most company now uses a computerized payroll system. A computerized payroll system will not only resolve the difficult problem but also will provide a fast process and accurate calculation of the salary. According to Dave Rooses (2010) in his article on how payroll systems work. In a manual payroll system, there are so many possible errors that may be encountered but if the payroll is computerized, payroll clerks will not need a calculator to compute the salary of the employee. Payroll is the sum of all financial records of salaries for an employee, wages, bonuses, and deductions. In accounting, payroll refers to the amount paid to employees for services they provided during a certain period. (Wiki podia 2005). The employer is required to hold back the part of each employee’s earnings because the money will be used for paying the income taxes union dues and medical insurance premiums that are responsible for the employee. (Fundamental financial and managerial accounting concepts published by mc grave-hill international edition).

Payroll processing is a special-case purchases system in which the organization purchases labor rather than raw materials or finish goods for resale. (Accounting information system by James A. hall 2006), the proponents will propose a system that is entitled computerized payroll system. It will save time, produce a faster result, and will lessen errors.

A computerized payroll system will not only provide accurate calculation and the fast process of payroll transactions but it will secure data through security implementation and accordingly arrange files provided by a well-designed database that will produce a paperless environment.

Gboko local government education authority is a government established under the supervision of Benue state universal basic education board (BENUE SUBEB). The LGEA is to cater to the needs of universal primary education at the local level. The need for the efficient management of the staff warfare and the and emoluments that accrue to the staff from the state government as in the monthly salaries, wages, and other benefits received from the work done every month, the LGEA have a duty to prepare the payroll of his/her staff to the state headquarters of SUBEB for approval and document and pay details of individual staff is entered manually using biro, pencil and duplicating papers for making of duplicate copies.

1.2 STATEMENT OF THE PROBLEMS

Due to the manual process of collection of Taxes and proper recording of records, the government fails to collect the appropriate tax from the people, body, and cooperation also from business firms that are due for Tax payment. The government cannot access all the locations to collect Taxes from them. Also because of inconsistency in the process, the actual Tax payment might not be calculated effectively from these bodies. Therefore, making the government lose so much in the revenue generated from the Tax income service.

1.3 OBJECTIVES OF THE STUDY

This study is intended to design and develop a computerized e-tax system, a system that will allow all these bodies to pay their Tax from their location and pay consistently.

Specifically, another objective of this system is to develop a system that will provide:

i. A registration, payment processing, and tax filing facility for individuals and businesses.

ii. Provision for individuals and corporate bodies to request their Tax Clearance Certificate (TCC) online.

iii. A Customs management system for its import, export, and cross-border activities.

iv. Electronic interfaces with the Gboko LGEA and the Companies and Intellectual Property Commission (CIPC).

v. Minimizing the effort of the bookkeeper in processing the payroll slip and payroll form.

vi. Making an efficient and accurate computation of Tax payment due.

vii. Creating a well-arranged database and implementing strong security of the system for data security.

1.4 SIGNIFICANCE OF THE STUDY

The proposed system will help the internal revenue commission board and the LGEA, especially for Tax collection and management. It will help to lessen the time and effort of the board in moving around and collecting Taxes. The system development can accommodate changing features and produce a paperless environment through a 2well design database.

This study will help the proponents to enhance their ability on how to create an understandable computerized system easily. This will serve to the proponents as a challenge to do a better system.

1.5 SCOPE AND LIMITATION

1.5.1 Scope

This study is designed to develop and implement a computerized payroll system which will be called an e-Taxation system for BIRDS and Gboko LGEA, it covers the process of preparing and collecting of Tax from the employee, cooperation and business firm, and management of these records

1.5.2 LIMITATION

The proposed computerized payroll system for BIRDSand the Gboko LGEA does not support offline programs. It only uses the internet or the wireless Area network (WAN) for its operation.

Other limitations are as follows:

i) Lack of funds to sponsor the research and implementation of the at the initial time.

ii) Inadequacies of professional programmers who should have been used as a reference point at the design stage through the implementation stages.

1.6 DEFINITION OF TERMS

The computer is management and business study (1978), defined a computer as an electronic device that is capable of imputing and outputting stored in the computer system.

Payroll: list of employees and all their and salaries including their allowance and deductions.

Salary: this is usually a monthly payment for regular employment that on his/her work done.

Shift allowance: This allowance is paid to workers on a shift basis.

Arrivers: this represents the accumulation of staff entitlement.

Rent subsidy: this represents the rent given to an employee for his or her rent age.

This is the allowance granted to an employee who it s a pictorial representation of information in data processing means of symbols.

Transport allowance: this is an allowance given to staff for his transportation to work.

SQL: structure query language a database payment language.

LAN: Local Area network.

Tax is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state to fund various public expenditures. A failure to pay, or evasion of or resistance to taxation, is usually punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labor equivalent. Some countries impose almost no taxation at all or a very low tax rate for a certain area of taxation.

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