FEDERAL POLYTECHNIC BALI

SCHOOL OF MANAGEMENT AND TECHNOLOGY

DEPARTMENT OF PUBLIC ADMINISTRATION

COURSE TITLE INTER-GOVERNMENTAL RELATION

COURSE CODE: PAD 223

ASSIGNMENT

BY

SGT/PA/ND/20/090

QUESTION:

Is this true Nigeria is the giant of Africa? If yes why? If no why?

 QUESTION1

EARNED INCOME

GENERALLY, EARNED INCOME IS ANY MONEY YOUR EMPLOYER

PAYS YOU FOR YOUR LABOR, ANY SALES GENERATED FROM A
BUSINESS YOU OWN, OR MONETARY PROFIT FROM SELF-
EMPLOYMENT.

UNEARNED INCOME

UNEARNED INCOME DIFFERS FROM EARNED INCOME, WHICH IS

INCOME GAINED FROM EMPLOYMENT, WORK, OR THROUGH
BUSINESS ACTIVITIES. UNEARNED INCOME CANNOT BE
CONTRIBUTED TO INDIVIDUAL RETIREMENWT ACCOUNTS (IRAS).

ACCORDING TO THE INTERNAL REVENUE SERVICE (IRS), EARNED

INCOME INCLUDES WAGES, SALARIES, TIPS, AND SELF-EMPLOYMENT
INCOME.

MENTION 5 DUTIES OF FIRS

1. ASSESS PERSONS INCLUDING COMPANIES, ENTERPRISES

CHARGEABLE WITH TAX;
2. ASSESS, COLLECT, ACCOUNT AND ENFORCE PAYMENT OF
TAXES AS MAY BE DUE TO THE GOVERNMENT OR ANY OF ITS
AGENCIES
3. COLLECT, RECOVER AND PAY TO THE DESIGNATED ACCOUNT,
ANY TAX UNDER ANY PROVISION OF THIS ACT OR ANY OTHER
ENACTMENT OR LAW
 4. IN COLLABORATION WITH THE RELEVANT MINISTRIES AND
AGENCIES, REVIEW THE TAX REGIMES AND PROMOTE THE APP

QUESTION 2

PROGRESSIVE TAX

WITH A PROGRESSIVE TAX, THE TAX BURDEN IS HIGHER FOR THE

WEALTHY THAN IT IS FOR THOSE WITH LOWER INCOMES. THIS KIND
OF TAX HELPS LOWER-INCOME FAMILIES PAY FOR BASICS SUCH AS
SHELTER, FOOD, AND TRANSPORTATION. A PROGRESSIVE TAX
ALLOWS THEM TO SPEND A LARGER SHARE OF THEIR INCOMES ON
COST-OF-LIVING EXPENSES.

REGRESSIVE TAX

A REGRESSIVE TAX IS ONE WHERE THE AVERAGE TAX BURDEN

DECREASES WITH INCOME. LOW-INCOME TAXPAYERS PAY A
DISPROPORTIONATE SHARE OF THE TAX BURDEN, WHILE MIDDLE-
AND HIGH-INCOME TAXPAYERS SHOULDER A RELATIVELY SMALL
TAX BURDEN.

PROPORTIONAL TAX
 PROPORTIONAL TAX IS THE TAXING MECHANISM IN WHICH THE
TAXING AUTHORITY CHARGES THE SAME RATE OF TAX FROM EACH
TAXPAYER, IRRESPECTIVE OF INCOME.

QUESTION 3

SEVEN PRINCIPLES FOR TAXATION ARE THAT IT SHOULD BE STABLE,

SUSTAINABLE, ADEQUATE, PROGRESSIVE, EFFICIENT, TRANSPARENT
AND RESPONSIVE TO ECONOMIC, SOCIAL AND ENVIRONMENTAL
EXTERNALITIES.

STABLE – A STABLE TAX SYSTEM SHOULD BE BASED ON SOURCES

OF REVENUE THAT DO NOT FLUCTUATE EXCESSIVELY AS PART OF
ECONOMIC CYCLES. FOR EXAMPLE, THIS WILL REQUIRE TAXES ON
WEALTH, AS WELL AS INCOME AND CONSUMPTION. TAXES ON
WEALTH (SUCH AS PROPERTY TAX) TEND TO BE MORE STABLE
DURING A RECESSION. PROPERTY TAX IS COMMON IN MANY
COUNTRIES AND IS USED TO FUND LOCAL GOVERNMENT.

SUSTAINABLE – A SUSTAINABLE TAX IS DRAWN FROM A SOURCE

THAT WILL NOT BECOME EXHAUSTED. SIMILARLY, A SUSTAINABLE
TAX SYSTEM IS NOT UNDERMINED BY EXCESSIVE TAX
EXPENDITURE.

ADEQUATE –A COUNTRY’S TAX SYSTEM MUST PROVIDE SUFFICIENT

REVENUE TO PAY FOR THE LEVEL OF PUBLIC SERVICES THAT
PEOPLE WANT, AS WELL AS OTHER STATE LIABILITIES, SUCH AS
SERVICING THE NATIONAL DEBT.
PROGRESSIVE – A PROGRESSIVE TAX SYSTEM IS ONE WHERE THOSE
WHO GAIN MORE FROM THE ECONOMY (IN TERMS OF WEALTH AND
INCOME) MAKE A PROPORTIONATELY LARGER CONTRIBUTION. THIS
SHOULD BE THE NET EFFECT ACROSS THE WHOLE TAX SYSTEM, NOT
JUST INCOME TAX. PUBLIC SERVICES ARE ONE WAY OF MAKING THE
NET BENEFIT FROM THE ECONOMY MORE PROGRESSIVE FOR PEOPLE
ON LOWER INCOMES.

EFFICIENT – ECONOMICALLY EFFICIENT TAX IS ONE WHICH

MINIMISES ECONOMIC DISTORTION. THE TAX SYSTEM SHOULD SEEK
TO ENCOURAGE ECONOMIC ACTIVITY.

TRANSPARENT – ALL TAXES, AND TO WHOM THEY APPLY, SHOULD

BE CLEAR. IN ADDITION, ALL EXEMPTIONS, TAX RELIEF, ETC.
SHOULD BE TRANSPARENT.

RESPONSIVE – THE TAX SYSTEM ALSO HAS ROLE TO PLAY IN

INFLUENCING BEHAVIOUR, BY BEING RESPONSIVE TO MARKET
FAILURE/EXTERNALITIES. TAXES CAN BE USED AS POLICY TOOLS TO
ACHIEVE ECONOMIC, SOCIAL AND ENVIRONMENTAL GOALS. FOR
EXAMPLE, CARBON TAXES DISCOURAGE CARBON-HEAVY ACTIVITY
SUCH AS BURNING OF FOSSIL FUELS.

QUESTION 3B

RELIEFS AND ALLOWANCES AND TAX EXEMPT DEDUCTIONS

RELIEFS AND ALLOWANCES ARE DEDUCTIONS AVAILABLE TO

INDIVIDUAL TAXPAYER UNDER THE PERSONAL INCOME TAX ACT
CAP P8 LFN 2004 (AS AMENDED) TO LIGHTEN HIS TAX BURDEN. IN
ADDITION TO THE RELIEFS AND ALLOWANCES, PERSONAL INCOME
TAX (AMENDMENT) ACT, 2004 (AS AMENDED), ALSO PROVIDES THAT
CERTAIN DEDUCTIONS SHALL BE TAX EXEMPTED UNDER THE SIXTH
SCHEDULE TO THE. BELOW ARE THE RELIEFS AND ALLOWANCES
(INCLUDING TAX EXEMPT DEDUCTIONS) AVAILABLE UNDER THE
LAW:

(A) CONSOLIDATED RELIEF ALLOWANCE (CRA)

CRA IS GRANTED AT THE HIGHER OF ₦200,000 OR 1% OF GROSS

INCOME PLUS 20% OF GROSS INCOME.

GROSS EMOLUMENT MEANS WAGES, SALARIES, ALLOWANCES

(INCLUDING BENEFITS IN KIND), GRATUITIES, SUPERANNUATION
AND ANY OTHER INCOME DERIVED SOLELY BY REASON OF
EMPLOYMENT.

GROSS INCOME MEANS “ALL INCOMES FROM WHATEVER SOURCE

DERIVED, UNLESS EXCLUDED BY LAW”. GROSS INCOME IS NOT
LIMITED TO CASH RECEIVED. IT INCLUDES INCOMES REALIZED IN
ANY FORM, WHETHER MONEY, PROPERTY, OR SERVICES

GOING BY THE FOREGOING DEFINITION, IT IS OBVIOUS THAT GROSS

INCOME ENCOMPASSES ALL INCOME OF A TAXPAYER, WHETHER
RECEIVED IN CASH, IN KIND OR IN ANY FORM (EXCLUDING INCOME
SPECIFICALLY EXEMPTED). HOWEVER, FOR PURPOSE OF CRA
COMPUTATION, GROSS INCOME SHALL BE DEFINED AS THE TOTAL
INCOME (EXCLUDING FRANKED INVESTMENT INCOME (FII)) OF A
 TAXPAYER I.E. EARNED INCOME PLUS UNEARNED INCOME
(EXCLUDING FII).

BENEFITS IN KIND (BIK)

THESE ARE EXPENSES INCURRED BY AN EMPLOYER FOR THE

BENEFIT OF AN EMPLOYEE APART FROM HIS SALARY OR
ALLOWANCE. SOME BIKS ARE TAXABLE WHILE SOME ARE NOT. THE
BENEFITS IN KIND EXEMPTED FROM TAX ARE;

I. REASONABLE REMOVAL EXPENSES, INCLUDING A TEMPORARY

SUBSTANCE ALLOWANCE WHERE A CHANGE IN PLACE OF
EMPLOYMENT NECESSITATES A CHANGE IN PLACE OF RESIDENCE

II. PROVISION OF UNIFORMS, OVERALL OR PROTECTIVE CLOTHING

III. PROVISION OF FOOD IN ANY CANTEEN FOR STAFF GENERALLY

TAXABLE BENEFIT IN KIND

I. WHERE THE EMPLOYER PROVIDES ASSETS FOR EMPLOYEE’S

BENEFIT. THE EMPLOYEE IS TAXED WITH 5% OF THE COST OF THE
ASSET OR THE MARKET VALUE IF COST IS UNKNOWN

II. WHERE EMPLOYER PROVIDES AN ACCOMMODATION FOR THE

EMPLOYEE; THE EMPLOYEE IS CHARGED WITH THE COST OF THE
PREMISES HE ENJOYED FROM THE EMPLOYER ACCOMMODATION.

III. WHERE EMPLOYER RENTS OR HIRES ASSETS FOR USE BY

EMPLOYEE; THE AMOUNT OF BIK IN THE HANDS OF THE EMPLOYEE
IS THE ANNUAL RENT OR HIRE PAID
 (B) NATIONAL HOUSING FUND CONTRIBUTION

THE NATIONAL HOUSING FUND ACT OF 1992 PROVIDES THAT A

NIGERIAN EARNING AN INCOME OF N3,000 AND ABOVE PER ANNUM
IN BOTH THE PUBLIC AND THE PRIVATE SECTORS OF THE ECONOMY
SHALL CONTRIBUTE 2.5 PER CENT OF HIS BASIC MONTHLY SALARY
TO THE FUND. THE EMPLOYER IS TO DEDUCT THE CONTRIBUTION
FROM THE CONTRIBUTION FROM THE EMPLOYEE’S MONTHLY
SALARY AND TO THE FEDERAL MORTGAGE BANK OF NIGERIA
WITHIN ONE MONTH OF MAKING THE DEDUCTION. THE ACT
MANDATES THE FEDERAL MORTGAGE BANK OF NIGERIA TO
COLLECT, MANAGE AND ADMINISTER THE FUND. CONTRIBUTIONS
MADE TO THE FUND ARE TAX DEDUCTIBLE.

(C) NATIONAL HEALTH INSURANCE SCHEME

THE NATIONAL HEALTH INSURANCE SCHEME (NHIS) WAS SET UP BY

THE NATIONAL HEALTH INSURANCE SCHEME ACT, 1999 FOR THE
PURPOSE OF PROVIDING HEALTH INSURANCE WHICH SHALL
ENTITLED PERSONS INSURED UNDER THE SCHEME AND THEIR
DEPENDANTS THE BENEFITS OF PRESCRIBED GOOD QUALITY AND
COST EFFECTIVE HEALTH SERVICES AS SET OUT IN THE ACT. THE
ACT PROVIDES THAT AN EMPLOYER WHO HAS A MINIMUM OF TEN
EMPLOYEES MAY, TOGETHER WITH EVERY PERSON IN HIS
EMPLOYMENT, PAY CONTRIBUTION UNDER THE SCHEME, AT SUCH
RATE AND IN SUCH MANNER AS MAY BE DETERMINED, FROM TIME
TO TIME, BY THE GOVERNING COUNCIL FOR THE SCHEME. AN
 EMPLOYER UNDER THE SCHEME SHALL CAUSE TO BE DEDUCTED
FROM AN EMPLOYEE’S WAGES THE NEGOTIATED AMOUNT OF ANY
CONTRIBUTIONS PAYABLE BY THE EMPLOYEE. THE EMPLOYER’S
CONTRIBUTIONS AND THE CONTRIBUTIONS IN RESPECT OF ITS
EMPLOYEE ARE TO BE PAID INTO THE ACCOUNT OF A DESIGNATED
HEALTH MAINTENANCE ORGANIZATION. CONTRIBUTIONS TO THE
SCHEME ARE TAX DEDUCTIBLE.

(D) LIFE ASSURANCE PREMIUM

A DEDUCTION OF THE ANNUAL AMOUNT OF ANY PREMIUM PAID BY

THE INDIVIDUAL DURING THE YEAR PRECEDING THE YEAR OF
ASSESSMENT TO AN INSURANCE COMPANY IN RESPECT OF
INSURANCE ON HIS LIFE OR THE LIFE OF HIS SPOUSE, OR FOR A
CONTRACT FOR A DEFERRED ANNUITY ON HIS OWN LIFE OR THE
LIFE OF HIS SPOUSE;

REFERENCE
DIAMOND, P., & SAEZ, E. (2011). THE CASE FOR A PROGRESSIVE TAX:
FROM BASIC RESEARCH TO POLICY RECOMMENDATIONS. JOURNAL
OF ECONOMIC PERSPECTIVES, 25(4), 165-90.

NICHOLS, D. R., & WEMPE, W. F. (2010). REGRESSIVE TAX RATES AND

THE UNETHICAL TAXATION OF SALARIED INCOME. JOURNAL OF
BUSINESS ETHICS, 91(4), 553-566.

CALLAN, T., WALSH, J., & COLEMAN, J. S. (2006). TAX EXPENDITURES.

BUDGET PERSPECTIVES, 47-60.

KANE, T. J. (1997). BEYOND TAX RELIEF: LONG-TERM CHALLENGES IN

FINANCING HIGHER EDUCATION. NATIONAL TAX JOURNAL, 50(2), 335-
349.

CORDS, D. (2007). CHARITABLE CONTRIBUTIONS FOR DISASTER

RELIEF: RATIONALIZING TAX CONSEQUENCES AND VICTIM
BENEFITS. CATH. UL REV., 57, 427.