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A tax could be defined as the transfer of resource from the private to the public sector in order to accomplish some of a  nation’s economic and social goals. The primary economic goal of developing countries a is to increase the rate  of economic growth and hence the per capital income which will lead to pre capital income which will lead  to higher standard of living. If due recognize two major accomplishment as requirement for the attainment of this goals. Provision of additional basic government services, particularly in education, public health and transport, which are important for the growth of remainder of the economy. A higher rate of capital formation in production facilities, whether understand in the  government or private sector.   The  specific goal, is of course , not the highest rate  that will permit the maximum  rate  of growth  in GNP regarded as feasible under the circumstance.

Broadly, it could be said that there are three main method of financing expenditure open to most developing countries: –

i.  Taxes and other current receipts such as the profit of public enterprises.

ii.  Loans and

iii. grants       

of these source, taxation is perhaps the  most important since that level of government expenditure is to a great dependent on  the ability  of the tax  system to place  the requirement revenue at the disposal  of government.

Thus, Chelliah (1960) asset, taxation might be used to accomplished the following objectives:

a.  Increasing the incentive  to save and invest

b. Transferring resources from hand of public to the hand of the state to make possible public investment.

c.  Modifying the pattern of investment

d.  Mitigating economic inequalities

e.  Restraining or curtailing consumption and transferring resources from consumption of investment.

These objectives are relates to the ultimate goals of increase in national income and of the direction of economic development. The various form of taxation could be classified under two headings – indirect and direct. Indirect taxes are those types of taxes are levied against goods and services e.g of indirect in Nigeria are custom duties and excise duties.

Direct taxes are those types of  taxes levied on factors  of production. In Nigeria, direct taxes consists of personal income tax, company income tax, petroleum profit, capital gains tax and capital transfer  tax. The administration of the income tax laws in each of the federation is vested in the state board of interval revenue services. Prior to 1993 the composition of the board could vary from state to state effective fraud 1993, the composition is now uniform throughout the country.


Every research work start with the statement problems which the research work intends to paid solution to the work tilted “the problem and prospects of pay as you earn administration system in Nigeria. A case study of the board of internal revenue, Kaduna. The following are some of the problems to be looked  into:

1.  What are the various sources of fund that are made available to the  state.             

2.  How responsible is the board in revenue generation in the state?

3.  What is relationship between the board and tax payers.

4.  What enlightenment for the tax pa tax payers towards of the boards objectives.

5.  How effective  and efficient is the board  in revenue identification and collection.

6.  What is the projected of revenue generation in the state.   


The aims and objectives of this study are: –

i.  To examine the entire machinery of pay-as-you-earn collection in Kaduna state.

ii. To enlighten the taxpayers of the usefulness of the revenue derived from the system.

iii.To enlighten readers of the categories of income liable to the system.

iv.To demonstrate the procedure law down in the computation and treatment of the system. To study, evaluate and to make possible recommendation o f  improving the machinery of pay as  you earn in  Kaduna state.


This research  work is of great significance not only to the Board of internal revenue, Kaduna but  also  to its likes  all over the   other state of the Nigeria and at the federal and  local government level. It will greatly aid in enlightening the government and operations of the board with the analysis and knowledge of pay as-you-earn ways of over coming these problems of identified will be of great significance to the board. They will also richly benefit for revenue source analysis to discover how best they can be exploited.

To the general public and other organization, this work will give the needed knowledge about the revenue  generation machinery so as to erase any  possibility of ignorance. For student and researchers, it is an educational material that creates an issue for further research and reference. Thus, the significance of this work cannot be under estimated.


a. Is there any relationship between government policies and pay-as-you-earn.

b. Is shortage of manpower a problem for effectives administration of pay as-you-earn to the board?

c. Is the organizational structure of the board consistent with accepted principles?

d. Has the board succeeded in facilitating in any way, the collection of pay as you earn tax in Kaduna state?

e. What are the factors responsively for the development of any tax system?


This research work is reduced in scope to Kaduna state which is one of the 36 states of Nigeria. Within Kaduna state not all the activities, the scope of this study is therefore  limited to the revenue generation  activities of the board of internal revenue, Kaduna.


This research is hampered most especially by time constraints. A near accurate research work demands a very long term  of study so as to generate enough data and make enough  analysis  and verification  of data and the analysis.

Unfortunately, the period within which this work should be  completed is short and shaved  between many other things to do. Also there is a shortage of relevant texts and documents either by their non availability, unaffordable cost of procurement or confidentially. These are vital data source that their absence with hamper on the claimed validity of any work.

Finally, the uncooperative attitudes of some staffs of the board has its on negative effect on this work because their attitude has been a discouragement which reduce the zeal to unique more.

1.8  DEFINITION OF TERMS            

PAYE: The term pay as you earn (PAYE) is used to described the system where by the employee pay tax on what ever income he earns from his employment in any particular mouth at the end of that month.

TAX AUTHORITY: The person or body of person responsible under income tax decree No 104 of 1993 to impose compute, collect and administer tax legislation.

FREE PAY ALLOWANCE: Employees entitlement under the personal income tax such as: children, dependent allowance etc.

RETURN FORM: is form use to declared employees income and claims the allowance entitlement to.                                                      

TAX REFUND: Is the amount refunded to an employee if he  is over assessed after claming free pay allowance.

TOTAL PAY: Is the sum of all payable to employees during any remuneration period including all allowance, bonuses, acting allowance, commission etc.

MONTHLY REMITTANCE: Is the total tax collected during the mouth from pay of employees. Which is payable to the board of internal revenue service after lessing tax refund  if any.       

DIRECTED EMPLOYER: The person/organization directed by tax authority on prescribed form to operate PAYE on the emolument of his employee.

GDP: Gross Domestic Product.

DNP: Gross National Product  


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