STATEMENT OF THE PROBLEM
It is an indisputable and
incontrovertible fact that the internal revenue generation of most local
government in Nigeria,
especially in Onicha Local Government Council where this study is focused on,
is far below what it should be, all things being equal. The concomitant effect
of the poor internal revenue generation and maximization is that inadequate
finance remains the most single devastating problem undermining effective local
government administration in the country (Onwe, 2004).
As we all know, the statutory allocations
from the federal government are not adequate to cover the financial obligation
of the local government such as payment of staff salaries, maintenance of
social services and local security, education etc. To be able to function
effectively and efficiently, local
Government
has to look inwardly to raise the required revenue, which by implication, is to
maximize its internal revenue generation.
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Local
governments as we are aware have several and adequate sources of internal
revenue generation. The main problem is that they have not paid adequate
attention to exploiting and maximizing these internal revenue sources (Onwe,
2004).
Several reasons have been adduced why internal
revenue generation is most local governments in Nigeria is far from being
satisfactory. For example, the report committee on the fiscal and financial
performance of local government in the federation in 1978 year observed that
“generally… the performances of local governments in revenue collected are very
low.
The
following factors are responsible for the situation poor communication network
particularly in the Riverine Areas of the country, lack of commitment on the
part of some revenue collectors some of whom are down –right dishonest and
defective revenue collecting machinery in particular. Some of the laws for
revenue collection have not been updated by various state governments including
Ebonyi especially in areas of rating and tenements rates:
Similarly, local governments have been
known to exhibit their inability to keep proper and adequate accounting
records. The problem of internal revenue generation in the Nigerian local
governments (Onicha inclusive) system according to Egonwam cited in Onwe, 2004,
are also compounded by the
fact
that the state governments required the more incrative, elastic and collectable
revenue sources e.g. water rates, vehicle increases, fees from building plans,
leaving local government with taxation with low ceilings, and revenues which
are administratively and politically difficult to exploit in an environment
where the vast majority of the people are poor, self- employed and dispersed in
rural areas. The attitude of tax rates collection in local government also falls
short of expectation. There are also reported cases of fraud and embezzlement
among the executive and staff of Onicha local government area of Ebonyi State.
Furthermore,
most local governments in Nigeria
today have become centers of fortresses of corruption. This problem was clearly
highlighted in the news watch magazine edition of December 20, 1993 (p.5).
The
problem of internal revenue generation in the Nigeria local government can be
summarized as observed by Onyishi (1995) to include:” poor revenue assessment
and method of collection; paucity of technically trained and experienced
revenue assessors and collectors; obsolete revenue bye-laws, sheer tax rate and
fee payers; inefficient supervision and control and ineffective audit system.
In view of the foregoing, the researcher
therefore, asks the following research questions to guide the study:
1.
How has the nature and structure of local
government in Nigeria
affected its internal revenue generation?
2.
Should landmass (size) and population from
the only bases for local government creation?