Pay As You Earn (PAYE) Tax as Panacea to Backlog of Gratuities and Pensions of Civil Servants in Nigeria
DOI:
https://doi.org/10.47747/jat.v4i2.1798Keywords:
Gratuities, Pension, Retirement, Pay As You Earn, Burgess’s Activity TheoryAbstract
Gratuities and pensions are payments due to retired civil servants; however, payments of these have not been timely and consistent to the extent that 23 state governments are owing N836.40 billion as gratuities and pension liabilities as of the end of 2022. Non-payment of these retirement benefits is often accompanied by social and health problems, leading to the premature death of retirees. Consequently, this study aims to examine the potential of monthly Pay As You Earn (PAYE) tax to eliminate the backlog of retirement benefits owed to retired civil servants. To achieve this aim, quantitative secondary data of PAYE tax collections by state governments is collected from the annual Internally Generated Revenue reports of states published by the National Bureau of Statistics (NBS) 2010-2022. Descriptive statistical analysis tools are employed to analyze collected data while Burgess’s activity theory and public policy analytical framework guided the conduct of the study. On the overall, results from the study revealed that while the 23 state governments owe N836.40billion as liabilities of retirement as at 2022, the same states have collected the sum of N5,672billion as PAYE tax 2010-2022. On individual states, 20 states have collected PAYE tax 2010-2022 more than their liabilities of retirement benefits, while only three states collected PAYE tax less than their accumulated liabilities of retirement benefits. The short-run policy implication is for states to set aside collected PAYE tax to settle the backlog of benefits and adopt the Contributory Pension Scheme (CPS) to avoid future recurrence of the backlog
References
Abasili, K. N., Achufusi, E. E., &Nwokike, C. E. (2023). The effectiveness of employee wellness programmes and civil service productivity in Nigeria: a content analysis. International Journal of Research, 10(7), 180-191.
Abdulazeez, N. (2015). Pension scheme in Nigeria: History problems and prospects. Arabian Journal of Business and Management Review, 5 (2), 2-6.
Akinola, A. B. (2017). Problems and prospects of civil service system in Nigeria’s fourth republic. Direct Research Journal of Social Science and Educational Studies, 4 (1), 1-7.
Akintoye, A. (2015), Developing Theoretical and Conceptual Frameworks, EDMIC 2015 Research Workshop, OAU, Ile Ife, Nigeria. Retrieved from file:///C:/Users/sani/Downloads/ ecitydoc. com_akintola-akintoyedeveloping-theoretical-andconceptual.pdf
Amaize, et al (2023). 21 states owe N790bn inherited pensions, gratuities. Retrieved from https://www.vanguardngr.com/2023/10/21-states-owe-n790bn-inherited-pensions-gratuities/
Aminu, K. K. (2013). Human resource management. Kano: Benchmark Publishers
Amune, J. B., Aidenojie, E. O. &Obinyan, O. O. (2015). Management of life after retirement and its implication on retired academic librarians in Edo State, Nigeria. International Journal of Humanities and Social Science, 5 (10), 233-241.
Analysis of retirement benefits in Nigeria: a case study of some selected federal establishment
Andrews, R., Ashworth, R. (2013). Determinants of Representation: an empirical assessment of the UK civil service. Policy and Politics, 42(3), 429-448.
Ash, E., Morelli, M., Vannoni, M. (2022). Divided government, delegation, and civil service reform. Political Science Research and Methods. 2022;10(1), 82-96.
Baxitbaevich, M. K. (2020). Evolution of the civil service in the USA. International Journal of Political Science and Governance, 2020; 2(1), 104-108.
Bridges, E., Bridges, B., Edward C., & Chapman, B. (2024). Civil Service. Retrieved from https://www.britannica.com/topic/civil-service/additional-info#contributors
De Smith, S. A. (1998). Constitutional and administrative law. Penguin Books
Dominic, S., & Peter, I. (2018). appraisal of the challenges of civil service and workers ‘performance in Nigeria. Lapai International Journal of Administration, (), 18-29.
Ekott, I. (2020). Explainer: What to know about Nigeria’s recession and how it affects you. Retrieved from https://www.premiumtimesng.com/news/headlines/427285-explainer-what-to-know-about-nigerias-recession-and-how-it-affects-you.html?tztc=1
Elaigwu, J. I. (2024). The Federal Republic of Nigeria. Retrieved from http://www.forumfed.org/libdocs/Global_Dialogue/Book_2/BK2-C08-ng-Elaigwu-en.htm
Ewah, J. (2023). Pensions, gratuity and much ado about nothing. Retrieved from https://punchng.com/pensions-gratuity-and-much-ado-about-nothing/
Federal Civil Service Commission (2024). History and Establishment. Retrieved from https://fedcivilservice.gov.ng/page-history_and_establishment
Fiiwe, J. L. (2020). Analysis of retirement benefits in Nigeria: a case study of some selected federal establishment. Equatorial Journal of Marketing and Insurance Policy, 4(1), 1 – 15.
Fitzpatrick, D., & Richards, D. (2019). The civil service’s gender diversity agenda under the coalition: where have the critical feminist actors gone? British Politics,14(), 198–222.
Friedman, S. (2022). Climbing the Velvet Drainpipe: Class Background and Career Progression within the UK Civil Service. Journal of Public Administration Research and Theory, XX, 1–15
Fulton, S., Krainovich-Miller, B. (2010), Gathering and Appraising the Literature. In LoBiondo-Wood G, Haber J (Eds) Nursing Research: Methods and Critical Appraisal for Evidence Based Practice. (Seventh Edition. Mosby Elsevier,Missouri, 2010, 56 – 84).
Garba, A., Jirgi, I. M. (2014). Civil service and sustainable development in Nigeria. European Journal of Business and Management, 6(21), 41-45.
Gauke, D. (2024). PAYE story. Retrieved from https://www.taxation.co.uk/articles/2011-09-21-280681-paye-story
Gombe State Civil Service Commission (2024). About Us. Retrieved from https://cscgombe.com.ng/
Gong, T. & Wu, A. M. (2012). Does Increased Civil Service Pay Deter Corruption? Evidence from China. Review of Public Personnel Administration, 32(2), 192–204.
Gu, Q., Zhao, K. (2015). An empirical research on the performance assessment of Chinese civil servants. International Conference on Logistics Engineering, Management and Computer Science, 768-776.
James, L., Russell, M., & Renwick, A. (2023). The civil service: what is its role? Retrieved from file:///C:/Users/User/Downloads/constitution-unit.com-The%20civil%20service% 20what %20 is%20itsrole.pdf
Kivunja, C. (2018). Distinguishing between theory, theoretical framework, and conceptual framework: A systematic review of lessons from the field. International Journal of Higher Education, 7(6), 2081, 44-53.
Lowe, R. (1981). The official history of the British civil service: Reforming the civil service. Retrieved from https://api.pageplace.de/preview/DT0400.9781136830143_A24325247/preview-9781136830143_A24325247.pdf
McGrath, R. J. (2013). The rise and fall of radical civil service reform in the United States. Public Administration Review, 73(4), 638–649.
Micah, L. C., Ebere, C., &Umobong, A. A. (2012). Tax System in Nigeria – Challenges and the Way Forward. Research Journal of Finance and Accounting, 3(5), 9-15.
Mohammed, S. D., Adamu, B. B., Karaye, Y. I., Abdullahi, M., Ibrahim, N. A., Hashim, A. A., & Abubakar, A. (2023). Digitalization of Tax Administration As Emerging Global Best Practice: An Assessment of Digitalization of Tax Administration By States in Nigeria. POLAC International Journal of Economics and Management Science, 9(2), 164-175.
Morgan, M. O., Okon, E. E., & Emu, W. H. (2019). A critique of the bureaucratic theory: The Nigerian civil service experience. Global Journal of Social Sciences, 18(), 1-10.
Murana, A. O., Olayinka, S. M., &Omotayo, I. B. (2016). The impacts of the Nigerian civil service reforms on effective service delivery. International Journal of Politics and Good Governance, 7(7.3), 1-20.
National Pension Commission (2021). 2021 Annual report and account. Retrieved from https://www.pencom.gov.ng/wp-content/uploads/2022/07/2021-ANNUAL-REPORT-DRAFT-12-1-LPFOs-Final.pdf
Nebo, O. E. S., &Nnamani, D. O. (2015). Civil service reforms and national development in Nigeria. South American Journal of Management, 1(2), 1-14.
Okolie, U. C., & Idibra, M. (2022). Delayed payment of gratuity, pension, and post-retirement conditions. Indonesian Journal of Social Sciences, 14(02), 79-92.
Okpata, F. O. (2014). Re-enacting the civil service core values and strategic policy approaches for sustainable restoration of the values in Nigeria. African Journal of Politics and Administrative Studies, 6(1), 18-29.
Onaiwu, U. J., & Arekhandia, E. L. (2021). An Assessment of PAYE System of Taxation in Nigeria. International Journal of Research and Innovation in Social Science, 7(9), 760-768.
Organization for Economic Cooperation and Development (2020). Compensation of civil servants. Retrieved from https://www.oecd-ilibrary.org/sites/01829db9-en/index.html?itemId=/content/ component/01829db9-en
Owotemu, A., & Daniel, C. O. (2021). The Nigerian experience: management of the civil service. European Journal of Business and Management, 13(2), 55-62.
Pension Nigeria (2022). Nigerian Labour Congress demand restoration of Gratuity to public servant in Nigeria. Retrieved from https://www.pensionnigeria.com/pension-news/nlc-demands-restoration-of-gratuity-for-public-service-retirees/
Pension Reform Act (2004). Pension Reform Act. Retrieved from https://www.pencom.gov.ng/wp-content/uploads/2017/04/Nigeria_PensionReformAct2004.pdf
Pillah, T. P. (2023). Federal civil service remuneration and salary in Nigeria: an overview of structural change. International Journal of Public Administration and Management Research, 8(6), 62-72.
Rajaraman, I &Saha, D. (2008). An empirical approach to the optimal size of the civil service. Public Administration and Development, 28(), 223–233.
Salisu, B. (2009). The role of the civil service in policy formulation and implementation. Management Network Journal, 6(12), 1-19.
Small and Medium Enterprises Development Agency (2024), Nigerian Micro, Small and Medium Enterprise Report 2022. Retrieved from https://smedan.gov.ng/wp-content/uploads/2022/07/Kippa-MSME-Report.pdf
Sui, M., Ding, H., Xu, B., Zhou, M. (2022). The Impact of Internet Use on the Happiness of Chinese Civil Servants: A Mediation Analysis Based on Self-Rated Health. International Journal Environmental Research and Public, 19(), 1-16.
Taxes and Levies Act (1998). Taxes and Levies (approved List for Collection) No. 2. Retrieved from https://www.firs.gov.ng/wp-content/uploads/2021/01/TAXES_AND_LEVIES.pdf
The Nigerian Constitution (1999). Constitution of the Federal Republic of Nigeria 1999. Retrieved from https://www.wipo.int/edocs/lexdocs/laws/en/ng/ng014en.pdf
Udom, C. A., Ukommi, A. S., & Ekanem, A. E. (2022). Saving for retirement days: a cure or curse? A study of universal basic education board retirees, Akwa Ibom State, Nigeria. Ibom Journal of Social Issues, 11(2), 23-35.
United Kingdom Civil Service Commission (2012). Civil service history. Retrieved from https://www.civilservicecommission.org.uk/civil-service-history.html
United States Office of Personnel Management (2003). Biography of an Ideal: A History of the Federal Civil Service. Retrieved from https://dml.armywarcollege.edu/wp-content/uploads/2023/ 01/OPM-Biography-of-an-Ideal-History-of-Civil-Service-2003.pdf
Vanguard (2023). Unpaid gratuities, pensions, salaries choke states. Retrieved from https://www.vanguardngr.com/2023/06/unpaid-gratuities-pensions-salaries-choke-states/
Yang, M., Bento, P. & Akbar, A. (2019), Does CSR Influence Firm Performance Indicators? Evidence from Chinese Pharmaceutical Enterprises, Sustainability, 11(5656), 1-18
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Sani Mohammed, Sunusi Garba, Armaya’u Alhaji Sani, Rukayya Tijjani Ibrahim, Yusra Musa Muhammad, Ibrahim Ahmad Kassim
This work is licensed under a Creative Commons Attribution 4.0 International License.
Copyright for this article is retained by the author(s), with first publication rights granted to the journal.
This is an open-access article distributed under the terms and conditions of the Creative Commons Attribution license (http://creativecommons.org/licenses/by/4.0/)
![http://creativecommons.org/licenses/by/4.0/](https://journal.jis-institute.org/index.php/jat/management/settings/<a rel="license" href="http:/creativecommons.org/licenses/by/4.0/"><img alt="Creative Commons License" style="border-width:0" src="https:/i.creativecommons.org/l/by/4.0/88x31.png" /></a><br />This work is licensed under a <a rel="license" href="http:/creativecommons.org/licenses/by/4.0/">Creative Commons Attribution 4.0 International License</a>.){kind=link}