CHAPTER ONE

1.1 BACKGROUND TO THE STUDY

The existence of taxes had been before the colonization of African countries. Taxes existed in Africa for the benefits of African populace.

In Nigeria taxes were paid and were properly recognized then and there were few cases of tax evasion and tax avoidance.

Though, compared with what we have now taxes realized then were relatively small but sufficient for the need of the society as at that time.

However, what we have in Nigeria today Is to a large extent an offspring of the British tax system, inherited from our colonial masters.

For example taxes were prominent In the northern part of Nigeria before the colonial era, by the way of rendering free services such as clearing of bush, digging of wells, digging of pit toilets, etc. all these were recognized as taxes for the benefits of the community as a whole.

Cattle rearers and citizens even went to the extent of giving cows and horses so that community could sell them and use the proceeds for the economic development of the community.

There were laws or regulations guiding the procedure, then and even if there were any, they where not on record today.

In those days, the obas, Emirs and obis were appointed and recognized as commissioners for tax purpose which is now equivalent to the modern commissioners for finance and ‘revenue. These chiefs would in turn appoint ward chiefs who would be operating under their authority. Also, the ward chiefs would appoint family heads to carry out any responsibilities given to them.

Any matter which could cause delay in tax administration would be jointly decided by the Oba, Emir or obi and his council of’ chiefs and the Oba, Emir or Obi are usually the chairman of such a panel or meetings.

The system ha know been adopted by: the joint tax board with some moderation as the letter is not the combination of chiefs but a combination of different professionals from’ different fields of human endeavour.

If one views the system of tax administration during pre-colonial period, there taxes collected at times, could be less than expresses incurred during the process of collection.

Also, there were few cases of tax evasion and tax avoidance could be attributed to the level and standard of education. People are now educated and so they now know how to avoid and evade tax cleverly.

However, with all these above mentioned points, the pre-colonial tax system has its disadvantage because this custodian of this money could easily run away with it or misappropriate part of the whole money or it may be stolen there were banking in those days.

Secondly, some family head were assigned to collect the tax liabilities of their wards. They could not do much in collecting the taxes from their family members who refuse to pay. They may even except their own immediate families from paying tax.

In view of those problems and disadvantages, in 1904 Lord Lugard introduced community income tax into Northern Nigerian. It is important to mention here that Nigeria tax system as it is today is an offspring of the British tax system.

Though further changes and amendments were made in the 1904 tax, which result to the native Revenue ordinance in 1917, 1918, it was extended to the southern part of Nigeria.

It was in operation in Abeokuta in Ogun State and Benin City in Edo state. In 1928, the provision was extended to the introduced as income tax on the income of individual trade,’ vocation or profession. This was however limited to profit withdrawn by the owners.

The company income tax was enacted in 1943 while the Nigerian income tax was also enacted in 1940. the tax laws and the administration of tax was not met with joy by Nigerians as the colonials masters encountered great problems in executing most of those tax laws.

Were not proper and should annulled, consequence of which riot erupted. The same thing happened in the western state in Abeokuta. This was a way of showing the dissatisfaction of the people with the tax laws and many women and children died in the two riots.

Since 1943, there had been some other legislation which is still relevant today. These modern ‘legislation are up to date for the modem economic system.

1.2   STATEMENT OF THE PROBLEM

The serious problem that calls for this study Is the general unawareness of the citizens about the importance and contribution of taxes to the economy.

Also, major problems being faced by the board of Internal revenue which reduces the revenue generation capacity of the government Include the following:

1. Shortage of working facilities, such as vehicles, strong safe and cabinet etc.
2. Manpower problem which has to do with shortage staff. Illiteracy among taxpayers which impedes communication with them.
3. Some taxpayers don’t keep proper record of account and assessment of such taxpayers is based on the judgment of tax officials
4. Tax evasion and tax avoidance
5. Sometime, the statistics departments rely on this market women Information, which may be wrong.
6. Some tax collectors were not fully trained In the field so they are ineffective when carrying out their duties
7. Some employers of labour do not always corporate with the tax authority in respect of paye system of their employment and this also occurred in the limited liabilities companies which makes it very difficult for the board of internal revenue to assess their tax liabilities.
8. Fraudulent practice & by some tax collections

1.3   OBJECTIVES AND PURPOSE OF THE STUDY

1. The primary objective of this study is to sensitize the citizens about the Importance and contribution of taxes to the economy of Nigeria as well as to let them know the need to pay their taxes promptly.
2. To offer solutions to the obstacles often faced by tax collectors and the payer in the country.

iii.      To study how revenue is raised for finance of government expenditure.

1. To know resources are transfer from the citizens to the government.

It is the main purpose of the study to let students and non students know the role, contributions and importance’s of taxation to the economic development of the country.

This is because of the ignorance of this people on the importance of Nigerian tax system which has caused low revenue generation to the government and consequently a negative effect on economic development.

Many find it difficult to know the importance of taxation and feel cheated when ever they are asked to pay. Up their tax liabilities.

People will not feel reluctant to discharge their civic responsibilities if they are aware of this system and contribution of Nigeria taxes to the development of the economy.

In other words, proper awareness of the people about the tax system and its contribution to the economy of the county will make them discharges their civic responsibilities with enthusiasm.

Hence, government would not hesitate to provide the Masses with vital social amenities, which will definitely lead to economic growth and development.

However, an important purpose is to focus on the areas of difficulties with a view to providing them with possible solutions.