CHAPTER ONE
INTRODUCTION
1.1   BACKGROUND OF THE STUDY
Tax can be defined as a compulsory contribution to the support of government levied on persons, property, income, commodities, transactions etc. Now at a fixed rate mostly proportionate to the amount on which the contribution is levied (Crowther 1998) as it can equally be confirmed in (Tilley 1981) Oyebunji (2006) identified two major forms of taxes these are:
1.  Direct taxes:  These are taxes imposed by the government on the income of individuals and companies which are usually paid by the person or persons on whom it is legally imposed. Examples are Personal Income Tax (PIT), Company Income Tax (CIT), Capital Gains Tax (CGT), Withholding Tax, Petroleum Profits Tax (PPT), Education Tax and Capital Transfer Tax (CTT). The PPT is imposed on individuals earning, CIT on profits of organization/corporate bodies, PPT on oil purchasing/exploration companies, CGT on profit from sales of capital assets and CTT in the transfer of property inter-viro and transfer in death. However, CTT in profit was abrogated in 1996.
2.  Indirect taxes:These are taxes by the government on goods and services. Indirect taxes can be avoided because it is payable only if one buys the commodities or enjoys the services on which the tax is imposed and it involves little administrative cost compared to direct taxes. It does not create dis-incentive to efforts as in the case of direct taxes and hence does not affect the economic functions of the tax payers. Examples of the indirect taxes in Nigeria according to Oyebunji (2006) are:
1.   Import duties/traffics: Levied on goods imported into the country.
2.  Export goods: levied on goods produced for export.
3.  Excise goods: Imposed on specific goods produced in a country.
4.  Consumption tax: levied on the purchase of any commodity or enjoyment of a service.
Examples are sales taxes and Value Added Tax (VAT), the characteristics effect of consumption tax is that it is not included in the price tag by the affected commodity rather it is added as a percentage of the total of invoice in the goods or services rendered. However, this research aims to provide a comparative analysis of Value Added Tax Revenue among different sector in Nigeria, A case study of Federal Inland Revenue of Lagos State.           According to Oserogho and Associates as quoted by Adereli, Sannid Adesina (2011), VAT is a consumption tax levied at each stage of the consumption chain and borne by the final consumer of the product or service. Each person is required to change and collect VAT at a flat rate of 50% on all invoice amount on all goods and services not exempted from paying VAT, under the Value Added Tax Act 193 as amended. Where the VAT collected on behalf of the government (output VAT)  in a particular month is more than the VAT paid to other persons (input VAT) in the same month, the difference is required to be remitted to the government, on a monthly basis by the taxable person where the reverse is the case, the tax payer is entitled to a refund of the excess VAT paid or more practically to receive a tax credit of the excess VAT from the government. All exports are zero rated for VAT, i.e. no VAT is payable on exports. Also VAT is payable in the currently of the transaction under which goods and services or services are exchanged.          
The precedence for the introduction of VAT in Nigeria was based on the fact that taxation as an instrument of fiscal policy is vital in generating revenue to finance the activities of government, redistribute income, stabilize the economy as well as stimulate growth and development. The research intends to investigate the performance of different sectors in the Nigerian economy in contributing to VAT revenue using Lagos State Federal Inland Revenue as a case study.
1.2     STATEMENT OF THE PROBLEM          
VAT was introduced to contribute to economic growth of the nation by providing revenue to government to accelerate development. However, this goods is still far from being achieved sector contributions to VAT revenue is pivoted to providing the needed revenue to government to impact on economic growth. Hence, the problem confronting this research is to provide a comparative analysis of Value Added Tax Revenue among different sectors in Nigeria with a case study of Federal Inland Revenue Service of Lagos State.
1.3     Research Questions
1.       What is the nature of tax and its significance?
2.       What is the nature of value Added Tax?
3.       What are the sectoral contributions of Value Added Tax Revenue?
4.       What constitute the sectoral analysis of VAT in Lagos State?  
1.4     OBJECTIVE OF THE STUDY
1.       To determine the nature and significance of tax
2.       To appraise the nature of Value Added Tax and the significance.
3.       To determine the sectoral contributions of Value Added Tax revenue in Lagos State.
1.5     SIGNIFICANCE OF THE STUDY
1.       The Study shall provide sectoral analysis of contributions of Value Added Tax with a view to providing measures and policies to maximizes Value Added Tax revenue in Nigeria
2.       The study shall serve as reference point of information for economist, accountants, managers and government on issues regards Value Added Tax Revenue in Nigeria.
1.6     STATEMENT OF HYPOTHESIS
1.       H0      VAT is not significant to economic growth in Nigeria
          H1      VAT is significant to economic Growth in Nigeria
2.       H0      The impact of VAT on government Revenue is low
          H1      The impact of VAT on government Revenue is High
3.       H0      Sectoral contributions to VAT in Lagos State is low
          H1      Sectoral contributions to VAT in Lagos State is high
1.7     SCOPE OF THE STUDY          
The study focuses on the comparative analysis of value added tax revenue among different sectors in Nigeria with a case study of Federal Inland Revenue of Lagos State.  
1.8     DEFINITION OF TERMS
VAT: VAT is a consumption tax levied at each stage of the consumption chain and borne by the final consumer of the product or service. Oserogho and Associates (2011).