CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The development of any nation depends on the amount of revenue generated by the government for the provision of infrastructural facilities. One major source of generating this revenue is taxation. According to Azubike (2009) tax is a major source of government revenue all over the world, including Nigeria. Government use tax proceeds to render their traditional function of law and order, defense against external and internal aggression regulation of trade and business to ensure social and economic justice. Musgrave and Musgrave (2006) also maintain that the economic effects of tax include micro effects on the distribution of income and efficiency of resource use well as macro effects on the level of capacity output, employment, price and growth. However, the use of tax as an instrument of fiscal, policy cannot be possible except effective and efficient government tax planning and administrative machinery is ensured in the country. Anyamu (1997) writing on tax policy planning and administration in Nigeria opines that a tax system that ignores the tax planning and administrative aspect is deemed to remain a good system only on paper. It is on the basis of this that Bhatia (2004) maintains that: it is not an easy task to introduce an optimum task structure in an underdeveloped country. There is an inevitable conflict between defined policy and ability to execute them.
Various characteristics and institutions of an economy may come in the way of adapting on idea tax system such as the paucity of date, level of education cultural patterns, etc. A tax system has to be politically acceptable and in conformity with administrative capabilities of the authorities. Moreover, several taxes tend to work at cross purposes. (This also poses its own problems in devising an efficient and optimal. Taxation is key to unlocking the resources required for public investment and infrastructure growth. But collecting taxes from citizens have proved herculean tax because the average person would rather evade tax than paying it. In Nigeria and other African countries, the level of tax evasion is quite high. As a result, African countries collect little or
nothing from taxes. African countries have to improve on their tax collection, while also improving on their political and financial independence if they wish to develop their economics. Furthermore, in a less complex society or country in which the government has less duties and responsibilities, its financial needs are minimal. However, as society becomes complex the needs of the people increase with corresponding demand for greater responsibilities. To discharge the responsibilities, the people, through the constitution ampoule the government to raise finances through a number of sources.
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