CHAPTER ONE
INTRODUCTION
Taxation is as old as the system of government, is has been in operation from the time immemorial. Taxation has its divine origin from the Holy Bible when God told Moses that he should tell everybody that participate in the census to pay the required amount of money weight according to official standard and it become compulsory contribution or levy imposed by a public authority in respect of the exact amount of service rendered to tax payer in return
Taxation in Nigeria was consistently operated from the date of independence in 1960. Taxation was not alien to Nigeria as it has been a source by which government provides the people with facilities such as road, pipe-borne water, electricity and security etc.
Modern and regulated taxation system started in 1940 with the ordinances of the year. It repeals native direct taxation ordinance of 1927 whose provision was incorporated.
In 1904, income tax was first introduced in Nigeria by late Sir Lord Lugard. It was known as community tax system, several, changes were made to the tax system as problem arose until 1917 when these crystallized into revenue ordinance, which was amended in 1918 to extend its jurisdiction to Abeokuta in Ogun State and Benin City in 1923.
According to Nnadozies and Nwana (2007) tax was only applicable to Eastern Nigeria despite the resentment and opposition to the issue of taxation.
In 1961, the federal government enacted income tax management Act known as (ITMA) which came into force on April 1, 1961, to promote uniformity in the incidence and applicable of income tax laws in Nigeria.
For the development and growth of any society, the provision of basic infrastructure is necessary. This explains why government shows great concern on how the funds can be made available to achieve their set goals for the society. One of the main methods though which funds are acquired for the government is through taxation. Citizens are expected to discharge their civic responsibility by paying their taxes to contribute to the development and administration of the society at large.
Tax evasion remains the greatest problems plaguing tax administration in Nigeria. Apart from salaried employees, most citizens in Nigeria pay inadequate taxes or no taxes at all and this has led to a substantial loss of government revenue. The reasons for such behaviour could be attributed to several factors; the insufficiencies and complexities of legislation coupled with tax payers taking advantage of loopholes in the tax law, high rates of taxation and a lack of sense of civic responsibility among the tax payers.
Every government depends to a large extent on taxation not only for its socio-economic development but also for wealth equalities in the society. But in a situation where all this are not provided for the citizens, they deliberately refuse to pay tax which leads to tax evasion.
1.2 STATEMENT OF THE PROBLEM
It is a known fact that government officials and other office holders are diverting tax payer’s fund to solve their personal problems like buying expensive cars, building houses and marrying new wives at the expense of providing social amenities like good roads, schools, hospital and electricity etc.
This attitude discourages tax payers especially the private business owners from paying tax and this leads to high rate of tax evasion. Also, the low quality of service in return for tax, tax system, low transparency and high level of corruption do significantly influence tax evasion. The development has deprived the nation huge amount of revenue that would have been used in providing social amenities to the citizens. This study examines that transparent use of tax fund in Nigeria will aim at reducing incidence of tax evasion and tax avoidance in Nigeria.
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