Tax Administration Definition

This chapter presents a broader context of the study subject by reviewing past researchers’ works, related to the effect of tax on revenue, components of taxation, the methods to enhance tax revenue and finally empirical review and conclusion

2.1. Definition and Concepts of Taxation

Taxation is seen as a burden which every citizen must pay to sustain his or her government because the government has certain programs to perform for the benefits of those societies. A précised definition of taxation by (Farayola, 1987), is that taxation is one of the sources of income for government; such income has used to finance or run public utilities and perform other social responsibilities. (Ochiogu, 1994), defines tax as a levy imposed by the government

2.2.2 Functions of a Good Tax Administration A tax administration is all organizational set-ups for the management of the tax system. The tax administrative set-up is a department of government and of course works under regulations prescribed by tax legislation. Tax administration is the process of assessing and collecting taxes from individuals and companies by the authorities in such a way that correct amount is collected efficiently and effectively with minimum tax avoidance and tax evasion.

The main objectives of a tax system is to guarantee the long-run fiscal soundness of the policies and programmes of government while the purpose of tax administration is to fully implement the tax system, that is, to ensure that tax payers comply with the provisions of tax laws and that the funds derived from tax sources are paid into the government purse. Some aspects of the tax system are preconditions for a successful tax administration. These preconditions

(Balls, 1965) has pointed out that subject to the direction of the government and the will of the legislature, the purpose of the tax administrator is, to devise taxes in conformity with the principles that will raise revenues sufficient to achieve the needs of government to establish the basis of assessment and a procedure for collection that are as simple, effective and economical as possible, and to develop auditing and other procedures.

The function of a tax administrator also includes ensuring full compliance and effective enforcement of tax matters by tax payers. It is important to note that good principles of a tax system may be, the success of tax administration depends essentially on the ability of the tax administrators to utilize the principles. The problem of personnel then becomes central to tax administration. Hence it has been argued according to (Surrey, 1965)that the problems of tax administration in underdeveloped countries are basically problems of personnel; there is usually poor pay, lack of training, inefficiency and understaffing.

2.2.3 The Principles of Taxation

(Adams S. , 1910), stated in his book “The Wealth of Nations” gave the most important set of principles, which are also known as the “cannon of taxation” which are still accepted generally by tax administrators all over the world. These principles of taxation are list