Taxation In Nigeria Essay

CHAPTER 1

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Tax administration in Nigeria dates back to the days before the coming of the Colonial Masters. Those days, Emirs of the Northern Region, Chiefs and Obas of the Western Region administered and collected taxes from their subjects. (Kiabel 2014). Though functional, the tax administration back then was somewhat arbitrary. This is basically due to lack of standardized method of assessing and collecting such taxes.

Kiabel (2014) divided the history of taxation in Nigeria into three eras: Pre-colonial, Colonial and Post-Colonial. In the Pre-colonial era, the Eastern Province, not having constituted monarchical system, hardly practiced standard taxation. Roads and other community projects were

Tax laws differed as each region made its own Personal Income Tax Law. There was a need for unification. In the year 1960, Nigeria was granted full independence. In 1961, Income Tax Management Act No. 21 (ITMA) was enacted. The ITMA of 1961 could not unify tax rates, reliefs and allowances around the country. According to Kiabel (2014), in 1991 the Federal Government set up a study group of eminent Nigerians under the hardship of Prof. Emmanuel Edozien to review the entire tax system and administration. Their recommendation led to some milestone in history of Nigerian Tax Administration.

Tax, according to Ezejelue and Ihendinihu (2006), is the demand made by the government of a given country for mandatory payment of money by the citizens of that country in order to raise revenue and finance its expenditure, regulate economic and social policies, and satisfy the wants of the citizens. Black’s Law Dictionary, cited in (Kiabel 2014) defines tax as a “charge, usually monetary, imposed by the government on persons, entities, transactions, or property to yield public