1.1 Background of the Study
A country seeking to improve its revenue generation would opt for a concept enabling it to best realize its objectives with due regards to its peculiar socio-economic make up (Olaoye, 2009). Okaura, (2012) stated that government need money. Modern government needs lots of money. How they get and whom they take it from are the two of the most difficult political issues faced in any modern political economy. One of the ways of getting this money is by taxation. There are quite a number of definitions of tax or taxation depending on the qualities it possesses. In that vein, taxation is the process or machinery by which communities or group of persons are made to contribute in some agreed quantum and method for the purpose of the administration and development of the society (Igbonyi, 2008). It is also defined as a means by which, a Government appropriate part of the private sector’s income (Olaoye, 2012). Tabansi (2001) defines Taxation as a levy imposed by the Government against the income, profit or wealth of the individual, partnership and corporation. Reid (2003) defines taxation as the process whereby charges are imposed on individuals or property by the legislative branch of the federal government and by many state governments to raise funds for public purposes. While The National Tax Policy defines tax as a financial charge or levy imposed upon an individual or legal entity by a state or a legal entity of the state; it is a pecuniary burden laid upon individual or property to support government expenditure (Okauru, 2012). The accumulated revenue is used in meeting recurrent expenditure. Tax occupies a unique position, because it is an important part of government policies. The ability of a government to generate revenue from this sector affects services offered by such a government. A means of improving internally generated revenue is through Value Added Tax (Olaoye, 2009).