1.1 Background to the Study
The issue of tax evasion and avoidance have generated a considerable interest and concern to the governments and finance experts recently; this is because of their socio-economic implications and the effects on government revenues and fiscal viability in the long run. Asada (1997) in Bassey (2014) expressed that the issue of personal tax in Nigeria is being handled with levity hand and it is very disappointing and problematic of all the taxes in the tax system today. In spite of the fact that tax is now being considered as a huge source of generating revenue for government in the place of dwindling oil prices in the international market. A well organized society, say a country or state government owes some fundamental obligations to the people it governs, these obligations are in the forms of provisions of basic social amenities such as good roads, health, security of lives and properties, shelter, good water and others, the citizens on their own part are expected by the government to make equitable contribution in the form of tax. It is against these background that government levy taxes on its citizenry to pursue the above stated objectives it owns to the people.
The claim above suggests that tax payers over the years have demonstrated unpatriotic act through such means as concealment of profit and inference with revenue agents through corrupt practices, therefore, personal income taxation in Nigeria requires proper handling of the taxation system to ensure that everyone pays his/her tax as at when due. Taxes have period because there is no choice (consider the pay as- you-earn PAYE), due to the requirements of tax clearance certificates and, in most cases because of coercion by the government (use of task force and personnel), as a condition for recurring public sector benefits or social services rendered by the government even before attempting to contest elections, therefore, the desires to uplift one's society is the first desire of every patriotic citizen, the patristic citizen, however, pay taxes because it is a civic responsibility and for others because they want the government to succeed. This is perhaps due to the fact that the pace of development and growth in any economy is closely tie to taxes compliance rate. Tax payment is a civic responsibility everyone must perform to ensure that government finance or run public utilities as well as perform other social responsibilities. Taxes, thus constitutes the principal sources of government revenue, an effective tax system ought to satisfy the twin purpose of raising maximum revenue and at the same time encourage production. In an effectively managed tax system, the two purposes are not inconceivable provided the beneficial effect of government expenditure and incentives for production exceed the unfavourable effect of taxation. Adenkrah (2011) posited that an effective tax system aside from maximizing revenue for development, ought, if well structured and managed elicit a feeling of common purpose, joint responsibility or obligation amongst the taxable persons in a state or a country.