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1.1 BACKGROUND OF THE STUDY The prime objective of every government is to maintain law and order, to provide and maintain basic essential services without which the community will be unimaginable and which by their nature cannot be left appropriately in the hands of private entrepreneurs. Such services include Internal Law and Order, Maintenance of National defense, provision of good healthcare system, educational system, transportation system, agricultural system etc. To cover the cost of providing these goods and services for the public good, government must generate financial and adequate revenues. The quest to governing meaningful financial resources has often led government to designing and administering some efficient and effective revenue generation systems. Primarily the main source of government revenue includes;

  1. Taxation
  2. Borrowing
  3. Charges
  4. Grants.

Amongst these sources, taxation (the demand made by the government of a country for a compulsory payment of money by the citizens of that country.) remains the most outstanding. This may be due to it being a civic responsibility that must be performed by the citizens of the state. As a non-penal by compulsory transfer of resources from the private sector, taxation must be levied on the basis of equity, certainty, convenience, economy and productivity. Unfortunately, taxes are not paid in exchange for specific things but are collected for the sake of public welfare and interest. Historically, without exaggeration, the origin of taxation is as old as mankind. The Christian bible tells us the story of Joseph in Egypt and his seven years plan. The Egyptians were heavily taxed for seven years to enable them build up a surplus of grains for storage against the year of famine. This is one of the early instances of economic planning through taxation. In Nigeria, the legal history of tax system can be traced to the native customs and traditions. Nigerians cheerfully paid taxes in kind (rendering free services to communities in which they lived). Those who could not render these services were duly punished. These people were forced to erect community buildings or have their fat animals slaughtered for the benefit of the community. Studies have shown that before the advent of colonial rule in Nigeria, some relatively well- organized system of taxation had existed In the north under the autocratic rule of Fulani conquerors. The Mohammedans by enjoining their followers to give a portion of their income for charitable or religious purposes provided a religious basis for taxation in Northern Nigeria. Community taxes were also levied on communities. Akin to this were special taxes often levied by reference to occupation or on products or services produced or rendered. For instance, fishermen, smiths, hunters, weavers, etc were all subjected to pay special taxes. Government often uses various systems (kinds) of taxations to generate the required revenues. For instance, direct taxes which include personal income tax, often applied on employees, sole traders, partnership, capital gain tax on companies, individual and non- co-operate entities, capital transfer tax (applicable asset transferred from one person to another), purchase tax, petroleum profit tax, and company income tax has constituted a significant source of revenue to the government. Similarly, indirect tax, e.g. stamp duties, custom duties, industrial training fund, toll paid on federal highways, will have often enhanced government revenues. The administration of tax in Nigeria is in the hands of three relevant tax authorities viz:

  1. The joint Tax Board
  2. The federal Board of Inland Revenue
  3. The various state Board of Internal Revenue

In Nigeria, persons liable to pay income tax include men, women, married or single, trustees and executors, families, villages and indigenous communities. Though government can also raise funds through natural resources such as oil, palm oil, coal and gas which are exported, those alternative sources of income to government are hardly enough to shoulder the burden of government expenditures, especially in the area of economic and social spheres in each year, hence the need for tax payment. We must emphasize here that income Tax Law must be interpreted in strict- to- sensor. There is no equity in tax law. The tax payer must be brought within the letter of the law and rigid adherence is the rule. Nothing should be read in and nothing should be implied. The onus of bringing a tax payer into the tax net is on the revenue or assessment authority. Another important point to note is that tax is not imposed on person or individual. Section 4 (1) of ITMA 1961 states that “the tax shall subject to the provisions of this act, being payable for each year of assessment upon income accruing in derived form, brought or received in Nigeria. Studies have shown that in Nigeria, workers pay more than the rich people who invest in various proper ties such as building, transporters, etc as a result of ineffective administration of taxes. Yet those investors are the category of people who would want government to move mountains in terms of raising their socio-economic well being, without meaningfully contributing towards the funds. Now that our various government are gearing efforts to revamping over bettered economy and improving the living condition of Nigerians, the need for the evolvement of more effective strategies to ensuring regular tax payment by taxable individuals need not be overemphasized. Taxable adults and organizations in various sectors of the economy must discharge their civic responsibilities. Unfortunately, this can only be achieved if tax systems are effectively administered so that people would in government revenue generation, willingly and without grudges pay their taxes. This will result to improvement in government revenue generation, hence the basis for this research study.

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