Taxation, Meaning;
A perusal of the Nigeria tax laws shows that no attempt has been made to define the term tax. Taxation is a means by which the government through specific enactment imposes a compulsory level on a person or upon a property. Taxation has been defined as monetary charge imposed by the government on persons, entities, transactions or property to yield public revenue, it has also been define as enforced proportional contributions from persons and property, levied by the state, by virtue of it’s sovereignty, for the support of government and for all public needs. We however, find more scholarly definitions in decided cases. In the case of Mathews v. Chicory Marketing Board, it was defined as
“A compulsory exertion of money by a public authority for public purpose, or taxation is raising money for the purpose of government by means of contribution of individual persons”
That:
Tax in the general understanding of the term and used in the constitution signifies an exertion for the support of the government. The word has never been thought to connote the expropriation of money from one group for the benefit of another”
“The primary meaning of the taxation is raising money for the purpose of government by means of contributions from individual persons
History of Taxation
“But when the crop comes in, give a fifth of it to pharaoh. The other four-fifth you may keep as seed for the field and as food for yourselves and your household and your children”.
In India, Islamic rulers imposed sizya (a poll tax on non-Muslims) starting in the 11th century. It was abolished by Akbar. During the war filled years of the eighteenth and early nineteenth century, tax rates in Europe increased dramatically as war became more expensive and governments becomes more centralized and adapt at gathering taxes.
Origin of Taxation in Nigeria
A system of direct taxation as a form of revenue generation had been in existence in this country before the advent of colonial rule, particularly in the north where there was an efficient and stable administration of tax for most part in Islamic system.
Thus, in Northern Nigeria there were various forms of taxation such as the Zaket, a tax levied on Muslim for charitable, religious, and educational purposes, Kurdin kasa- an agricultural tax; Shukka – another tax levied on livestock.
It is perhaps necessary to emphasis here, that during that pre-colonial period, revenue generation functioned more or less on an ethnic basis. In the chiefly society with administrative machinery and judicial institutions such as the areas on Northern Nigeria, Yoruba land and Benin Kingdom where you have Emirs and Obas respectively, there was a system of taxation. In the chief less societies like the Igbo, Tiv, Bira Igbirra and Bachama area, there existed little or no form of organized taxation.
Furthermore, taxes where not necessarily paid in money. They were mostly paid in kind and obligatory personal services otherwise known as tribute taxes. When money came into general use, this did not abrogate the obligatory personal services but only supplemented them. As stated earlier, however, the system of taxation in Northern Nigeria was far more organized, more sophisticate and more established than anywhere else in the country.
When the British came to Nigeria they were therefore naturally attracted by the organized tax system in Northern Nigeria and so they immediately consolidated all the various traditional taxes there under the Land Revenue Proclamation Law of 1904. There was no such Law in Southern Nigeria, until after the amalgamation of the Northern provinces with the colony and protectorate of Nigeria in 1914 when the Native Revenue Ordinance 1917 was enacted to cover the areas of the Western Regional of Nigeria.
It was
not until 1927 after much debate and hesitation that the first personal income tax was introduced into the Eastern region of the country. This sparked off disturbances culminating in the Aba Tax Riot of 1929. Among other amendment in the 1930s, is Non-native Protectorates Tax Ordinance of 1931, which later consolidated the subsequent amendment in 1939. This ordinance was later repealed and incorporated into the taxation ordinance, No 4 of 1940 and subsequently re-enacted as the income Tax ordinance, 1943. The above tax laws were administered on individuals and corporate entities by tax controllers that is, district officers, in the district, provinces and regions.
In order to achieve uniformity in the system of taxation throughout the geographical entity called Nigeria, the colonial Government set up the Riesman commission of 1958. One of the recommendations, of the Riesman commission led to the Income Tax Administration Ordinance No 39 1958. The ordinance among other things, provided for the establishment of the Federal Board of Inland Revenue. However, full effect was only given to this provision under the Companies’ Income Tax Act (CITA) 1961. The Federal Board of Inland Revenue, (FBIR), as created under CITA 196 consisted of
a. A chairman
b. A Deputy Chairman
c. The Senior Assistant Secretary with responsibility for revenue matters in the Federal Ministry of Finance;
d. The Legal Adviser in the Federal Inland Department;
e. Two other Member being chief Inspector of taxes or Officers of equivalent rank; and
f. One further member appointed by notice in the Gazettes by the Minister.
a. Reconstitution of the FBIR by expanding the number of
members of the Board to Fifteen inclusive of the Board Secretary;
b. The establishment of the Federal Inland Revenue Service (FIRS) as the operational arm of the FBIR;
c. The re-designation of the Board Chairman as executive chairman; and
d. Establishment of a technical Committee of the Board
In spite of the above reforms introduced by Decree No. 3 of 1993, tax administration still remained a function of the civil service and the Chairman of the federal Inland Revenue Service was appointed from among the Directors of the Federal Ministry of Finance. In 2002. the government set up a study group headed by professor Dotun Philips to examines the Nigerian tax system and make appropriate recommendations. Further to the study Group’s recommendations a working group headed by Mr. Seyi Beckersteh was constituted. The realigned recommendations of the two groups had far reaching impact on tax administration and the implementation of the recommendations commenced in late 2003.
Overall, since 1943 when the Nigeria Inland Revenue Department was established, it has undergo one series of modification with the period of 68 years existence to attain its present form.
2.4 Nature of Taxation
Personal income taxes, corporate income taxes, property taxes, death and gift taxes, and import – export duties.
The regulatory aspects of taxation are more apparent in indirect taxes, such as custom duties than in direct taxes such as income tax. For instance, government can control private consumption, especially of imported goods by increasing custom tariffs. An increas
e in taxation on personal income on the other hand, may result in a decrease in private saving without affecting the level of consumption. It is to be noted that not all revenue to government are taxes. A fine or penalty is not a tax, for example, penalty for late payment of due is not tax neither is penalty for contravening tariffs regulations tax. Furthermore, a charge for specific services rendered by government or its agency is not a tax. It is paid for consumption of the service. Payment of water corporation bills for instances is not a tax. Anyone can choose in Nigeria not to enjoy the services of the Water Corporation by providing his own sources of water supply. Such a person does not need to pay water corporation charges anymore. But this is not the case with the tax, once there is a taxable income; the tax thereon has to be paid irrespective of the enjoyment of any related benefits by the taxpayer. The basic characteristics of taxation can be summed up as follows:
1. Tax is a compulsory contribution imposed by the government on the people residing within a country. Since it is compulsory, it then means that people whom falls under a tax jurisdiction and refuses to pay is liable to punishment.
2. Tax is not a levy in return for any specific service rendered by the government to the taxpayer. In other words, an individual cannot ask for any special benefit from the state in return for the tax paid by him.
3. Tax is a contribution to settle the cost incurred by government of the state. The state uses the revenue collected from the tax to provide goods and social services such as hospitals, schools, public utility service and so on which are beneficial to all people.
Oxford Advance Learner Dictionary 7th Edition
The Black law Dictionary 8th Edition
Cooley. Thomas M. A… A The law of Taxation including the law of local Assessments, Chicago: Callaghan and company. 1886. Reprinted 2003 by the law book Exchange. Ltd.”
The Holy Bible. Genesis Chapter 47:24(King James Version)
Alberecht socin (1890). Mesopotania htt:p//www.1902encyclopedia.com/D/DAR/darius.l.thegreat.htmp(visited on July 10.2011)
History of Renaissance. Http://www.historyworld.ne/weildtreins/plarintexthistories.asp?historyid=aabs(visited on July 10.2011)
Study group on the … Nigerian Tax System and Administration; headed by professor. Emmanuel Edozie, www.nigeriantaxbook.com/index.php.assessed on the 18th of August 2011
L.A Ayua. “ Nigerian tax Law. (Ibadan: Spectrum Law publishers 1996). P.3
John Ogbonna “Nature of Taxation. (Unpublished lecture note. Ebonyi State University. 2009)
Thomas Hobbes “Social Contact Theory” in: Lnya A. Eteng (ed..) The Fundamentals of sociology. Vol Revised Edition (copyerft publication 2006)p.22
S. A. v. Regional Tax Board (1970) ALR Aomm. 68 and Adarwos Timber Tradding Company Ltd V. FBIR (1969)… All NLR 247.
Abubarkar Yusuf Mamud “Tax Policy in Nigeria” www.buzzel.com assessed on the 10th of July, 2011.
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