PROBLEMS OF TAX COLLECTION IN NIGERIA: A CASE STUDY OF UYO LOCAL GOVERNMENT AREA

2.1     Conceptual Framework 
Adebayo (a004) defined taxation is the legal demand made by the Federal Government or State government for its citizens to pay money on income goods and services. In a less complex society in which the government has few duties and responsibilities, the financial need of the government are minimal. However, as society becomes complex the need of the people becomes greater and the government assures greater responsibility the financial needs of the government becomes great. Consequently, taxes increase and their effect on the economy becomes more important. 
In the past, government has utilized taxation as an instrument of regulating the general economy. Since income tax provide large source of national revenue. Effect on inflation, unemployment and social and economy objective has become the prime consideration in enacting tax law in Nigeria. 
Taxation in an aggregate definition is mandatory contribution from the people to generate revenue for the government; use in financial it’s capital project and recurrent expenditure. A renown tax authority in his book “Principle of Public Finance” Dr. H. Dalton define tax as a compulsory contribution imposed by a public authority, in respect of the exact amount of services rendered to the tax payer in return” according to Professor Seligman, a tax is compulsory contribution from a person to the government to defray the expenses incurred in the common interest of all, without reference to special benefit conferred. 
From the above concept, the following are therefore the global objective of taxation and avoidance. 
i. To persecute the tax law very vigorously thereby deterring tax evasion and avoidance. 
ii. To recognize the tax official’s as important human asset in achievement of the said objective. 
iii. To collect tax according to the law as means as possible and to the actively encouraging voluntary competence. 
2.2     History of Taxation in Nigeria 
Taxation is an age long concept which dates lack to the pre-colonial era in Nigeria. Taxes where paid through different kinds of manual labour for the entire community benefit. Some examples of such services are clearing of bushes, digging of pit toilet, well etc for the benefit of the community as a whole. Failure to render such services usually resulted in seizing of property which will be claimed only on payment of money. For example, the best house at Isenyin, which is inherited by Oyo State Government was said to have been built between 1916 and 1932 after the Isenyin riot of 1916, under the supervision of Captain W. Rose, the resident district officer and Mr. Yerokun, the case taker. 
In 1904, during the colonial rule, late Lord Lugards government introduces income tax to Nigeria and community tax was being paid in Sokoto caliphate, northerner Nigerian. The Ordinance of 1917, 1918 and 1928 were later incorporated into the Direct Taxation Ordinance of No. 4 of 1940 which replace the native revenue Ordinance. During this period, the board of constituted, comprising of the following:- 

1)  The residence Governor. 
2) A representative of elders in each district. 
3) Any native authority recognize by the tax authority. 
4) Any village council appointed by the government.

2.2.1  Characteristic of Taxation 
There are three major characteristic of taxation. There are as follows:

2.2.2  Form of Taxes 
The mode of differentiating tax by asking a question who pay tax? I am assessed and fellow pays, them tax become indirect. 
Direct Tax: This are taxes that are levied on the income, gains or profit of individuals and business firms, and which are actually paid by the person or persons on whom is legally imposed. This view was aptly experienced by John Staurt Mill who define tax as one which is “demanded from the very person who it is intended or desired should pay it. In Nigeria, direct taxes include the following: 
i.  Personal Income Tax: This is a tax on the income of an employees, sole trader, partnership and personals. 
ii.  Company Income Tax: This applies to the profit/income of companies which are usually cooperate economic. 
iii.  Capital gain Tax: This affects companies, individuals and non-cooperate bodies.  It is a tax on the gains arising from the disposal of items of Capital natures. 
iv.  Petroleum Profit Tax: This is a tax payable by entity that engage prospecting for or the extraction and transporting  of petroleum oil on natural gas. 
Indirect Tax: An indirect tax is a tax imposed on employment of goods and services by individuals as well as cooperate persons. It impose on one person, but paid party or wholly by another, owning to “a consequential change in the terms of some contract or bargain between them” in Nigeria, example of indirect tax are as follows: 
i.  Import Duties/Tariff 
ii.  Import Duties  
iii.  Custom Duties  
iv.  Excise Duties 
v.  Value Added Tax (VAT)

2.2.3  At State Government Level 
The administration of the income tax law in each of the federation invested in the State Board of Internal Revenue prior to 1993. The composition of the Board could be different from the state to state. However, with 1993 amendment to ITMA the composition is know uniform through out the country. 
2.2.4  Composition  
Sub section 2 gives the composition of the State Board as: 
a)  Three other persons shall be nominated by the Commissioner of Finance of the State on merits. 
b)  The Directors and Head of Department within the state service. 
c)  The Director from the State Ministry of Finance. 
d)  The executive head of the state service as chairman. He shall be a person experienced in taxation, appointment in from within the state service   
e)  A legal adviser who shall be appointed from the state ministry of justice. 
2.2.5  Functions  
The State Board shall be responsible for: 
a)  Ensuring the effectiveness and optimum collection of all taxes and penalties due to the government under the relevant law;  
b) Appointment, promotion, transfer and discipline of employee of the state service. 
c)  General control of the management of the service on matters of policy, subject to the provision of the law setting up the service. 
d) Making recommendation where appropriate to the joint tax Board on tax policy, tax reform, tax legislation, tax treaties and exemption as may be required from time to time.
2.2.6  Technical Committee of the State Board   
As an adjunct to the Board, the law (Section 33C of Decree 3 of 1993) also provided for technical committee of the Board which shall be made up of the following: 
a)  The Chairman of the State Board as Chairman. 
b)  The Director within the state service. 
c)  The Legal adviser to the Board. 
d)  The Secretary. 
Functions 
The technical committee shall have power to do the followings: 
a)  Have powers to co-opt additional staff from within the services in the discharge of its duties. 
b) Advice the State Board on all its power and duties as prescribed. 
c)  Attend to such other matter as may from time to time be referred to it by the Board. 
d)  Consider all matter that require professional and technical expertise and make recommendation to the State Board. 
2.3     Sources of Tax Revenue 
An interesting feature of the Internal Revenue sources of the State is that they are common. The same revenue sources are therefore observed from one state to the other with only little variation. The sources are tax-revenue sources and no-tax revenue sources. The differences between the two sources is that where as the tax revenue are dependent on taxes imposed by the state, the non-tax revenue resource are independent of taxes and hence of the tax administrative machinery available to the state. 

An example of non-tax revenue is income earned from state enterprise like property, development corporation, housing estates, government farms etc. Although a good number of such public enterprises have not really generated substantial revenue to state coffers. There are therefore relatively smaller components of the internal revenue sources of the states. Other examples of non-tax revenue are grants, gift or donations by state indigenes. The large component of internal sources of states’ revenue is the tax-revenue sources. 
There is a long list of these taxes and fee. A typical state list of tax-revenue sources include:- 
i.  Direct Assessment  
ii.  Pay As You Earn (PAYE) 
iii.  Driver Licence Fee 
iv.  Motor Vehicle Licence  
v.  Entertainment tax 
vi.  Stamp duties and Penalties  

2.4     Importance of Taxation   
Taxation as one of the measures that assist the nation economy has the following importance:- 
a)  Taxation is imposed to generate revenue for the government to meet its capital and recurrent expenditure. 
b)  It reduces inequalities of income; the more you earn, the more you pay. 
c)  To increase output and employment. 
d)  To awaken civic responsibilities among citizens. 
e)  Tax is in fiscal policy measure inflation, deflation and depression. 
f)  It encourages and protects new industries. 
g)  It discourage the consumption of harmful product or foods such as beer, tobacco etc  
2.4.1  Tax Exemption  
In Nigeria, there are some types of income that are completely exempted from tax imposition. Their incomes are those from:- 
i.  Social clubs 
ii.  Cooperative society 
iii. Mosque and churches

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