Income Tax

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NAME:OGODETON KELVIN OKIEMUTE

DEPARTMENT:ACCOUNTING

COURSE CODE:ACC325 (ASSIGNMENT)

MATRIC NO:09AA08569

TOPIC:‘Income tax is one of the major sources of revenue for all government in Nigeria and it is a factor to be recon with in both the state and the Federal Government body….It is an enforced contribution of money enacted pursuant to legislative authority….Analyze the importance and the problems of TAXATION and the way forward in Nigeria………….’

INTRODUCTION
Income taxes provide the largest single source of government revenues in most developed countries or developing countries for example Nigeria. Indeed, Taxation is one of the most vital elements or sources of income imposed on both individuals and corporations by the government in order to enable them raise funds to implement capital and recurrent projects that would definitely lead to the betterment of the state……..

Income tax, has no doubt, been one of the major sources of revenue to governments at different levels i.e. the different tiers of government (Federal, State and Local) and it is a ‘thing’ to be reckoned with in order to ensure the growth and well being of the Nigerian economy. Income taxation has so many roles to play in the development of the Nigerian economy.

IMPORTANCE OF TAX
The importance of tax regulations cannot be over-emphasized, as most transactions with any Ministry, department, or government agency cannot be concluded without evidence of tax clearance. i.e. a Tax Clearance Certificate certifying that all taxes due for the three immediately preceding years of assessment have been settled in full. Tax serves myriad functions. The revenue generated from taxation sustains the economic and social needs of the Nation. In fact, taxation serves multifarious ends, some of which have GOVERNMENT, ECONOMIC and SOCIAL bearings.

IMPORTANCE OF INCOME TAX FROM THE GOVERNMENTAL BEARING
The importance of tax to the politically are as highlighted as follows; •Decentralization/Allocation of Power: The importance of income tax is also shown by the fact that one of the problems inherent in any federal system of government is the allocation of taxing powers between the federal and the state governments. In May and June 1957, when Nigeria leaders were planning the form of federalism they wanted, a two-member fiscal commission was appointed to study and to make recommendations as to the allocation of taxing powers between the then Regional Governments and the federal Government. This was Raisman commission.

Fund Generation/Sources of Fund: The Federal Government has exclusive jurisdiction over import, export and excise duties, mining royalties, purchases and sales tax on most commodities, and taxes on the income and profits of all limited companies. The state Government, on the other hand, have exclusive jurisdiction over purchase and sales taxes on produce, hides, skins, licenses fees, estate duties and personal income taxes.

Economic Control: Taxes are a means of controlling the economy, in order to achieve full employment. By levying them, the government can influence the rate of consumption, saving and investment in the economy.

IMPORTANCE OF INCOME TAX FROM THE ECONOMIC BEARING
The following listed below are some importance of tax to the economy in general; •Encourages Productivity: In the encouragement of activities, pioneering industries, which produce goods locally, are encouraged and generally enjoy tax holidays for some years (five years). Dividends received from such companies are not taxed. Only the federal governments can signate-pioneering companies if they can satisfy conditions including profitability.

Economic Growth: The government to promote economic growth uses taxes. This can be achieved by imposing a lower rate of tax on company profits that are ploughed back into business. Also, government can also encouraged economic growth by pursuing generous investment policies. It can grant some...
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