Tax Evasion

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asionTHE SOCIO-ECONOMIC PROBLEM OF TAX AVOIDANCE AND EVASION IN NIGERIA: AN OVERVIEW Dominic Asada LL.B. (Hons.) B.L, LL.M. Tax Avoidance and Evasion are some of the most perplexing problems facing the nation today. It is widely believed that there is a considerable difference between estimated revenue from taxation every year and what is actually collected. This disturbing aversion to taxation has some historical antecedents. Traditionally, there has always been a hostile response to the payment of tax by the people who viewed tax collectors as a nuisance to the society. And for the few that paid tax, they did so with the greatest reluctance. Even in the Bible, instances abound where the Jews treated the tax collectors with disdain and contempt.1 This negative attitude transcended to modern times and with the consequence that various devises, has been formulated by the tax payers to frustrate the tax authorities. To say the least, this negative attitude to taxation is unpatriotic in view of the well recognised role which taxation plays in the economy. In fact, it is undeniable today that every government depends to a large extent on taxation not only for its socio-economic development but also as a means of ameliorating the existing inequalities of wealth in the society.2 It is in this light that there has been various legislative and judicial attempts to impose liability on the tax payer in appropriate cases. Definition of Tax: The Nigerian tax Acts do not define the word tax. Thus for the purpose of ascertaining its meaning resort has been made to decided cases. It must be quickly pointed out here that even the various judicial attempts at defining it lacked precision. This maybe due to the Myriad function of taxation in the society.

In spite of the difficulty at definition, some definitions proffered by some leading authorities in the field may be examined. In the words of Chief Justice Lathman of the Australian Supreme Court in Matthews v. Chucory Marketing Board,3 a tax "is a compulsory exaction of money by a public authority for public purpose, or taxation is raising money for the purpose of Government by means of contribution from individual persons". Similarly in United States v. Butter,4 Chief Justice Roberts of the United States of America Supreme Court, said tax is "… an exaction for the support of Government …" He debunked the continued conception of tax as the "expropriation of money from one group for the benefit of another". Coming nearer home, Professor C.S. Ola has defined tax as "The demand made by the Government of a country for the compulsory payment of money by the citizens of the country”.5 A more recent and comprehensive definition was given by Dr Ekenze Oliver of Buitas Consultancy to the effect that tax is: “a compulsory levy imposed by an organization or Government on its member citizens, for the sole purpose of providing common goods and services for the benefit of all members".6 He continued: “tax is designed to raise revenue required for the Expenditure authorised in a Government budget Expectation. It is also a veritable instrument of promoting social and Economic justice and equality amongst citizens of a State or members of an organisation". As could be gleaned from the above definitions, a tax is not therefore a voluntary payment; it is a compulsory pecuniary burden placed upon the subjects of a given country to support the people. Definition of Tax Evasion and Avoidance: The Nigerian tax codes have neither defined nor drawn any distinction between Tax Evasion and Tax Avoidance. Tax Avoidance may be simply defined as the reduction or minimization of a person's tax liability by carefully arranging

one's affairs in such a way as to take advantage of loopholes in the tax Law provisions, it is the intentional act of a tax payer to pay less than what he ought to legally pay to the tax authority. Commenting on the attitude of the courts and the legislature towards Tax Avoidance. Professor...
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