1.1Background of the study
The financial resources with which government discharges His numerous responsibilities come in the form of tax revenue and non-tax revenue (Alabede, et al, 2010).
Taxation can be simply defined as a compulsory contribution levied by government, on the incomes, profits, goods, services or properties of individual and corporate persons, trusts and settlements.
The primary objectives and purpose of taxation is essentially to generate revenue or raise money for government expenditure on social welfare. Thus, it has been stated that the importance of taxation lies primarily in its ability to raise capital for the development and growth of the economy and also in assisting the regulation of the consumption pattern, resulting in economic stabilization and effective redistribution of income (ICAN, 2009). The Nigerian tax system takes after the political structure of the country. As we have three (3) tiers of government (Federal, State and Local Government), we also have a distinct tax administration at each tier of government with the joint tax board playing an overarching supervisory role. The Joint Tax Board (JTB) is an off shoot of the Income Tax Management Act (ITMA) 1961 with the main objective of bringing uniformity in the administration of the various regional tax administrations. The Joint Tax Board was established under section 86 of the personal Income Tax Act Cap p.8 LFN 2004. The section provides that the chairman of the JTB shall be the chairman of the Federal Board of Inland Revenue (Amawhe A. S, 2010). The administration of taxation on the profits of incorporate companies is vested in the Federal Inland Revenue service (FIRS) whose management board is known as the Federal Board of Inland Revenue (FBIR) (Section 1-3 FIRS establishment Act). The various taxes collected by the FIRS are;
(1) Companies Income Tax
(2) Withholding Tax on companies, resident of Federal capital territory, Abuja and non-resident individuals (3) Petroleum Profit Tax
(4) Value Added Tax
(5) Education Tax
(6) Capital Gains Tax on residents of the Federal capital territory, Abuja, bodies corporate and non-resident individuals (7) Stamp Duties on bodies corporate and residents of the Federal capital territory, Abuja (8) Personal Income Tax in respect of:-
* Members of the Armed Forces of the Federation
* Members of the Nigerian Police Force
* Residents of the Federal capital Territory, Abuja and
* Staff of the ministry of foreign affairs and non-resident individuals. (9) National Information Technology Development Levy
Value added tax as one of the taxes collected by the FIRS is an area of taxation that has high prospects of improving the internally generated revenue of the Nigerian government. The VAT system in Nigeria started with acceptance of the recommendation of a study group on indirect taxation in November 1991. The decision to accept the recommendation was made public in the 1992 budget speech of the Head of State. This resulted in setting up the modified value-added tax (MVAT) committee on 1st June, 1992 as recommended by the study group. The introduction of VAT in Nigeria through Decree 102 of 1993 marks the phasing out for the Sales Tax Decree No. 7 of 1986. The Decree took effect on 1st December, 1993 but administrative arrangement, involving for tax purpose commenced January, 1994. Value Added Tax is a tax on the supply of goods and services which is eventually born by the final consumers but collected at each stage of production and distribution chain. The introduction of VAT made government reasoned that, it will be virtually impossible to evade tax (Olatunji, O. C., 2009). The reforms of the various taxes collectible at the Federal level in Nigeria have been a key component of the economic reforms implemented from the second half of 2986. The reforms that characterized the taxes have been undertaken...