SOURCE:

Faculty: Law
Department: Law

CONTRIBUTORS:

Bielu, K. J.
Okeke, G.

ABSTRACT:

Tax is an enforced and compulsory contribution exacted pursuant to legislative authority levied on individuals and corporate persons. It is levied as duty, customs and excise, levy and others. Both the federal and state legislature have power to impose taxes in accordance with the law in Nigeria. The tax authorities collect these taxes. The non-compliance with the specifications in the tax laws and inadequacies in the tax laws has affected the realization of the revenue by government in Nigeria. It is only persons who benefit or enjoy directly the benefits of the social amenities provided by the government that should pay tax. The government has been unable to meet its obligation in the provision of certain infrastructure such as electricity, roads, pipe borne water, medicare and housing. Despite the huge tax yield to the Federal, State and Local governments unemployment is on the increase. Both the federal, state and local governments have adopted Public/Private Partnership in an attempt to provide social amenities and meet some of the obligations expected of the government by the citizenry and the challenges of the tax collection in Nigeria. This research sought to find out who has duty to impose, collect and expend tax revenue yield in Nigeria. The relevant tax legislations were examined to know the extent of compliance by the authorities and taxpayers. The procedure for utilization of the tax yield and the impact of the revenue utilized on the taxpayers in Nigeria were x-rayed. The research adopted doctrinal method using analytical and expository approaches in reviewing the relevant legislations/statutes, case laws, including secondary information sources and the practice in other jurisdiction. The result of the study shows that the problem of non-utilization of the tax yield for the people of Nigeria is prevalent. This is as a result of a combination of factors which include fiscal federation problems, complex tax legislations, and lack of proper dispute resolution mechanism. Other problems plaguing the tax system include the increased demand to grow internally generated revenue which led to the exercise of the powers of taxation to the detriment of the taxpayer. The increased demand to grow internally generated revenue, which has led to the exercise of the powers of taxation to the detriment of the taxpayer who suffers multiple taxation and bears a higher tax burden than anticipated. The insufficient information available to the taxpayers on tax compliance requirements created uncertainty and room for leakages in the tax system. Multiple taxation by government at all levels, which impacted negatively on the investment climate in Nigeria. Elimination of multiple taxation is therefore of major concern at all levels of government. The lack of accountability for tax revenue and its expenditure is prevalent. Lack of clarity on taxation powers of each level of government/encroachment on the powers of revenue one level/state by another. There is lack of skilled manpower and inadequate funding, which led to the delegation of powers of revenue officials to third parties, thereby creating uncertainty in the tax system and increasing the cost of tax compliance. There is the use of aggressive and unorthodox methods for tax collection. The non-refund of taxes to taxpayers is still plaguing the system. The non-review of tax legislation had led to reliance on obsolete laws. The lack of a specific policy direction for tax matters in Nigeria and the absence of laid down procedural guidelines for the operation of the various tax authorities. Based on the findings, the research recommended that section 4 of the Constitution of the Federal Republic of Nigeria 1999 as amended should further be amended to accommodate the Federal Capital Territory as a taxing authority. The powers exercisable by the Federal Government on tax matters should be curtailed. The State Joint Local Government Account should be abolished. The Value Added Tax should be made a state tax. Section 251 of the Constitution should be amended to accommodate the jurisdiction of Tax Appeal Tribunal. Sections 2, 25 and 68 of Federal Inland Revenue Act should be amended to accommodate the jurisdiction of State Board of Internal Revenue. There is need to shift from direct to indirect tax system. The Joint Tax Board should be alive to its responsibility. Regulations should be formulated to track offshore payments, transfer pricing and mispricing and there is need to establish academy for capacity building for tax officials on global best practices.