A
desirable tax system is typically described as one that raise requisite funds
to support the cost needed public services without constant rate adjustments, alters
economic choices as little as possible excepted to correct identified problems,
is certain and inexpensive for tax administrators to run, and relieves agreed
upon distributional goals23.
The
Nigeria
taxing system is lopsided, and dominated by oil revenue. It is also
characterized by unnecessarily and largely inequitable taxation laws that have limited
application in the informal sector that dominates the economy. In the early
stage Nigeria,
there was an organized taxing system in the northern part of the country,
unlike other part of the country. In recent times, the Nigeria tax system is basically structures as a
tool for revenue times, the Nigeria
tax takes the form of a pecuniary burden. The tax charge is usually on the
income or gains of the taxpayer but sometime it is on expenditure.
As
earlier stated, Nigeria’s
tax system is plagued by several problems, which have not been adequately tackled
for many year24. tax system in Nigeria
has undergone tremendous changes since independence.
Following
inconsistencies and apparent confusion in the operation of various tax systems
in the northern, western and eastern regions of the country. Raisman fiscal
commission of 1938 recommended that there should be a uniform basic principle
for taxing income throughout the country. It was this recommendation that was
embodied in the Nigeria constitution order in council 1960, which eventually in
the enactment of the Income Tax Management Act 1961 ( ITMA) was the precursor to Companies Income Tax Acts 1961, 1979 and
1990 as well as the Personal Income Tax Act 1993 as amended.
The
personal income tax degree 104 of 1993 for example is a legislation that regulates
personal taxation in Nigeria.
It regulates the assessment and collection procedure for the individuals or
body of individuals including a family, any corporation sole, trustee or
executor having any income, which is chargeable with tax under the provision of
the Decree. The provisions of the decree are to apply throughout the federation
except as therein provided. In Nigeria
it is only the federal government that can legislate in tax matters. However, the
administration of personal income tax law is delegated to the state governments
each state is expected to administer the law in accordance with the provisions.
The following are some of Nigeria
relevant tax regulations.
a.
Value Added Tax (VAT): This was introduced by the
VAT decree No 2 of 1993, to replace the old sales tax, it is a consumption tax
levied at each state of the consumption chain, and is born by the final
consumer.
b.
Capital Gain Tax: This occurs on an actual
year basis and it pertains to all gain accruing to a tax payer from the sale or
lease or other transfer of proprietary right in a chargeable interest which are
subject to a capital gain tax of 10%
c.
Educational Tax: An educational tax of 2%
assessable profit is imposed on all companies incorporated in Nigeria. This
tax is viewed as a social obligation placed on all companies in ensuring that
they contribute their own quota in developing educational facilities in the
country25.
23
John. M. Peha, Robert P. Strains “National Association Spring Symposium”. Arlington, Virginia,
1997
24 Nigeria institute
of Advance legal studies Lagos, Nigeria
“Colloquium on the Tax Payers money” 19th January 2011
25 http://directry.nigeria.org/types-taxes-and-value-in-nigeria.html..visited
on 20th July 2011