Revisiting taxation and advancing criteria for a good tax system in Nigeria

Abstract

Tax is one of the oldest and commonest sources of revenue to government all over the world. Taxation
is however not only a source of revenue but also represents a potent instrument of public policy which
serves a diverse role in the modern society. The basic types and nature of taxes levied in the course of
history have been profoundly affected in character and scope by the nature of the political, economic
and social changes, which every society experienced. In a nutshell, the tax system operating in a
country is the product of the commutative effect of the political and economic history of that country. In
Nigeria, the first twenty years after independence witnessed respectable growth record in social,
political and economic activities. Accompanying this economic growth rate was the problem of social
inequality, external dependence, mass poverty and rural impoverishment due to many reasons of
internal managerial and administration contradictions and further fuelled by external shocks. These
socio-economic and political features have since had varying impacts on the pattern of nation’s
development. They have also had an effect on the various sources of revenue which the various tiers of
government in Nigeria depend upon. It has long been evident that tax in Nigeria has remained the most
unsatisfactory, disappointing and problematic concept in spite of the fact that tax reform has of recent
been a key element in economic reform which the country had undergone. It is therefore felt that
taxation in Nigeria requires radical handling to ensure that a large chunk of the taxable population does
not escape tax which will enhance development and growth of the economy. An effective tax system
ought to satisfy the twin purpose of raising maximum revenue and at the same time encourage
production. And if well structured and managed will elicit a feeling of common purpose, joint
responsibility or obligation amongst the taxable persons in a country. This paper therefore examines
the hydra-headed problems of tax collection and administration in our tax system. It also highlights the
reasons for tax avoidance and proffer advancing criteria for good tax system in Nigeria.