CHAPTER ONE
1.0 INTRODUCTION
This chapter aims at discussing the brief history of taxation and various sources of tax law and types of tax Acts promulgated by the Federal Government of Nigeria. Taxation can be defined as a compulsory levy by the government imposed on the incomes of individuals firms and corporate bodies. Emphasis will also be regained towards examining the different versions of tax authorities responsible for the tax laws and other relevant problem that confront its smooth operation and growth. Moreover the various tax laws or involved in the collection of taxes and to know their impact in the implement of taxes how they have contributed either negatively or positively in the course of their operation. These Regulatory bodies include the Federal Board of Inland Revenue (F.B.I.R) and the state Board of Inland Revenue (S.B.I.R) Tax objective and it classification principles concepts incidence e.t.c.
1.1BACKGROUND OF THE STUDY
Taxation system had been in operation from time immemorial dated back to the time of our forefather during which communities taxed each other as a result of the failure of their member to carry out their communal assignment such assignment such as bush clearing pit digging well e.t.c. all for the benefit of the community concerned. Failure to render, such service usually resulted in Seizure of property which might be reclaimed on payment of money. This practice continues until 1904 when late Lord Lugard introduced the first income tax into the system. With the emergence of the Native Revenue ordinance of 1917 and subsequent amendment, the income tax became operative in the southern Nigeria in 1918 precisely Abeokuta in the Western Nigeria and Benin city in Mid-Western Nigeria and by 1928, it has extended to the Eastern Nigeria. With the passages of time the Native Revenue ordinance of 1917, 1918 and 1928 were transform into Direct Taxation Ordinance in 1940 and this automatically replaced the Nature Revenue Ordinance and the Native Direct Taxation (Colony) of 1937 which of course was regarded as been discriminatory in nature for the fact that it only applies to native in Nigeria other than Lagos Colony or township. In 1943, the Federal Board of Inland Revenue (F.B.I.R) was born as the sole tax authority to asses employees to tax on a current on Actual basis in respect of his emolument.
It must be emphasized here that the Government accounting gear then was between 1/4/19 – to 31/3/19 – e.g. An employees assessed to tax between 1/4/1943 and 31/3/1944 would be taxed based on 1993/44 year of assessment.
COLONIAL ERA TAX AUTHORITIES
The following entities represent the various tax authorities during the colonial Era.
(i) The Resident appointed by the Government to administer a particular province.
(iii) The chiefs, Elders and other persons of influence in each district.
(iv) Any native authority appointed by the Governor to be a tax collection authority.
(v) Any village council, district headman or other suitable person on group of person appointed by the Governor.
DUTIES OF COLONIAL TAX AUTHORITIES
The duties of the colonial Tax Authorities were to supply information, supervise tax collection render tax collection account e.t.c. penalty for non – accountability of tax collected attracted a five of four hundred naira (400.00) or imprisonment for two (2) years.
PRODUCTS ASSESSABLE TO TAX IN THE COLONIAL ERA
(i) Income from land
(ii) Rent derived from land
(iii) Annual profit of the produce from land which were enjoyed by the community or individual.
(iv) Profit from trade and manufacturing
(v) Dividend or Interest
(vi) The value of all livestock owned by individual or the community.
PROCEDURE FOR CLAIMING REMEDY WRONG TAX COMPUTATION AND TAX EXEMPTION IN THE COLONIAL ERA
Where any native was assessed to tax within the area of the authority of a District council and to the Resident if need be. In the light of seeking tax exemption, than Governor otherwise called the chief commissioner reserved the right to exempt individual from tax and as well make regulation far carrying out the provisions of ordinance i.e. he provides statements on the tax returns, claims for remedy, deduction of tax at source or monthly deduction known as pay As – You Earn System.
SOURCE OF TAX LAWS/ACTS
Tax laws or Acts in Nigeria came into being as a result of lack of uniformity in the tax collection system as observed between the Africans and non – Africans living in some part of the regions of Nigeria most especially Lagos Territory. Informed sources revealed that income of a larger population of Europeans were not taxed. This recommendation was embodies in the Nigeria order in council (Constitution), 1960 and formed the basis of the income Tax management Act (I.T.M.A) 1961 thereafter – referred to at the ACT. With the emergence of the Act, the unfair treatment of some African resident and the unjust exception given to the non-African (e.g. Europeans) were faced out.