ABSTRACT
The federal government being a non‑profit oriented organization generates its revenue through various sources. These1hources include: Taxes, Loan and grants, Investment, Rates and Rents, Court Fees, Royalties, and, Sales of confiscated properties.
Tax being the paramount of government revenue source is sub divided into: Personal Income Tax, Companies Income Tax, Petroleum Profit Tax. Capital Transfer Tax, Value Added Tax, Education Tax and Capital Gains Tax.
In this project work, we shall be looking into the Value Added Tax (VAT), which is the most effective of all other Taxes, due to the process and procedures involved in its collection.
In chapter one of this project work, we shall be, discussing briefly the historical development of the VALUE ADDED TAX (VAT) the structure also the scope of VALUE ADDED TAX (VAT).
In chapter two we shall be looking into people’s opinions and ideas on’ Taxes generally, precisely on the VALUE ADDED TAX (VAT).
However, In chapter three, the method used in this study will be explained in terms of population sample. Size and sampling technique Research instrument and method of data analysis collection of data analysis and statistical tools.
Attention will be focused on breakdown of the data collected as well as the analysis of the data and the testing of the hypothesis in chapter four, the final chapter of this project. will be the summation of the findings, the conclusions reached as well as providing practicable recommendations that can help in checking and restraining the savage cycle that has made VALUE ADDED TAX (VAT), ineffective in terms of revenue generation.
CHAPTER ONE
1.0 INTRODUCTION
VALUE ADDED TAX (M) as it is called is one of the means through which the government generate fund and could be said to be the most effective of all other taxes due to the process and procedure of its collection. Generating funds generally through the public tax be faced with a lot of administrative bottlenecks, this is why we are looking at VAT and to compare it with other taxes and see how effective they are and to use VAT as a means or yardstick of measuring the effectives of generated fund but before then a brief history of this value added tax and the rational for introducing the tax into Nigerian economy will be examined.
1.1 BRIEF HISTORY OF VALUE ADDED TAX (VAT)
Taxation has been in time memorial but the year 1991 was a major trademark in the tax administration of Nigeria, in that year the Professor Edozien led study group on the review of Nigeria tax system first identified, the need to transform the old scales tax that was then administered by the state government. Within the same time, another study group on indirect taxation led by Dr Sylvester U. Ugoh was given the task of studying the feasibility of introducing value added tax after making series of consultation, studies and researches both within and outside the country, the Ugoh study recommended in November 1991 that after two years of preparatory work.
As a follow up, by 1991 the Isewere led modified value added tax (MVAT) committee was set up to undertake preliminary work for the introduction of the new tax. The committee was later to work in close collaboration with the federal Inland Revenue ser4ces, in 1993 for them to take over the administration of the new tax, which was scheduled to come on stream as value added tax by 1st September 1993.When the federal government agreed to introduce the new tax, decree No. 102 of 1993 was promulgated to back it up. Although the scheme did not actually commence until 1st January 1994 due to administrative bottleneck which were initially encountered by federal Inland Revenue services so value added tax was therefore introduced as a replacement of the sales tax.
There are currently five administrative bodies set up in Nigeria since 1992 to look into the related issues of tax. These administrative machinery are important for the proper management of tax in Nigeria most especially value added tax.
Value added tax is borne by the final consumer but collected at each stage of the production and distribution chain. It has a wider coverage than the sale tax and cover both imported and locally manufactured goods except where a particular goods or services had been described as exempted under the decree. So many companies tend to confuse value added tax (VAT) exemption with tax exemption but under the decree individuals companies or organizations are not generally considered for VAT exemption as only goods or services may be so qualified.
In the 1930’s professor Card Shoup together with an economist named professor Seligman wrote for Cuba a tax reform report but was never implemented, though the professor Shoup had proposed to Japan the introduction of value added tax in 1948. In the report of Japanese taxation, Professor Shoup stood his ground on the need for the first time in fiscal history for the introduction of value added tax fioni the report to Shoup mission USA. Michingen state was said to have experienced the implementation of what looked like a modified VAT in 1953 but the policy was neglected for about four years. Shoup first proposed VAT in Japan, while the French government began a series of tax‑reforms in 1954. These reforms included the imposition of VAT “Taxes Sur la Valuer a on the consumption of goods. Few years later Nicholas Kaldor who later advised the chairman government on tax reforms prescribed the implementation of the expenditure tax in India (1967). Although the expenditure tax project in India was twice implemented and twice rejected. It contributed to the fiscal ferment that the idea of taxing purchases or consumption then enjoyed use French value added tax could not but succeed the tax soon became popular and continued to gain a prominent place in the fiscal armory of many countries, in Europe, Latin, America, Asia and Africa.