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PROBLEMS OF INCOME TAX ASSESSMENT AND COLLECTION

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Income tax was first introduced in Nigeria in the year 1904 by the late Lugard when community tax became operative in Northern Nigeria. Previously Nigeria cheerfully paid their taxes in kind by rendering free services as clearing the bush, digging pit toilets etc. for the benefit of the community, as a whole failure to render such services usually resulted in seizing of property which management reclaimed on payment of money.

In 1917, Lord Lugard made certain changes which culminated in the native revenue ordinance. It was the 1917 ordinance that was extended to the Eastern part of Nigeria in 1928. Prior to 1st April 1956, the direct taxation ordinance was applied to the Eastern Nigeria (Anambra state (Nigeria. Under this ordinance, native Authorities (later local government councils) assessed and collected income tax from Africans resident within their area of jurisdiction.

With the Nigeria constitution order in council, 1954 power was given to each region to tax on a regional level, all Africans resident within the region  or deriving income there from. Eastern region acted on this power, by repealing the direct taxation ordinance and introducing the finance law 1956 which became effective from 1st April 1956. This law brought PAYE (pay as you earn) system of tax collection into operation.          
The raise man fiscal commission of 1958 recommended the introduction throughout Nigeria of basic principles for taxing incomes of persons other than companies. This recommendation was embodies in the Nigeria constitution order ion council, 1960 and it formed the basis of statute upon which the present day tax laws of Enugu state operate.          
By virtue of Edict 6 of 1970, the board of internal revenue came into existence. In effect, the board of internal revenue is the organ charged with the carrying of broad based principles of tax administration in Enugu state
REVIEW AND DEFINITION OF TERMS          
Taxation, tax assessment and collection with their associated problems have received attention in public and among seasoned writers. This is what it should be because there has been increasing emphasis on revenue generation in recent times. Government activities in Nigeria is almost grinding to a halt because of the inability of the state government to meet the demand for increasing the salaries of their workers. This is claimed to be due to lack of sufficient revenue on the part of the state government. In such circumstances the issue of tax is bound to be topical.          
But what is tax? The oxford Advanced Learners Dictionary of current English defines tax a sum of money to be paid by citizens (according to income, value of purchase etc) to the government for public purpose. The definition assumes that to be taxed, a citizen must have earned income to purchase taxable goods and that the tax payer must be a citizen and that the claim appears narrow. Tax is a levy paid by a resident of a state provided the resident is within a taxable age. Mr. J. O.E. Afulukwe shared that view in his not on General Principles of taxation. In 1975, when he said that tax can be defined as a compulsory contribution to the public authority to meet the expenses of government and the provision of general benefit          
Tax can also be defines as a compulsory levy imposed by the government on the income of a citizens. It must be distinguish from which is an impost by a state on person which are resident or earn income within the state.in Simon’s income tax (1952) Lord Mechagh was quoted as saying that income tax if may be pardoned for saying so, is a tax on income. It is not meant to be a tax essentially on anything else. It is not collection of taxes essentially distinct. The essential element of that definition is that tax has to be based on income and assessed as one within a given tax year. If you derive your income from various sources (eg profession, the rent, and dividend|) the income from all the sources must be aggregated and assessed together, not as series of taxes by one tax.          
Personal income tax is levied on the income of any individual residing or deemed to be residing in any state. Section 3 of the income tax management Act 1961 prescribes person liable to income tax to include individuals trustees of a trust or settle, executor of estate of a deceased person, body or group of individuals other than limited liability companies, communities or families and itinerated workers.          
Section 12 (1) B) of the finance law, 1962 however exempted income of a corporation established by a state government from paying tax.          
Personal income tax must be distinguished from the company tax which is levied on the earning of limited liability companies, whether private or public., part II schedule D, paragraph 7 of the 1989 constitutions of Nigeria spells out the taxing power of the state of income other than company tax, thus leaving tax in the hand of the federal government.          
In terms of assessment it was asserted in Simion’s income tax (1952) “for income tax purposes assessing means the process of making assessment, and it covers the process from the examination of the completed return forms, if any, to the issue of notices showing the amount of the tax payable” to my own mind definition appears circular and does not take any one to power understanding of the word assessment. Chief H.D. Attamah, Enugu state Director of Internal Revenue seems to have corrected that de-efficiency when in one of his lecture notes (1991) He defines tax as “the art of appraising or evaluating an object with the aim of ascertaining its value, monetary.

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