PROBLEMS OF TAX COLLECTION IN NIGERIA, A CASE STUDY OF UYO LGA
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
One of the recurrent problems of the three-tier system in Nigeria, a case study of Uyo LGA is dwindling revenue generation as characterized by annual budget deficits and insufficient funds for meaningful growth and viable projects development. Local governments are the nearest government to the people at the grassroots in Nigeria, a case study of Uyo LGA; they are strategically located to play a pivotal role in national development. Since they are responsible for the governance of about 70 percent of the population of Nigeria, a case study of Uyo LGA, they are in vantage position to articulate the needs of the majority of Nigeria, a case study of Uyo LGAÂ and formulate strategies for their realization (Ekpo and Ndebbio, 2001).
Local administration in Nigeria, a case study of Uyo LGA can be traced to the colonial period. Available record shows that the first local administration ordinance was the Native Administration Ordinance No. 4 of 1916 which was designed to evolve from Nigeria, a case study of Uyo LGA’ s old institutions the best suited form of rule based on the people’ s habits of thought, prestige and custom (Bello-Imam 1990). These local administrations were used in the north eastern and western parts of the country while the indirect rule was introduced in the rest of the north. For example, in 1926, a centralized budget system was introduced. Following the creation of Northern, Western and Eastern regions in 1946, a decentralized public revenue structure began to emerge. The first revenue commission was set up in 1946. During the colonial period, four revenue commissioners were created. The principles, criteria and allocation formulas recommended by the commissions are well documented (Ekpo, 2004).
Macpherson constitution of 1948 initiated some remarkable changes; the regions introduced some reforms in their local administrations in the 1950s which aimed at enhancing performance. Though, the reforms gave local administrations to collect rates and levy pools and income taxes to finance their activities, the regions had overall control of the taxes. Local administration lacked self-determination, hence their resource were inadequate. Though, the local authorities were partially successfully in the North but unsuccessfully in the Eastern and Western regions. Adedeji (1990) blames the ineffectiveness of local administration on the following reasons:
1. Lack of mission or lack of comprehensive functional role
2. Lack of proper structure (i.e. the role of local governments in the development process was not known).
3. Low quality of staff; and
4. Low funding.
According to him, these problems led the local governments into a vicious circle of poverty because inadequate functions and powers lead to inadequate funding which result in the employment of low skilled and poorly paid staff. Local government administration in the country experienced fundamental changes in 1976. The 1976 local government reform created for the first time, a single-tier structure of local government in place of the dierent
structure in the various states. Our interest in the 1976 reform hinges on the restructuring of the financial system. The reforms instituted statutory allocation of revenue from the federation account with the intention of giving local government fixed proportions of both the federation account and each state’s revenue. This allocation to local government became mandatory and was entrenched in the recommendations of the Aboyade Revenue Commissions of 1977
