CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Taxation has long been practice in Nigeria decree No 7 (1986) initially, only men were expected to pay taxes but now all person working and anybody found in the capacity of paying tax obtained to pay tax. Tax is a mandatory levy on income changed for the purpose incurred by the government in recent times through tax evasion are increasing rapidly despite the pathetic financial and economic state of the country. There are daily reports on newspapers and magazines that the government loses billion of naira yearly due to evasion and the fraudulent practices of the tax oicials. This has been attributed to many factors. Most people attribute this to the fact that the country’s tax system is highly income based and since income is taxed only at one point or stage a lot of evasion results.
In Nigeria, many different goods are consumed for this reason, tax experts see consumption as the actual liability and as the need to shi the tax based from income tax to consumption tax. Introduction of sales tax in Nigeria through decree no 7 of 1986. However it was discovered that sales tax is narrow because it does not cover a lot of goods and services. This prompted the introduction of Value Added Tax (VAT) in Nigeria. The idea of introducing vat in Nigeria came from the report of the study set up by the federal government in 1991 to review the entire tax system. Vat was proposed and a committee was set up to carry out feasibility studies on its implementation. In January 1993 government agreed to introduce vat through the instrumentality of the vat decree no 102 of 1993. This was meant to be effective from January 1, 1993 it came on stream as a replacement to its antecedent the sales tax which was characterized by a lot of lapse adequacies and restrictive coverage. Vat is a consumption tax imposed on all manufactured goods, industrials raw materials and other inputs imported in to or produced in Nigeria a single rate of five percent.
Potentially its dragnet covers virtually everybody since one consumes on thing of the other expect in the cases of specific items that are expected several benefits which the government expected to derive from value added tax (VAT) were enumerated among several other, they are: 1. Increase in revenue generation 2. Facilitation of administrative enforcement 3. Reduction in revenue losses through tax evasion 4. Enhancements of documentation of transitions maintenance of neutrality in tax payment since it is broad based and has a single rate. 5. Enhancement if rapid industrial growth by allowing credit for input taxes for capital goods. The government has covered these benefits to the public and has also organized working and seminars to educate the producers, suppliers, consumers, tax officials and the general public on vat system in Nigeria. However, the perception of the taxpayers is necessary at this stage and this is what this research is set to find out.
STATEMENT OF THE PROBLEM
The federal government has made frantic exports to convince the public of the need for vat system in Nigeria. It has been informed the public of the benefits which have been derived from vat for example a reduction in the tax evasion increase in government revenue and so this implies that the government sees vat as a good tax system. That the taxpayers may not have the same view as the government. They may not see the relevance of the taxes in which case they will most definitely the reluctant to pay the problem or the question therefore it what is the perception of the tax payers or the public on this tax system? Do they see it as being import as the government dose? Do they see it, as one that is fair and equitable is the burden less felt than other tax system? It is in view of the above questions that the researcher has decided to find out and evaluate the perception of the public or taxpayers on the value added tax in Nigeria.
