TAXATION AS THE SIGNIFICANT TOOL FOR ECONOMIC DEVELOPMENT (THE STUDY OF INTERNAL REVENUE SERVICE, UYO)

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

Taxation is an important tool to meet the needs of the people of resource producing state. It is a major national issue in most countries and is often problematic in its imposition, administration and usages. It’s nature contrast with its obvious benefits to society.

The introduction of taxation could be traced back to ancient days when kings levied their subject to provide for the benefit of the people.

In Nigeria, the imposition of tax is traced right from the colonial government when Lord Fredrick Lugard introduced tax to people in order to generate revenue to run his administration. It is reported that   his policy of taxation was not accepted by the citizens and these subsequently led to riot in 1929.

Government, though its agent have come to play the larger role in controlling our national economy. She has to

Consider the aspect in which taxes helps in achieving her economic goals.

Taxation has been introduced to enable the government generate revenue to implement certain function for the citizens of the country. This functions of taxation in Nigeria include wealth redistribution, economic growth, employment generation, price stability and etc.

Taxation in ancient period and in present time has been used to bring improvement in finance of the country. The tax collected has been used as revenue to the government.

Also, taxation has helped to discourage the consumption of certain goods and service. It helped to bring government planning into implementation because it generate revenue, allow for investment in certain areas, like foreign goods and encourage agriculture and industries. Consequently, for some infant industries, there is a period of tax holiday which could last for five years to enable such industries or company nature

• HISTORICAL BACKGROUND OF THE STUDY

Historically, internal revenue service was a department of ministry of Finance before the civil war in 1960. It was called as at then ”Revenue Department”, after the civil war in 1970, the name was changed to South Eastern State Board of Internal Revenue Service, according to South Eastern State Edict No.8 of 1969. The South Eastern State was changed to Cross River state Law Cap. 45. This gave birth to the state Board of Internal Revenue Services, the legal backing to administer personal income tax.

But on creation of Akwa Ibom State but in 1987, the State established its own Board of internal Revenue Service from the Cross River State Cap 45 as applicable here in. this law prevailed until the promulgation of personal income tax decree 104 of 1993 (Now Act 104, 1993). The functions were collection of pay As you Earn Tax (PAYA).

Direct Assessment Tax, collection of Tax example: pool betting, fines, registration and renewed of motor vehicle licenses, driver’s licenses, sales of badges and plate numbers, collection of other taxes and revenue that belongs to the State.