ANALYSIS OF THE LEGAL FRAMEWORK OF INCOME TAX ENFORCEMENT AND COMPLIANCE STRATEGY FOR REVENUE GENERATION IN NIGERIA

CHAPTER ONE GENERAL INTRODUCTION

       Background to the study

Taxation may be defined as the demand by the government of a country on its citizens for a compulsory payment of part of their wealth. The aim of taxation is to raise revenue to finance government expenditure to achieve economic development and to distribute income on a socially acceptable basis. Hence, the first need of a modern government is revenue which is indeed the breath of its nostrils¹. Expenditure has shown that connection is not a simple task, especially in developing countries like Nigeria where its economics, social and political structure is so complicated. Tax has to be collected with caution as voluntary compliance is lacking. Income tax and every other form of taxation have not being readily accepted and even where it is accepted, it is not favoured. Members of the public are usually touchy about forms, notice and letters tax authorities. The result is an attempt to create or avoid taxes as much as possible, causing a low rate of the compliance.

It is necessary at this juncture to distinguish between: ―tax evasion‖ and ―tax avoidance‖, either of which could be the result of non compliance with payment of ― tax evasion is usually defined to mean the failure to pay one‘s tax or the reduction of one‘s tax liability through illegal or fraudulent return or failure to make a return or even failure to pay on time. Evasion is not only wrong, but also it involves breach of tax laws. Ola C.S, opined that:

Tax avoidance is the minimization of tax liability by arranging one‘s affair as to take advantage of provision in the tax law.²In this way the tax payer pay less than otherwise would have been payable.