VALUE ADDED TAX AS A TOOL FOR REVENUE GENERATION.

posted on January 27, 2020

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF STUDY

Some years back, the agricultural sector was playing an important role in the Nigeria economy both in generating revenue and in the physical impact. This was before oil started its own impact on the economy. The impact created by the oil sector begging to be more relevant within a short period of time. Other sectors of the economy become secondary in terms of their relevancies. The sectors were neglected in the favour of oil. Oil thus becomes the leading factor and the leading product in term of revenue generating and foreign exchange contribution. The condition of the economy became vulnerable to the condition of the word oil market form 1970 till date. The fluctuation of price in the world of oil market in the Nigeria economy is a significant factor to the revenue to be generated. This is by diversifying the revenue generated based on the higher economy. In addition to the above mention situation, the Nigeria state was increasingly acquires ring national responsibilities along with the traditional role of the government. The financial requirement of the government has been increased over the years in facilitating the accomplishment of government functions.

Worthy of mention is this connection in the effective way of revenue generation and collection by the government against responsible for the task. The idea of introducing Value Added Tax (VAT) was therefore considered and the federal government finally approved its introduction. Value added tax is therefore expected to increase and be effective, contribute towards enhancing the revenue generation based on the government. The system is expected to minis of eliminate the corrupt practices associated with revenue assessment and collection. The important of revenue in any country and of course Nigeria cannot be overemphasized. Revenue has been the bedrock of government performance. The history of revenue in Nigeria dated to the pre-colonial era when tax and levies were paid to the fathers or lord as the case may be to Oba’s, Kings, Emirs. The tax or levies were to be paid in cash or in kind during the precolonial era. It was used to support the sustenance of the colonial administration. It has even been used to mobilize farmers into cash crop production mainly for the colonial export through the use of the cash taxes. Even after independency, tax has played in important role in generating revenue for the government. It was used for the running of the affairs of the post independence government in Nigeria.