CHAPTER ONE
Introduction
The chapter is devoted to the review of related literature and method used in collecting data on the topic of study. It is expected that in the course of this review the concept of taxation would be defined and explained with special interest on the personal income tax administration in Nigeria.
According to Chartered Institute of Taxation of Nigeria Tax guide and Statutes, Nigerian tax law is purely statutory, the tax system thus features a wide mixed range of statutes by which various governments in the country seek to charge and collect revenue for public expenditure. Of these, the most widely based are income taxation. The personal income tax act makes provision for the country, adding that liability to personal income tax in Nigeria does not depend on the domicile or nationality of the tax payer (Abdulrazaq, 2002)
1.1 Background of The Study
The importance of taxation in the activities of any government cannot be overemphasized. The world over, taxes is one major source of government revenue, however, not every national government have been able to effectively exploit this great opportunity of revenue generation. This can be attributed to a number of reasons including the system of taxation; tax legislation; tax administration and policy issues; over reliance on other sources of revenue (such as foreign aid and grants); corrupt practices in the system; especially as it relates to the system of tax collection and behaviour of citizens towards tax payment; and ease of tax payment. The willingness to pay tax, which may depend on the other aforementioned issues in tax-revenue generation, remains a key taxation-challenge in Nigeria. In the ease of tax payment, evidence from the World Bank Doing Business Report 2011 and 2012, shows that Nigeria ranked 109 and 138, respectively, out of 183 countries; in Sub-Saharan Africa, it ranked 27 out of 46 countries. This result is, despite some improvements the government has made to the tax system in the recent past. The Federal Inland Revenue Service (FIRS), for instance, which was first established as an operational arm of the Federal Board of Inland Revenue (FBIR) in 1993 but autonomous in 2007, was saddled with the responsibility of controlling and administering different taxes as well as accounting for all taxes collected. Another innovation by the government is the Tax Identification Number (TIN) programme, which has objective of carrying out a successful rollout and implementation of TIN for Nigeria. The system developed a relational database linked to all relevant stakeholders in Nigerian tax administration. There is also the Joint Tax Board (JTB), amongst others, which are set up to address problems of the tax policies and its implementation, tax collection, and the taxpayers compliance in the country. Thus, an integral part of the tax system is the people attitude towards tax payment. Further evidences that affect willingness will include multiplicity of taxes that is, paying similar taxes on the same or substantially similar tax base, ineffective and inefficient tax collection structure, poor tax awareness, tax transparency and tax accountability. The issues raised have implications on the willingness to pay tax in Nigeria, with the indirect effects on actual revenue generated from taxation. The end-point implication of strong unwillingness to pay tax is a crippled government that is unable to implement its growth and development objectives. The significance of the willingness to pay is also better related in the case of the informal sector, where the government is limited in terms of monitoring their affairs. The willingness of the people is what will speak for the government concerning tax payment. The peoples willingness is greatly influenced by their perception of the government delivery.