CHAPTER ONE
INTRODUCTION
1.1. BACKGROUND TO THE STUDY
Tax is any form charge levied on a person or an institution by a governing body or its equivalent such that defaulted payment is punishable by law. The imposition of taxes and the institution of taxing is as old as civilization itself cutting across religion, race and continental borders. Prompt tax payment and reduced tax evasion is always a primary objective of the government in most civilizations that exist today. The issue of tax evasion has proven to be a difficult practice to curb even in nations with a proper database of its citizenry and the current mode of tax payment is redundant and hectic as ascertained through a survey of our case study. Some of the challenges governmental bodies have to overcome in order to encourage the prompt payment of taxes and effectively reduce evasion includes, developing convenient payment methods and having proper records keeping systems. Taxation is essential for sustainable economic development, and tax administration is a basic function of a successful state. Taxation also helps make a government accountable to its citizens. When governments spend taxpayers’ money, they are more accountable to make budget decisions transparent and accessible. Online tax system has received a great attention globally through the development of information technology, which aects the tax administration system. With the emergence of information technologies (IT), it is possible for the tax administrators to improve tax administration system by creating awareness about their tax structure that most of the taxpayers have limited knowledge about (Adeyemi, 2013). Electronic revenue collection in developing countries has gained increasing prominence in the policy debate recently. For instance Nisar (2013) argued that recent trends in public taxation stress the need of developing a system of tax assessment and collection that involves internet services. Several factors explain this, including the potential benefits of taxation for state building; independence from foreign aid; the fiscal effect of trade liberalization; the financial and debt crisis in the “West”; and the acute financial needs of developing countries. Governments in developing countries face great challenges in collecting tax revenues, which result in a gap between what they could collect and what they actually collect.
Wasao (2014), describes electronic tax system is an online platform whereby the taxpayer is able to access through internet all the services offered by a financial authority such as the registration for a personal identification number, filing of returns and application for compliance certificate, electronic tax system forms part of the revenue collection reforms by Nigeria federal Inland Revenue Authority whose main motive is enhancing tax collections and tax efficiency and thus, tax revenues have been increasing rapidly due to the country’s rapid economic development accelerated by the new systems. Electronic tax filing or e-filing is a process where tax documents or tax returns are submitted through the internet, usually without the need to submit any paper return. The e-filing system encompasses the use of internet technology, the Worldwide Web and Software for a wide range of tax administration and compliance purposes. Electronic taxation differs among countries hence the name of the system differs from country to country. Several suggested benefit of e-tax filing system have been mentioned in recent times, among them are that it allows taxpayers to conduct transactions within a few mouse clicks. This convenience can serve as a key driver of e-filing adoption. E-filing provides many aspects of ‘convenience’ to taxpayers (that is time to file, place to conduct the filing, ease-of use, information searching and online transactions) at a degree that is not available through traditional channels.
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