CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Tax can be defined as a compulsory contribution to the support of government levied on persons, property, income, commodities, transactions et. Now at a fixed rate mostly proportionate to the amount on which the contribution is levied (Crowther 1998) as it can equally be confirmed in (Tilley 1981) Oyebunji (2006) identified two major forms of taxes these are:
1. Direct taxes:
These are taxes imposed by the government on the income of individuals and companies which are usually paid by the person or persons on whom it is legally imposed. Examples are Personal Income Tax (PIT), Company Income Tax (CIT), Capital Gains Tax (CGT), Withholding Tax, Petroleum Profits Tax (PPT), Education Tax and Capital Transfer Tax (CTT). The PPT is imposed on individuals earning, CIT on profits of organization/corporate bodies, PPT on oil purchasing/exploration companies, CGT on profit from sales of capital assets and CTT in the transfer of property inter-viro and transfer in death. However, CTT in profit was abrogated in 1996.
2. INDIRECT TAX:
These are taxes by the government on goods and services.Indirect taxes can be avoided because it is payable only if one buys the commodities or enjoys the services on which the tax is imposed and it involves little administrative cost compared to direct taxes. It does not create dis-incentive to efforts as in the case of direct taxes and hence does not affect the economic functions of the tax payers.
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