CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Historically, Nigeria’s experience of taxation predates the colonial period. The Hausas of Northern Nigeria were paying taxes, though in kind, to the Emir in return for security and common services. However, with the advent of the colonialists, direct taxation was introduced in 1904 by Sir Lord Lugard, the then British appointed Governor. Its implementation started first in the North and later in the Southern and Eastern regions. According to Ezejelue and Ihendinihu (2006) taxation can be defined as the demand made by the government of a country for a compulsory payment of money by the citizens of the country with the objective of raising revenue, satisfy collective wants of the people and regulate economic and social policies. Aguolu (1999:17) defined capital allowance as expenditures deducted from profits before taxation to reduce the eect of taxation and thus encourage savings and investment. These capital allowances can come in form of expenses on assets, investments and other noncurrent assets/activities of the organization. These capital allowances are however backed by various Government legislations. They are granted to enhance the growth and development of industries as well as empowering individuals and corporate taxpayers economically. This work will therefore focus on Capital allowances and their eect on small-scale industries with emphasis on selected small-scale industries in Nigeria, using Rivers State as a case study