A CRITICAL APPRAISAL OF THE LEGAL AND INSTITUTIONAL FRAMEWORK FOR TAX ADMINISTRATION BY THE FEDERAL GOVERNMENT IN NIGERIA

Abstract

This paper critically examined the legal and institutional framework for tax administration by the federal government in Nigeria. A tax system has three critical elements – the policy, the law and the administration. Policies are the fundamental principles which guide the orderly development of the tax laws and administration and, therefore, form the foundation of the entire tax system. Tax law is ‘a rule or body of rules governing the imposition and administration of taxes in a given society while tax administration can be briefly defined as the implementation of the tax laws in order to achieve set objectives. The prolonged military rule in Nigeria has bequeathed an over centralized structure under the Constitution of the Federal Republic of Nigeria, 1999 whereby the Federal Government administers about 90 percent of the country’s tax revenue. The aim of this paper is the need for decentralization and diversification of Nigerian revenue base from oil through and efficient and effective tax administration. The aim is to see how the tax system can be better arranged to ensure effective and efficient tax administration. It was found that the division of taxing powers is lopsided. This is because the federal government has the large chunk of the sources for the generation of revenue through taxation, to the detriment of the other tiers of government. The paper recommends for the devolution of taxing powers where states and local governments will be allocated more powers as against the present arrangement which place them at the mercy of the federal government.