Taxation: Tax and Local Government

Topics: Tax, Taxation, Local government Pages: 35 (10542 words) Published: July 3, 2013

CHAPTER TWO
2.0 LITERATURE REVIEW
INTRODUCTION.
Local government is faced with verities of difficulties to sources adequate revenue from federal, state government and internally generated revenue, such problems are cog wheel to the smooth running of local government administration.

Revenue generation in Nigeria local government is principally derived from tax. Tax is a compulsory levy imposed by government individual and companies for the various legitimate function of the state Colaoye, 2008). Tax can also be defined as a compulsory levy by government on goods, service, income and wealth primary to obtain revenue. In other words, it is levy or dues on the income of person and companies. It provides definite source of revenue of person for government expenditure. It is a way by which government obtain extra money.

History of tax in Nigeria.
The history of taxation can be date back to the age of men. According to Osisioma (1999) taxation was first introduced in great Britain in 1799 but with the intention that it would be a temporary levy to finance the Napoleonie wars. It was re-introduced annually till it was resumed 1842 and till date.

Osisioma (1990) states that prior to the period of European colonization, there was other forms of taxation in Nigeria dating back to days of our great ground father, where by communities taxed themselves through communical labour to prosecute community aids of aggression or attack or some kind of evialtion outside the community. Investigations carried out revealed that the inter-tribal was which existed in the olden days were attributed to search by stronger towns to get more town under their control. These weaker towns conquered become the subject of the stronger one, paying tax to them, while security will be provided in turn. During this era, Nigeria cheerfully paid their taxes in kind by rendering free service such as clearing the bush, digging toilet, well etc. for the benefit of the communities as a whole failure to render such service usually results in seizure of property which might be re-aimed on payment of money of or what represented money. This is still practice in various parts of village and towns of this country today. After independence, state government were to find out other sources of revenue generation.

2.1 NEED FOR REVENUE COLLECTION BY THE LOCAL GOVERNMENT
The management of finance constitutes the most crucial and central component in the management process of the local government. This is largely so because finance determines quite numbers of things done or services rendered by the local government. Finance is in all reunification, the live-wire of government. It serves as the lubrication element that greases and makes every organization’s administrative machine move. It therefore follows that for the local government to discharge its statutory function effectively, it should not only be adequately funded but such find should be efficiently applied. In other words the local government to serve as expected as a powerful instrument for rapid and sustained rural transformation it should posses a solid financial base. This forms the basis of the need for the collection of revenue by the local government.

Most local government in Nigeria are very large both in terms of territorial and popular sizes, in such a circumstance, a greater need far revenue arises to enable such a local government cope with the developmental problems of such a large area and at the same time be able to meet satisfactorily the diverse needs of the large populations.

In the same way where the local government is allocated diverse functions, as it now has in Nigeria, some of which are large in scope like education, healthy, water supply and rural electrification, the revenue sources to be provided should correspondingly be large in scope. Viable and rich in content to match the diverse function. Related to the above is that a wide variable and magnitude of function requires...
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