CHAPTER ONE
INTRODUCTION
Tax is one of revenue instrument in a country that exists since long time ago. In the bible, there are some stories that are related with tax. It means that tax is part of economy science that are known, studied, and done in centuries by governments in many countries as source of income from taxpayers, individually and institutionally. As one of the biggest, if not the biggest, source of income, it is expected that tax can drive one country’s economy in using its money for infrastructures, pay government and public workers, and so on. Unfortunately, many taxpayers do not fulfil their obligations in paying their taxes. Instead, they put their income in tax haven countries or countries that give various incentives to people put and invest their money in them.In Nigeria, amnesty has become a cliché, so to speak, in view of the conflicts of the militants in the Niger Delta and Boko Haram in the North East[1]. Instead of using amnesty as a way of forgiveness of a citizen’s sins, the citizen now cloaks himself with impunity to cause serious disturbance in the country as a means of getting noticed or heard with the hope that the nation would be hood winged into forgiving these improprieties someday. When amnesty was offered to Boko Haram in a bid to encourage them or stop their insurgency, they rejected it to everyone’s surprise; claiming that it was then that were wronged and should be granting Nigeria amnesty[2]. Majority of eligible taxpayers in Nigeria rarely remit their taxes and it is crucial that a common ground is found to achieve the objective of the government to raise funds from taxes through some ingenious means that work with our culture and economic landscape[3]. Amnesty will not completely knock off the penalties for deliberate tax infractions, but will seek a possible relaxation of some of these penalties to encourage the expansion of the tax net, albeit temporary. And one key demand will be an agreement between the tax-payer and the tax administrator to file future returns on time in the future. Despite concluding the National Tax Policy, making amends in the tax laws and strengthening of the Federal Inland Revenue Service for enhanced operational efficiency no real consideration has been given to measures or strategies that may encourage voluntary declaration and compliance as an alternative means of growing the nation’s tax base[4].Amnesty is legal forgiveness from certain infractions. Tax amnesty therefore constitutes a form of waiver or reduction and (sometimes) removal of penalties in back taxes to encourage defaulting taxpayers to pay what they owe within a specified window. An amnesty must necessarily have a legal or legislative backing for it to be effective and a deadline for compliance stipulated as part of the provisions. Usually, stiffer penalties are instituted for taxpayers who are still noncompliant even after the amnesty program. The objective of tax amnesty is to pardon or negotiate the tax liabilities of individuals and corporate taxpayers in line with laid down statutes. It is also intended to regularize the tax affairs of persons who have defaulted in meeting their tax obligations; improve the tax compliance culture and widen the tax net. In several countries world over, tax amnesty has been implemented successfully as a means of encouraging voluntary declaration and payment of accumulated tax liabilities. South Africa, Spain and the United States respectively, adopted tax amnesty programs at one time or the other encouraging many citizens to voluntarily declare outstanding taxes and raising millions in money's worth. The tax amnesty program is usually applied to certain categories of potential taxpayers:
Several taxpayers in these categories are conscious of the fact that they need to come clean and comply with the provisions of the tax laws. However, the potential cash flow implications on their business income serve as major deterrent to them. A tax forgiveness program may serve as the lever they require to propel them to doing the right things without necessarily suffering huge penalties.
1.2 STATEMENT OF PROBLEM
So far, Nigeria has successfully brought the three phased conversion to International Financial Reporting Standards (IFRS) to its final stages. GDP has been rebased and the Central Bank of Nigeria (CBN) has implemented several monetary reforms. All these signify steps by Nigeria to conform to global best financial practices originating or trending from developed economies. Voluntary tax compliance is therefore a culture that needs to be encouraged and cultivated in line with current trends in other developed countries. The soon-to-be-launched iTax platform is also an indication that voluntary tax compliance by all income earners would need to be encouraged to guarantee its effectiveness. Although a tax amnesty program has never been formally or rigorously implemented in Nigeria, proposals for its usage as a more effective tax revenue generation tool can be validated by results achieved in other countries where it had been implemented. If Nigeria had adopted the approach of enforcement all these years and yet has experienced moderate compliance by taxpayers and huge leakages in form of undisclosed income and unpaid taxes, then it is time to tweak approach and monitor the resultant effect. Amnesty in other countries has been reported to curb evasion, thereby increasing tax revenues at very low administrative cost. It has also helped to boost trust in the taxpaying public and the drive for voluntary tax compliance.
The major aim of the study is to examine an appraisal of tax amnesty in Nigeria. Other specific objectives of the study include;
1.4.RESEARCH QUESTIONS
HYPOTHESIS 1
H0: There is no significant effect of politicization/Lack of ‘Political Will on tax amnesty in Nigeria.
H1: There is a significant effect of politicization/Lack of ‘Political Will on tax amnesty in Nigeria.
HYPOTHESIS 2
H0: There is no significant relationship between corruption and implementation of tax amnesty in Nigeria
H1: There is a significant relationship between corruption and implementation of tax amnesty in Nigeria
The relevance of this study can first be appraised in the light of its usefulness to the Nigerian nation as a whole. This study, among other things, will expose the effect of tax amnesty and compliance on Nigerianeconomic growth. Concern over the economy wide effect of Tax is important because of the possibility that the tax amnesty and compliance may cause government to cut some expenditure of certain essential services, hence affecting government effectiveness and efficiency. Essentially, this research work is intended to expose the effect of corruption and politicson tax compliance in Nigeria, the knowledge of which therefore makes the research important to policy makers, Federal Inland Revenue Service (FIRS), Tax administrator, students as well as the general public who may require information about tax amnesty and its performance on tax compliance in Nigeria.
The study is restricted to an appraisal of tax amnesty in Nigeria, a case study of Federal Inland Revenue Service (FIRS), Abuja.
Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)
Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
Tax:The Oxford dictionary[5] defines tax as a compulsory contribution to support the government to carry out public services. It is levied on persons, properties, incomes, commodities, and transactions at a fixed rate mostly proportionate to the amount on which the contribution is levied. The Black’s Law Dictionary[6] defines tax as a charge usually monetary, imposed by the government to yield public revenue. The Nigerian Supreme Court has held that tax is a debt due to the government[7].
Amnesty: Amnesty has been defined by the Black’s Law Dictionary[8] as a pardon extended by the government to a group or class of persons. It is a legal forgiveness from certain infractions.
Tax Amnesty: Is the limited time opportunity given to taxpayers to pay outstanding taxes in turn they get forgiveness for previous tax liability.
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