THE EFFECT OF TAX AVOIDANCE AND EVASION TO THE ECONOMIC DEVELOPMENT OF NIGERIA A CASE STUDY OF ABIA STATE

THE EFFECT OF TAX AVOIDANCE AND EVASION TO THE ECONOMIC DEVELOPMENT OF NIGERIA A CASE STUDY OF ABIA STATEamp;lt;pamp;gt;amp;lt;strongamp;gt;CHAPTER ONEamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;INTRODUCTIONamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;BACKGROUND OF THE STUDYamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;1.1 Tax is a financial issue and its payment is a civil duty. It is the imposition of a financial burden for the government on individual firm and companies. In general based, the word tax means any contribution imposed by the government upon individual and companies for the use of government to provide facilities or services as rendered by the state. It is not a voluntary payment or donation but an enforced contribution made on the pronouncement or directive of legislative authorities.amp;lt;/pamp;gt;amp;lt;pamp;gt;Osita 2004:1 stated, taxation may be define as the compulsory leave by the government through its various agencies in the income, capital or consumption of its subject such as salaries, business profits, interest, dividends, commission regularities, rent etc.amp;lt;/pamp;gt;amp;lt;pamp;gt;It could be said that there are three main methods of financial economic expedition open to meet developing countries there are:amp;lt;/pamp;gt;amp;lt;pamp;gt;a LOANSamp;lt;/pamp;gt;amp;lt;pamp;gt;b GRANTamp;lt;/pamp;gt;amp;lt;pamp;gt;c TAX AND OTHER CURRENT RECEIPT.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;Of these sources, tax is perhaps the most important since the level of government expenditure is to a great extent dependent on the ability of the tax system to generate the required revenue at the disposal of the government.amp;lt;/pamp;gt;amp;lt;pamp;gt;In spite of this benefit from tax most people still indulge in tax evasion and avoidance. Attempt to avoid some portion of liability or not to pay tax will affect the revenue of the government that is the reason why the government frown at the issue of tax evasion and avoidance, and uses its authorities to enforce compliance.amp;lt;/pamp;gt;amp;lt;pamp;gt;ARONOMOLE and OLUWALAYODE 2006:39. Define tax avoidance as legal ways by which a tax payer reduces in tax liabilities.amp;lt;/pamp;gt;amp;lt;pamp;gt;It has to be pointed out that the successive Nigeria governments have not made adequate and sincere efforts toward informing the tax dodger or evader on the need for them to pay the taxes. All attentions have been directed on the revenue from oil sector while taxes and agriculture, which supposed to be generating a lot of revenue to the country, are deliberately over looked.amp;lt;/pamp;gt;amp;lt;pamp;gt;Also the researcher wants to look into the problems of paying tax by the public, such problem are as followsamp;lt;/pamp;gt;amp;lt;pamp;gt;a Tax evasion and tax avoidance by the publicamp;lt;/pamp;gt;amp;lt;pamp;gt;b Poor system of tax collectionamp;lt;/pamp;gt;amp;lt;pamp;gt;c Inability of the government to prosecute tax avoidance.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;1.2 STATEMENT OF THE PROBLEMamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;It has been noted that tax system in Nigeria has come to play a significant role, as a major source of revenue to the federal government by way of imposing tax on tax payers and it is for them to pay up the tax.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;The act of evading and avoiding tax by most registered companies and some individuals has however affected the revenue base of the government especially in providing essential services in the society. People naturally prefer to reduce their tax liabilities by deliberately overstating their expenses and make false entries and fictions in their books of account. Thus, their act however, causes tremendous reduction in the revenue accruable to the government which eventually shrinks revenue to the treasure of government.amp;lt;/pamp;gt;amp;lt;pamp;gt;The inability of the revenue board to collect substantial amount of money from tax is as a result of evasion and avoidance of tax. This research work examines the problems facing the revenue department in collecting taxes and levies under their jurisdiction with a view to indentifying possibilities at minimizing or even eradicating tax evasion and avoidance.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;amp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;1.3 OBJECTIVE OF THE STUDYamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;The objectives of this study are as followamp;lt;/pamp;gt;amp;lt;pamp;gt;1. To analyze the various causes of tax evasion and avoidanceamp;lt;/pamp;gt;amp;lt;pamp;gt;2. To identify the factors or problems militating against the tax assessment and collection in Nigeria.amp;lt;/pamp;gt;amp;lt;pamp;gt;3. To identify possible effects of the tax evasion and avoidance on the economic development of the country and Abia state in particular.amp;lt;/pamp;gt;amp;lt;pamp;gt;4. To analyze the effectiveness and flaws of various tax in the countryamp;lt;/pamp;gt;amp;lt;pamp;gt;5. To examine ways in which tax evasion and avoidance can be reduce with the new reforms.amp;lt;/pamp;gt;