This research work “A Critical Appraisal of the Nigerian tax laws “
A case study of Enugu State Board of Internal Revenue (1998-
2007) is based on the fact the Act 104 of 1993 creates a distinct
legal regime for the taxation of personal income Tax in Nigeria.
However inspite of that the Act made generous provisions as to
the income to be assessed on the hand of the tax payers, the tax
yield does not reflect these generous provisions. The government
has not achieved its targeted revenue, hence has not been able to
meet the needs of its subjects since the Act came into operation.
In view of this comes the need of this work to critically reappraise
the Act (as amended) with the intention of introducing
reforms where necessary. Such that the Act shall meet, as much
as possible the classical cannons of a good tax system as well as
the development needs of the economy. The findings, conclusion
and suggestion(recommendations) was drawn, on the study. The
findings high lighted the problems inherent in the Tax laws and
administration such as flaunts in the laws, loopholes,
Ambiguities, insufficient, provisions for enforcement, conflicting,
provisions as well as problem of judiciary interpretation of Tax
statues. Also absence of specialized revenue court among others.
Administratively, the tax officials do not receive adequate
remuneration and training. Moreover, they are not involved in the
policy making.
Valuable solutions were adduced, which if, implemented would
remedy the situations and increase the revenue generation as
expected of the Act. Such recommendations as.




Title Page
Table of Contents
Table of cases



Capital forms an important factor in production processes,
as well, essential ingredient in furthering economic growth and
Infact, without adequate financial resources no business
enterprise or government (federal state or local government) can
function effectively and efficiently (Adetunji 1997:16).
Government like an individual or business organization
require funds for its day to day activities however, unlike these
other bodies or persons it has the primary objective of raising the
standard of living of the citizens through the provision of such
amenities and services as education, public health, good roads,
potable water supply, electricity, market, defense etc. hence, Paul
Eriliri (1987:14) expressed “one of the basic function of the
protection of the property and the basic function of the state as
seen by the natural law theories is the protection of the property
and the property owners should therefore pay for the state
expenses. Similarly, services that tend to increase the value of
property must also be compensated.
Accordingly, government therefore, gives serious attention in
discovering means of raising revenue to meet these responsibility
(Olusanya 1978:206)
In the words of Adentunji (1997:16) though such funds can
be generated from taxes and royalties, there is a limit to the
extend to which this can be done to avoid over burdening the
citizens. Sharing the same view with Eriliri, Adam Smith in his
famous book “the wealth of the nation. “Every subject has to
contribute to the coffer of the state. These contribution according
to Omeje (1992:16) have been with a lot of resistance, creating
evil passion and mortification of the honourable poverty. Hence
the need for a self rules and regulation that would guide the
assessment and collection of the contribution (tax). Therefore,
president Esuhere during his budget speech to the American
Congress had this to say “we shall develop a tax system that
would encourage, savings and investment for the economy which
is ours” the above statement is saying nothing short of tax law
that would be used to attain government policies.
The legal regime that governs the tax system in Nigeria is
the tax laws as amended. There is no gain saying that once, rules
and regulations are formulated to guide a system, there is the
need to appraise the provisions of the laid down rules in order to
ascertain whether or not set rules and regulations are formulated
to guide a system, there is the need to appraise the provisions of
the laid down rules in order to ascertain whether or not the set
rules meet its goals and objectives.
According to Ochei (1987:19) in the United Kingdom, the tax
laws are consistently, being tasted in the law court and at the
end of each fiscal year, a finance act is issued, up dating by
addition or amendment, the existing tax laws. Comparing the
Nigerian tax law and systems with other developed countries he
further added. It seems clear that our income tax rates, relief and
allowances should be reviewed to reflect, money values, earning
capacity and additional responsibilities which the present
economic situation has imposed on the struggling population.
Considering the widespread criticism of the existing
Nigerian tax laws coupled with the persistence calls by the
Nigeria tax consultants tax administrators and the existing laws,
the need therefore arises for a work of this nature to critically
appraise the laws with particular reference to the personal
income Tax Act as amended. This is to ascertain the effect of the
laws and the consequent amendments on the revenue generation
is south east of Nigeria. If there is a considerable positive change
in the revenue generation since the law and the amendment took
effect, compared with the set target, then there may be no need
for over hanling the existing laws but if the other way, then the
laws should be critically reviewed in order to achieve the set out
government policies.
The best quality any personal income tax system should
adopt will be such that will be fair to the tax payers and at the
same time be able to achieve the intended objective of the
government. The essentials of good tax system, otherwise known
as common of taxation was first propounded by Adam Smith and
include – Equality –certainty, convenience and economy. From
1940, when Direct Taxation ordinance was enacted in Nigeria,
the Nigeria Tax Laws have undergone series of amendment.
The purpose of the amendment were to maximize the
revenue of the state with less incident on the taxpayers.
Since the creation of Enugu State in, 1991, the internal
generated revenue from sources absolutely controlled by the state
government has not been encouraging, consequently, the revenue
does not adequately carter for the need of the state government.
The income tax laws as provided by the presence income
Tax Act as amended made a lot of provision as to income taxable
in the hand of the tax payers but even at that, the tax yield on
personal income does not reflect the extended personnal income
Some questions readily come to mind at this unction.
i. Why do people not want to pay adequate tax?
ii. Are the provisions of the tax laws not inefficient
iii. Are tax laws full with flaunts
iv. What are the biggest obstacles in personal income tax
administration in Enugu State?
v. Do the personal income tax law made adequate provision
for its enforcement?
vi. Has the frequent changes in the tax law any negative
impact on the revenue generation in the state.
vii. Do tax payers and officials exploit the loopholes in the
law to their own advantages.
viii. Are tax officials adequately reinunerated?
ix. In formulating tax policies are tax administrator not
This study shall try to find a way out of the core problems. In
addition it shall try to provide answer to the following basic
a. Will further review of the laws being about voluntary
compliance of the tax payers.
It is the disposition of this work to critically appraise the
personal income tax Act 1993, as amended in relation to the
question of revenue collection of Enugu state since the Act came
into effect, with the intention of introducing reforms where
necessary such that the Act shall meet as much as possible the
classical common of good tax system as well as the development
need of the economy.
The personal income taxes are gaining ground in Nigerian
taxing system in term of revenue yield since the emergency of
internal politics in the international oil market which has
consistently crushed the oil price since 1980’s therefore, there is
the need to review regularly the tax laws to meet government
fiscal objectives specifically, this work will endeavour to identify
the policies, administrative, legal and other factors inhibiting the
smooth tax administration in the state. It shall look into the
efficient and effectiveness of the state before the amendments.
This is to ascertain whether there is any positive coloration
between the revenue generation and the set out revenue target of
the state within the period 1998-2007, finally, how the
performance of the duties of the Board of internal revenue
officials affect the personal income tax payers and the yield from
the income tax.
There are allegations that the yield from personal income
tax in the state does not reflect the generation provisions made in
the Income Tax Act and yet the state Expenditure has been
increasing astronomically.
This unhealthy practices because of certain identified and
unidentified problems in the system such as loopholes in the tax
laws, inconsistence tax policies, inadequate training for tax
officials among others the following hypothesis are therefore
H01. The incidence and amendments of the Nigerian tax
laws has impacted negatively on the question of revenue
generation in Nigeria.
H1. The incidence and amendment of the Nigerian tax laws
has imported positively on the quantum of revenue generation in
The researcher is motivated to critically appraise the
personal income tax act as amended with the intention of finding
the impact of the act on the revenue generation in the state, also
to introduce reforms where necessary such that the act shall
meet as much as possible the classical common of good taxation,
particularly now that the Nigerian economy calls for self reliance
self sufficiency, inculcation of maintenance culture and
restriction in sorting external borrowing so as to manage the
national debt problems.
This work therefore shall be of great interest to the following
a) The government and her agencies federal, state and local
b) The academicians
c) The general public.
It will reveal the lapses or short comings in the tax laws and
other factors inhibiting effective administration of the law in the
state. Whether the personal income tax laws since its
commencement had made any positive impact on the revenue
generation in the state. Its recommendation will attempt to bring
more income tax payers into the tax net for an improved
internally generated revenue.
Consciously aware of the limiting factor, the researcher
work “A critical appraisal of the Nigeria tax laws as being
administrated by the Enugu state government (A case study of
Personal Income Tax Act 1993 as amended) is restricted as
The purpose of personal income tax, qualities of good
personal income tax system, the development of personal income
tax in Nigeria, other tax laws existing in Nigeria, the activities of
the joint tax board, the activities of the state board of internal
revenue, failures of tax administration in Nigeria, tax law review
and amendments, the use of consultants in revenue collection
and assessment.
The role of the judiciary in interpreting tax laws, the court
that exercise jurisdiction over tax matters, burning issues in the
Nigerian tax system.
The effect of constitutional provision on tax laws. The effect
of taxes and levies (approved list for collection).
This work however did not cover critical appraisal of other
tax laws like: the company Income Tax Act, the property Act, the
value Added Tax Act, the capital Gain Tax, the stamp Duty Act,
among others. In addition to the above structural limitation, the
work is restricted to Enugu State alone. This is the considered
opinion of the researcher since the cost in term of time and
finance can hardly permit a nation wide survey. The researcher
nonetheless believe and strongly too that the result and findings
assessing from the cluster sample would not differ materially
from what it would have it would have been had the entire nation
been surveyed. It is important to note that a work of this nature
did not receive a warm reception because of the adherence people
have for tax. More so, the respondents felt the researcher was
prying into their personal life.



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