CHAPTER ONE 1.0      INTRODUCTION 1.1   BACKGROUND OF THE STUDY The political, social and economic development of any country depends on the amount of revenue generated for the provision of infrastructures in that given country. However, one means of generating the amount of revenue for providing the needed infrastructure is through a well structured tax system. according to Azubike (2009), tax is a major player in every society of the world. The taxation is an opportunity for government to collect additional revenue needed in discharging its pressing obligations. A taxation offers itself as one of the most effective means of mobilizing a nation’s internal resources and it lends itself to creating an environment conducive to the promotion of economic growth. Nzotta (2007) argues that taxes constitute key sources of revenue to the federation account shared by the federal, state and local governments. This is why Odusola (2006) stated that in Nigeria, the government’s fiscal power is divided in to three-tiered tax structure between the federal, state and local governments, each of which has different tax jurisdictions. The system is lopsided and dominated by oil revenue. He further argues that over the past two decades, oil revenue has accounted for at least 70% of the revenue, this indicating that traditional tax revenue has never assumed a strong role in the country’s management of fiscal policy. Instead of  transforming the existing revenue base, fiscal management has merely transited from one primary product-based revenue to another, making the economy susceptible to fluctuations of the international market.   However, one of the major functions of any government especially developing countries such as Nigeria is the provision of infrastructural services such as electricity, pipe-borne water, hospitals schools, good roads and as well as ensure a rise in per capital income, poverty alleviation to mention a few.   For these services to be adequately provided, government should have enough revenue to finance them. The task of financing these enormous responsibilities is one of the major problems facing the government. Based on the limited resources of government, there is need to carry the citizens (governed) along hence the imposition of tax on all taxable individuals to augment government financial position. To this end, government have always enacted various tax laws and reformed existing ones to stand the taste of time. They include: -       Income Tax Management Act (ITMA) -       Companies Income Tax Decree (CITD)        -       Joint Tax Board (JIB)Etc.    All these are aimed at ensuring adherence to tax payment and discouraging tax evasion and avoidance.   1.2   STATEMENT OF THE PROBLEM   It is of paramount important to note that no tax succeeds without the taxpayer’s co-operation. Here, we can ask some thought-provoking questions such as:         -       What makes taxation such a difficult issue?         -       Why do people feel cheated when it comes to tax? -       Is government making a legitimate use of taxpayer’s money?         In view of these questions above, this study is going to be carried out to offer solution to them.         We shall also look at the following issues and offer recommendations. 1.     Problems affecting the successful operation of tax system in Nigeria. 2.     How to determine the assessable income 3.     Process of tax administration in Nigeria.   1.3   RESEARCH QUESTIONS 1.     What is the nature that exist between taxation and economic growth? 2.     Do tax rate affects the rate of investment in the economy. 3.     Do you think that government having using the revenue generated for economic growth?   1.4   OBJECTIVES OF THE STUDY The general objective of this study is to assess the contribution of taxes toward the growth of the Nigerian economy.   However, the specific objectives of the study includes : 1.     To evaluate the nature of relationship that exist between taxation and economic growth in Nigeria. 2.     To determine the extent government has been using revenue generated from tax.   3.     To examine how tax rate affects the rate of investment in the economy.   4.     To know general desirability of firms to invest as a result of tax incentive measures.   Generally, the work is done to find out if tax constitutes the bulk of government revenue and to erase the erroneous that it is an exploitation by government for their selfish interest.   1.5   SIGNIFICANCE OF THE STUDY The study will afford us the opportunity to know the roles of taxation in the Nigerian economy, such roles includes: 1.     Taxation as a major source of revenue to the government 2.     Revenue generated from tax enables government performs its functions effectively. 3.     Taxation acts as an instrument of fiscal policy. 4.     The impact of taxation on small business in Nigeria. 5.     The study will also reveal if there are other better sources of government funding.   1.6   SCOPE OF THE STUDY The scope of this study covers the critical examination on the impact of taxation on the economic growth and development. It will also analyze other related issues such as structure and administrative machinery of tax in Nigeria and their associated problems. The essence of this digression is to possibly find out the obstacles if any that hinder the effective collection and administration of tax in Nigeria.   1.7   LIMITATION OF THE STUDY   The limiting factors anticipated during this research work are as follows: 1.     Lack of finance: This factor hindered me from collecting enough of data. 2.     Time factor: The duration of this research work conflicts with my lecture time which causes a great drawback in my project work. 3.     Inadequate materials: Most of the materials needed for my project work are not available both in the school library and in the FIRS which hinder my ability from collecting enough of data.   1.8   CHAPTER SCHEME      A brief outlook of the whole chapter of study is divided into five chapters. The first chapter is the introduction which is sub-divided into the general background of the study, statement of the problem, research questions, objectives of the study, limitations of the study and chapter scheme.     Chapter two which cover the literature review include the economic development in Nigeria, objectives of taxation, imposition of tax, income exempted to tax, introduction and functions of FIRS.   Chapter three is research design and methodology, it include the population of the study, samples and sampling procedures, types of data used, instrument of data collection, methods of data collection and data analysis.   Chapter four is the data presentation and analysis, it will serve as a reference to the student and academician for further research presentation and analysis and questionnaire to the director assessment.  

Chapter five involves the findings, summary, conclusion, recommendations, and bibliography.