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Taxation in its strictest sense is much broader than tax on income, capital gains and stamp duties. It also covers tax on property, consumption and products, hence the source of confusion and legal action which has not helped in the development of the tax regime in Nigeria.

Pending cases in the Courts may help decide conclusively on related matters. Suffice it to say that the prevailing position is that the Federal Government ultimately has overriding authority on taxation matters with some latitude to State Governments to introduce taxes, fee and charges (collectible by the Local Governments) in those areas that do not conflict with the position of the Federal Government.

Governments at both Federal and State Government levels have used the omnibus clause i section 4 of the Constitution to address gaps identified in the taxation system. Section 4 clearly gives the State Government the ability to enact laws in the interest of peace and good governance, but also the Federal Government the same powers to enact laws in the interest peace and good governance, with the proviso that where there is a conflict, the laws enacted b the Federal Government prevail.

The Nigerian Constitution generally allows the State and Local Governments broad discretion in establishing fees, charges, or fines as previously defined. These revenues (fees, charges, fines) should be seen as collected: for the privilege of engaging in certain activities; or in order to regulate a particular activity; or the purpose of imposing penalties.

In some cases-such as many user charges, admission fees, and some regulatory fees-th payment is closely linked to the cost of providing a particular service to an individual beneficiary or regulated party. In other cases-for example, certain environmental or regulatory fees-the payment may not be directly related to the costs associated with particular participants, b more loosely related to a discrete group of participants or an industry.

In some situations, the payment may not relate to direct regulation per se, but rather to broad social costs associate with particular activities-for example, environmental mitigation fees. Ideally, some link must exist between these payments and the related cost to governments in order to avoid' progressing to a 'tax.'

Fees or charges must be based on some established relationship between the amount of the payment, on the one hand, and the costs associated with the regulation of an activity or the provision of a good or service, on the other. Similarly, penalties must be considered reasonable given the specific incident of noncompliance.

If a sufficient relationship, or 'nexus,' is not established between the fee and costs of provision or regulation, the charge is considered a tax. This is an area for which legislation is required to conclusively make this distinction.

An example of this difference lies in the distinction between the tenement rate and the property tax. They are not and should not be confused as one and the same thing. Tenement rates are typically linked to charges by the local authorities for the provision of public services to residential dwellings including multi storey, multi flat dwellings with multiple owners which may be owner occupied or rented.

Property tax on the other hand is a tax based on the value of a house or other property. In Nigeria, the constitution provides for tenement rate, while Property tax is still a new concept in the tax system. Similarly, there is scope to have Environmental taxes, fees, charges or fines, none of which exist today.

In conclusion, the National Tax Policy recognises that the Federal Government through the National Assembly is empowered exclusively to impose taxes on incomes, profits and capital gains and on documents of corporate organizations and governments (stamp duties), while each State Government is empowered to collect those taxes from individuals resident in their respective States as may be determined by the National Assembly.

The taxes imposed by the Federal government include Companies Income Tax, Personal Income Tax, Education Tax, Petroleum Profits Tax, Capital Gains Tax, Value Added Tax and Stamp Duties. Apart from income taxes, State Governments, through their Houses of Assembly are also empowered to impose, fees, levies and rates collectible by them and Local Government Authorities in their respective states.

Every person involved in tax administration, tax payers, Consultants, tax and revenue officials, all agencies of Government involved in raising and collecting Government revenue, those involved in Governance, the Executive, the Legislature, Judiciary and every Nigerian citizen or resident is hereby invited to subscribe to the National Tax Policy.

Objectives of the Nigerian Tax System
The Nigerian tax system is expected to contribute to the well-being of all Nigerians and taxes, which are collected by Government should directly impact on the lives of the citizens. This can be accomplished through proper and judicious utilisation of the revenues collected by government.

In line with the above, there are certain objectives, which the Tax System is expected to achieve. These objectives include:

To promote fiscal responsibility and accountability

One of the primary objectives of the National Tax Policy is to create a tax system, which ensures that Government transparently and judiciously accounts for the revenue it generates through taxation by investing in the provision of infrastructure and public goods and services. Where this in place, Nigerians would have a tax system that they can fully relate to and which is a tool for National Development.

To facilitate economic growth and development
The overriding objective of the Nigerian tax system should be to achieve economic growth and development. As such, the system should allow for stimulation of the economy and not stifle growth, as it is only through sustained economic growth that the potential ability to offer improvements in the well-being of Nigerians will arise.

The tax system should therefore not discourage investment and the propensity to save. Taxes should not be a burden, but should be applied proactively with other policy measures to stimulate economic growth and development.

To provide the government with stable resources for the provision of public goods and services

For Nigeria to pursue an active development agenda and carry out the basic functions of government, its tax system should generate sufficient resources for government to provide basic public goods and services (e.g. education, healthcare, infrastructure, security etc.).

It is therefore a primary objective of taxation to provide the government with resources that it shall invest in judicious expenditure that will ultimately improve the well-being of all Nigerians.

To address inequalities in income distribution
Nigeria's tax system should take cognisance of our peculiar economic circumstances and seek to narrow the gap between the highest and lowest income groups. Those with the highest incomes should pay the highest percentage of tax and tax revenue should be utilised to provide Nigerians with affordable social amenities, basic infrastructure and other utilities.

To provide economic stabilization
Nigeria should use its tax system to minimise the negative impacts of volatile booms an recessions in the economy and also to help complement the efforts of monetary policy in order to achieve economic stability.

To pursue fairness and equality
Nigeria's Tax system must be fair and shall institutionalize horizontal and vertical equity.

Horizontal equity ensures equal treatment of equal individuals. The Nigerian Tax system should therefore seek to avoid discrimination against economically similar entities. Vertical equity on the other hand addresses the issue of fairness among different income categories.

In this regard, the Nigerian Tax System shall recognise the ability-to-pay principle, in that individuals should be taxed according to their ability to bear the tax burden. Individuals and entities that earn high incomes should pay a corresponding high percentage of tax. The overall tax system shall therefore be fair, so that similar cases are treated similarly.

In addition, any ambiguity or conflicting provisions in the law shall be resolved in a manner as to ensure fairness to the taxpayers and the tax authorities.

To correct market failures or imperfections
One of the objectives of the Nigerian tax system is the ability to correct market failures in cases where it is the most efficient device to employ. In this regard taxes may be reviewed upwards or downwards as may be necessary to achieve Government's intentions.

Market failures which the Nigerian tax system may address are those that are as a result of externalities and those arising from natural monopolies.

Features of the Nigerian Tax System
This section provides the fundamental features that taxes in the Nigerian tax system must exhibit. Accordingly any tax that substantially violates these fundamental features should not be part ofthe tax system of Nigeria.

Taxpayers should understand and trust the tax system, and this can only be achieved if Nigerian tax policy keeps all taxes simple, creates certainty through considerable restrictions on the need for discretionary judgements, and produces clarity by educating the public on the application of relevant tax laws.

It is therefore imperative that the Nigerian Tax system should be simple (easy to understand by all), certain (its laws and administration must be consistent) and clear (stakeholders must understand the basis of its imposition).

To enable a high level of compliance, the economic costs of time required, and the expense which a taxpayer may incur during the procedures for compliance, shall be kept to the absolute minimum at all times. Furthermore, taxpayers should be regarded as clients with the right to be treated respectfully.