‘It is important for all of us to appreciate where we come from and how that history has really shaped us in ways that we might not understand.’
The above saying is of relevance when the much heated topic of Taxation is being discussed. Tax like every other concept has a history and a fresh breathe of understanding tax can be taken when its history is put in recognition. Tax is from the Latin word Taxo! And in simple terms it’s a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.
By recorded history the first known system of taxation was in Ancient Egypt around 3000-2800 BC in the first Dynasty of Egypt. Tithe and the corvee were the earliest and most known from of taxation (the corvee was forced labor provided to the state by peasants too poor to pay other forms of taxation). Other forms of mandated financial levy as occurred throughout time and history around the world.
Well, that Tax as its etymology from a Latin word may create the impression that the concept never existed in Nigeria before the advent of the colonialists. Hence, this paper tries to take a cursory look into taxation in the pre-colonial, colonial and Post- colonial era in Nigeria.
TAXATION IN PRE-COLONIAL NIGERIA
It’s basic knowledge that the State ‘Nigeria’ never existed, until 1914, when Lord Lugard amalgamated the Southern and Northern Protectorates of Nigeria. However, a people existed before the creation of that state and their history was ‘taxified’.
To the Northern parts of Nigeria, a centralized system of taxation existed in which the Emirs (rulers) had several forms of taxes take effect in accordance with Islamic principles. The Zakat, Kudin-Kasa, Shuka-Shuka inter alia were some from of taxes collected and they were levied based on land utilization, cattle rearing etc.
The Southern part of Nigeria did not operate a centralized system of government and as such taxation was not systematic. The major tribes in the South were the Yorubas and Igbos. The Yorubas had kings and Isha-Kole was tax to be paid to the community leaders or chiefs; Owo-Ori was tax levied for services provided by individuals.
The imposition of financial charges has indeed never been a foreign concept in Nigeria’s history, although it might not have existed in the strict sense of tax administration has seen today!
TAXATION IN COLONIAL NIGERIA
The advent of Colonialism in Africa and the unyielding desire to exploit resources has seen the implementation of various policies by Colonialists. In 1861, British administrationofficially started in Nigeria, in that time Lagos was named the crown colony of the region. Even with the formal administration taxation was not centralized.
The Stamp Duties proclamation of 1903 became the first official document regulating tax in Nigeria which was followed by the Natives Revenue Proclamation 1906 that was created to harmonize the various taxes in the country. The latter proclamation systematized all the pre-colonial taxes by defining taxable taxes; and procedures for assessment and collection, as well as penalties for default thus eliminating arbitrariness that has hitherto characterized the Nigerian tax system.
Importantly, it introduced the four certainties essential to tax;What to pay; When to pay; Where to pay; and Who to pay.
Other landmark events in the colonial era was re-issuing the Native Revenue Proclamation as the Native Revenue Ordinance in 1917 to cover the Southern region and by 1927, it was made applicable in the whole country. Equally, in 192 the Inland Revenue Department was established.
Beginning with renovating the revenue agency, the Inland Revenue Department was renamed the Federal Board of Inland Revenue in 1958 and it became the precursor to the present day Federal Inland Revenue Service (FIR).
Following independence in 1960, other legal and institutionalreforms were effected in 1961 through the establishment of the Federal Board Of Inland Revenue (FBIR) and The Body of Appeal Commissioners as the first point of call for tax disputes resolution, in the same year the Joint Tax Board (JTB) was created with the primary responsibility of ensuring uniformity of standards and application of personal income tax. In 1958 Raisman commission introduced the standardized tax principles. The recommendations form the commission were later adopted by the Nigeria government. Other major reform was the establishment of the chartered institute of Taxation of Nigeria in 1982 and the review of the composition of the FBIR in 1993.
Today’s economic realities and commercial complexities as necessitated the need for the various legislations on Tax. As such various legislation have been enacted overtime to deal with raising mattes in taxation. According to the Nigerian Law, there are legal bodies that can levy the taxes in Nigerian; the Federal Internal Revenue Services, the State Board of Internal Revenue and Local Government Revenue Services.
The history of taxation in Nigeria is rich and it as most definitely influenced the tax policies operating the country today. Notably, the tax sphere is still developing and it would be in a constant state of adapting in order to adequately address tax issues that arise.