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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.

Osita (2004:1) stated, taxation may be define as the compulsory leave by the government through it’s various agencies in the income, capital or consumption of it’s subject such as salaries, business profits, interest, dividends, commission regularities, rent etc.

It could be said that there are three main methods of financial economic expedition open to meet developing countries there are:-

(a)        LOANS

(b)        GRANT


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.

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 it’s authorities to enforce compliance.

ARONOMOLE and OLUWALAYODE (2006:39). Define tax avoidance as legal ways by which a tax payer reduces in tax liabilities.

Tax evasion is a deliberate on the part of the tax payers to reduce their tax liabilities through illegal means or an attempt not to pay tax due.

The distinction between this tax avoidance and tax evasion is that tax avoidance is not considered a criminal offence where as tax evasion is a criminal offence.

According to ANYAELE (1990:225) a tax may be defined as a compulsory contribution imposed by a government authority on goods, individual and co-operate bodies irrespective of the exact amount of services rendered to the tax payer in return and not imposed as a penalty for our legal offence. Both direct and indirect taxes that are collected for the government inform of income tax, exercise duty, import and export duties. Purchase and sales taxes and so on help the government to generate a lot of revenue for the smooth administration in the nation.

There are two elements in every form of taxation and that is the BASE AND RATE. The tax base is the object which is taxed or a measure of the private sector income or wealth that can be taxed, while the tax rate is the percentage of the measured amount taken off from the tax base. In this case the money realized from it is used to provide social goods and services, so that everybody both the rich and poor will have equal chances of making use of them, that is the goods and services. They include pipe borne water, electricity, good roads, hospital, schools etc. most people in Nigeria has the habit of evading or avoiding tax payment i.e. they always avoiding paying their taxes. With this state of affairs the various tier of government in the country don’t usually generate enough revenue which will enable them to effectively execute all the development projects which are highlighted in their budgets.

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.

Also the researcher wants to look into the problems of paying tax by the public, such problem are as follows

a)   Tax evasion and tax avoidance by the public

b)  Poor system of tax collection

c)   Inability of the government to prosecute tax avoidance.


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.


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.

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.


The objectives of this study are as follow

1. To analyze the various causes of tax evasion and avoidance


2.   To identify the factors or problems militating against the tax assessment and collection in Nigeria.

3.   To identify possible effects of the tax evasion and avoidance on the revenue generation of the country and Kano state in particular.

4.   To analyze the effectiveness and flaws of various tax in the country

5.   To examine ways in which tax evasion and avoidance can be reduce with the new reforms.

6.   To examine tax reforms in Nigeria

1.4              RESEARCH QUESTION

For this research work to be effective it please the researcher to ask

the following question

1.   What are the causes of tax evasion and avoidance

2.   What are the factors or problems militating against the tax assessment and collection in Nigeria?

3.   What are the possible effects of tax evasion and avoidance revenue generation of the country and Kano state in particular

4.   Are tax laws in the country effective


5.   Have new tax reforms reduce tax evasion and tax avoidance and tax avoidance in Nigeria

6.   Do the loopholes in the tax laws encourage tax evasion and tax avoidance in Nigeria?


To aid the research work the following hypotheses has been postulated, the mill hypothesis is denoted by “Ho” while the alternative hypotheses is denoted by “HI”

H0: There is no significance difference between the expectedtax revenue and the amount actually paid by those who evade and avoid tax

HI: There is a significance difference between expected tax revenue andthe amount actually paid by those who evade and avoid tax

H0:    There is no significance difference between the number of people who are due to pay personal income tax and those that actually pay tax


HI: There is a significance difference between number of people who aredue to pay personal income tax and those that actually pay tax.

H0: There is a significance difference between numbers of register enterprise and the numbers of registered enterprises that pays tax in the country .

HI: There is a significance difference between numbers of Register enterprise and the numbers of registered enterprises that pays tax in the country or state


This research work would be relevant to various tax authorities; the Federal Board of Inland Revenue, Local Government revenue committee as well as their tax officials who are responsible to collect tax on individual or corporate bodies. It gives them insight on how to improve the tax administration.

The research would also help the professional bodies like the chartered institute of taxation of Nigeria and the institute of chartered


accountants of Nigeria as well as their members to see the areas of deficiency in the collections and call for improvement in tax revenue.

This research would also be relevant to the future researchers and the dents of accounting, economic, business administration and other social and management sciences as well as the legislations which will also benefit immensely from this research because it will form basis of tax policy formation, implementation and administration.


Since no single research can validly cover all areas of the topic the researcher tends that thrust of this project will be limited within the scope of how tax payers performance on tax are influenced by the choice of its tax system. The study will focus primarily on Kano state to be precise to enable the researcher carryout on extensive investigation on this subject. The state to be studied is: Kano state.

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