1.1 BACKGROUND TO THE STUDY
The essence of value Added Tax (VAT) In Nigeria in 1994 was to boost the revenue base of the government, re-activate the economy and as possible- reduce the poverty level by appropriately reallocating resources from personal and private sections to promote growth and development. The adoption of this form of consumption tax was also necessitated by the decline in the oil revenue due to fluctuations in the price of oil in the international market, which makes the oil revenue insufficient to run the affairs of the government similarly the present non-oil revenue Sources mainly taxes are not enough to meet public needs, as expenditure continue to rise. Custom duties, which used to be an important source of government revenue in the 80’s have dwindled significantly.
However, custom duties provided 75 percent of Federal receipt in 1994 but decrease to 19 percent in 2003. Company income tax, which accrued to 32 percent of federally collected revenue in 1994 fell to 5 percent in Nigerians pay tax 50 increasingly. The bull: of the self-employed traders, farmers and businessmen evade taxes and would only pay flat rate levies when compelled.
More so, this gives personal income tax.