ACC 201- Taxation

Main Content 3.1 Historical Background of Taxation in Nigeria Prior to the imposition of colonial rule in Nigeria, a well-organised system of direct taxation was in existence in Northern Nigeria under the autocratic rule of the Fulani conquerors. This was made possible by religion, organized and efficient administration of the Northern Emirs. Whereas in Southern parts on Nigeria, political and administrative institutions were yet to be well developed, consequently the tax system was less developed. The kings, chiefs and other traditional rulers relied on tributes, tolls and arbitrary levies for their revenue. Such a system led to multiplicity of separate levies, irregular imposition of tax and arbitrary assessment. In 1904, Lord Luggard introduced income tax in Nigeria with the introduction of community tax in Northern Nigeria. He later made changes which crystallized into the Native Revenue Ordinance of 1917. This Ordinance was amended and extended to Southern Nigeria in 1918 when it became operational in Abeokuta and Benin and was further extended to Eastern Nigeria in 1928. In 1940 the Direct Taxation Ordinance No. 4 was enacted which incorporated the Native Revenue Ordinances of 1917, 1918 and 1928. The Direct Taxation Ordinance No. 4 of 1940 applied to natives of Nigeria except those in Lagos township. In 1943, the Income Tax Ordinance No. 29 was passed and took effect from 1st April, 1943 which made it possible for non-Nigerians (Europeans) all over the country and Africans living in Lagos to be assessed to tax. Under the Richard’s Constitution which subdivided the country into three regions, viz, the North, East and West, there was no attempt to divide the powers over taxation between the central and regional government. The tax jurisdiction still remained centralized (Okorodudu, 1992, p.52).