A CRITICAL APPRAISAL OF UNIFORM PERSONAL INCOME TAX SYSTEM WITHIN THE CONTEXT OF NIGERIAN FEDERALISM

A CRITICAL APPRAISAL OF UNIFORM PERSONAL INCOME TAX SYSTEM WITHIN THE CONTEXT OF NIGERIAN FEDERALISM

CHAPTER ONE

1.1              BACKGROUND INFORMATION

Nigeria operates a federal system of government under which system each tier of government has its legislative competence or functions conferred on it as the case may be.  It is significant to note that Federalism in Nigeria dates back to 1954 when the country which had hitherto been administered as a Unitary state was restructured into three quasi-self governing and administered regions¹.

It is equally noteworthy that shortly before and since the independence of Nigeria in 1960, all the constitutions that have been enacted have taken the pattern of federalism.  Section 2(2) of the 1999 constitution also re-enacts the doctrine of federalism when it provides

that:

“Nigeria shall be a federation consisting of states and a federal capital territory”  However, there is no doubt that Nigerian federalism is anomalous in practice.  It is fraught with various phenomena that conflict with the universal precepts and normative imperatives of federalism to the extent that the danger and apprehension that the nation is susceptible to unitarism becomes heightened².

However, the focus of this thesis is not to appraise the entire constituents of Nigerian federalism but only the aspect of it that

affects Uniform Personal Income

1. Fajana O. – Three-and-a-half decades of fiscal federalism in Nigeria In: Elaigwu J.I and Akindele R.A (ed) Foundations of Nigerian Federalism 1960 – 1995, NCIR, Abuja (1996) p.105
2. Kupolati I. – Democratic Federalism in the cloud of Assault being one of the issues discussed as fourth Anniversary editorial message in (2004) All FWLR (P t 211) PXIX

Tax system.  It is expedient to note that one of the most constant sources of inter- governmental wrangles, which any federal system is likely to confront is the distribution of financial resources among the various levels of government.  The pivotal concern in this regard is to ensure the different tiers of government have adequate financial resources for the effective discharge of their essential political and constitutional responsibilities³.

The division of taxing power between the various parts of Nigeria has been a recurrent problem since the amalgamation of North and South in 1941⁴; and perhaps, for the texture of Nigerian Federation, it has succeeded in rearing its ugly head into our nascent democracy.  The enthronement of a democratically elected civilian government in Nigeria on May 29^th 1999 was preceded by about fifteen years of Military interregnum during which a somewhat unitary system of administration was practised because of the command structure of the military⁵.

That is a system where power flow from the centre. For instance, the Federal Military Government was vested with sweeping powers to make laws on any subject –matter whatsoever such as police affairs, census, imposition of taxation on incomes and profits, trade and commerce, etc including Local Government matters which is hitherto residual to the state governments⁶.

3. Ayua I.A. – The Nigerian Tax Law. Spectrum Law Publishing, Ibadan, First edition (1996) p. 25 see also Fajana O. op cit. 106
4. Note that in 1914 what Nigeria achieved was only amalgamation not unification or unitarism, and at independence in 1960 it became a federation, not a unitary dispensation.
5. Abiola S. – Division of Taxing Powers In: Abdulrazaq M.T. (ed) Chartered Institute of Taxation of Nigeria – Tax guide and statues, P. 650
6. See generally sections 2 and 5 of the constitution suspension and modification Decree 107, 1993 quoted in Abiola S.
7. cit P.650.

A CRITICAL APPRAISAL OF UNIFORM PERSONAL INCOME TAX SYSTEM WITHIN THE CONTEXT OF NIGERIAN FEDERALISM