CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The history of revenue generation of government is as old as the existence of government. Government generates revenue not only for the purpose of taking care of the cost administration, defense, security, but for the provision of various other social and economic amenities.

There are several means by which government can generate revenue. Among which is taxation which is very paramount in such a way that it can be used further to influence economic behavior.

 Nevertheless, two principles have been posited about the collection of taxes. First is the ability to pay principles which goes with the notation that the higher the income the higher the taxes to be paid. Second is the benefit principle and it has to do with paying from what you get (Gbosi 1980).

 In ancient days taxes were paid in kind, that was before the advent of money and after which it was paid both in cash and kind base on the level of complexity of the society.

Furthermore, several reports have shown that government lose huge sum of money that would have been revenue due to individual and corporate bodies evading tax not only that but giving false information in order to reduce their tax liabilities.

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