Taxes are part of the sinews of any state and a precondition for its prosperity. They are a sub-component of the revenue accruing to any government. They are a tool for achieving socio-economic structuring of any state, as well as important economic regulators However, for the foregoing to be possible in a state; there is the need for clearly thought out guidelines that will direct action to the achievement of the objectives of the tax system. This therefore means that harnessing the gains of taxation would be difficult without a definite policy on the subject. This is because tax policy is one of the planks on which the tax system stands. It is also a fiscal policy that could be put to use in achieving economic stability of any state.
It is a statement of the operational policy in the tax environment of any state and it provides the guidelines (and/or modus operandi) that could be deployed for the regulation of a tax regime. Consequently, a tax regime that lacks a defined and identifiable policy hub cannot achieve its desired objectives. Nigeria did not have such a document before 2012. Prior to this time, the policy within the Nigerian tax system was shaped by a varied mix of legislation, case laws and budget speech pronouncements. This created an unnecessarily complex and largely inequitable situation within the polity. To remedy the situation and bring about reform, the federal government commenced the formulation and documentation of a tax policy. This process was not a stand alone. It is part of the on-going World Bank funded Economic Reform and Governance Project (ERGP) in Nigeria. Today, Nigeria has a National tax policy.
This paper attempts to examine the National tax policy with a view at bringing to the fore its salient features as a tool for reforming both the structure and perception of the Nigerian tax system by the government and people. To achieve this, the paper is divided into six parts. Part II which immediately follows gives a description of the state of the Nigerian tax system before the formulation of a national policy on tax. Part III has as its focus on the activities that went into the making of the policy. Part IV is identifies the major participants in the formulation process and the contribution to the process. Amongst the identified participants is the presidency, the Federal Ministry of Finance, relevant tax authorities, etc. Part V is the core of the paper. Herein, the NTP is examined for the purpose of achieving the theme of the paper. Part VI is the climax of the discourse and it captures the closing thoughts as it relates to the theme of this paper.
Keywords: Nigeria, Tax Policy, Reform
JEL Classification: E00, E62, K34, O55
Suggested Citation: Suggested Citation