CHAPTER ONE
1.0     INTRODUCTION:
1.1     OVERVIEW:
One of the major functions of any government especially developing countries such as Nigeria is the provision of infrastructural services such as electricity, pipe-borne water, hospitals, schools, good roads and as well as ensure a rise in per capital income, poverty alleviation, maximize the utility of its citizens, improve their standard of living and so on.
According to Azubike (2009), tax is a major player in every society of the world. The tax system is an opportunity for government to collect additional revenue needed in discharging its pressing obligations. A tax system offers itself as one of the most effective means of mobilizing a nation’s internal resources and it lends itself to creating an environment conducive to the promotion of economic growth. Nzotta (2007) argues that taxes constitute key sources of revenue to the federation account shared by the federal, state and local governments. This is why Odusola (2006) stated that in Nigeria, the government’s fiscal power is divided into three-tiered tax structure between the federal, state and local governments, each of which has different tax jurisdictions. The system is lopsided and dominated by oil revenue. For these services to be adequately provided, government should have enough revenue put in place to finance them.  The task of financing these enormous responsibilities is one of the major problems facing the government of which it is of great necessity for these services to be provided to citizens of a state.  Based on the limited resources of government, there is need to carry the governed (citizens) along via the imposition of tax on all taxable individuals and companies to augment government financial position.  To this end, government have enacted various tax laws and reformed existing ones to stand the taste of time.  They include:  Federal Inland Revenue Service (FIRS), State board of internal revenue (SBIR), Income Tax Management Act (ITMA), Companies Income Tax Decree (CIID), Joint Tax Board (JIB) etc. 
All these are aimed at ensuring adherence to tax payment and discouraging tax evasion and avoidance by citizens.  For the purpose of this study, the researcher would be concerned with the impact of taxation on economic development in Nigeria.
1.2     STATEMENT OF THE PROBLEM: 
Obviously, the first need of any modern government is to generate enough revenue which is indeed “the breath of its nostril”.  Thus taxation is by far the most significant source of revenue for the government.  Nigerians regard payment of tax as a means whereby government raises revenue on herself at the expense of their sweat.
It is good to note that no tax succeeds without the taxpayer’s co-operation and that every government expects its citizens to see it as a duty to pay up their taxes.  Here, we can ask some thought-provoking questions such as: what makes taxation such a difficult issue?  Why do people feel cheated when it comes to tax?  Is government making judicious use of taxpayer’s money?  In view of these questions above, this study is being carried out to offer solution to them. We shall also look at the following issues and offer recommendations.
1.       Problems affecting the successful operation of tax system in Nigeria.
2.       How to determine the Assessable income.
3.       Process of tax administration in Nigeria.
1.3     OBJECTIVE OF THE STUDY:
The general objective of the study is to assess the contribution of  taxes towards the growth and development of the Nigerian economy.
However, the specific objective of the study includes:
1.       To examine the relevance of taxation in Nigeria.
2.       To determine why people feel cheated when it comes to paying their taxes.
3.       To determine the extent to which federal government has been using the revenues generated from tax.
4.       To examine how tax rate affects the rate of investment in the Nigeria economy.
5.       To know general desirability of firms to invest as a result of tax incentive measures. Generally, this study is carried out to know if tax constitutes the bulk of government revenue and to erase the erroneous that is the exploitation by government for their selfish interest.

1.4     RESEARCH QUESTION:
Upon completion of this research, the following are the questions generated from the above research objectives:
1.       Is taxation relevant in Nigeria?
2.       Do people feel cheated when it comes to paying their taxes?
3.       What is the extent to which federal government has been using the revenues generated from tax?
4.       How does tax rate affect the rate of investment in the Nigeria economy?
5.       Do firms generally desire to invest as a result of tax incentive measures?