A Comprehensive Tax History of Nigeria

5. Statutory Developments

131 CHAPTER FIVE STATUTORYDEVELOPMENTS Background With the fall of Sokoto in 1903, the entire area of present day Nigeria had come under British domination. As pointed out in the preceding chapters, even prior to the appointment of Sir Frederick Dealtry Lugard as British High Commissioner for the Northern Protectorate in 1900, various forms of taxation had already been in place in Northern Nigeria. As a result, Sir Frederick did not have to introduce taxation to the north as a novel idea. His challenge in this area was to harmonize the various forms of taxes that were already in place. Lugard achieved this through the introduction of statutory enactments in the regulation of taxation. Consequently, the Stamp Duties Proclamation 1903 was promulgated. This was followed in 1906 by the Native Revenue Proclamation No. 2 1906, which, for all intents and purposes, laid the foundation for the regulation of income tax in Nigeria. In the years to follow, political imperatives led to the expansion of income taxation based on this new model into first, the western territories and eventually into the eastern provinces. At the time, there was no clear cut distinction between personal taxation and business taxation in terms of statutory frameworks; rather, the income tax ordinances passed up to 1939 applied equally to both personal and business taxation. This chapter focuses on the statutory instruments that, at different times, shaped the development of the various tax types. Introduction of Income Tax Laws in Nigeria The first income tax law in Nigeria was the Native Revenue Proclamation No. 2 1906 issued by then Governor of Northern Nigeria, Sir Frederick. As the title suggests, the document was not legislation in the strict modern sense. However, to the extent that the Proclamation was a legal instrument that imposed and levied tax, it qualified as a law for all intents and purposes. The preamble to the Proclamation described it as ‘relating to the levying and collection of revenue from native sources’ and went on to state that prior to the issuance of the Proclamation ‘tributes, rents, taxes and other dues have been levied and collected according to Native Custom by certain chiefs’ and that it was: A Comprehensive Tax History of Nigeria 132 considered advisable to legalise and regulate the levying and collection of such taxes and dues aforesaid, and to promote such uniformity of taxation as may be possible in the Protectorate.1 Consequently, and subject to the approval of the Governor, the Resident of each province was empowered to fix and assess tributes on any community or unsettled district2 within his province and to impose tax on natives residing within his province who were previously subject to kurdin sarauta, gaisua and jangali.3 Assessment was based on the estimate of annual value of lands and produce in each community or the annual value of the produce or goods of any trade, goods or implements of the taxpayer or on the value of livestock of herdsmen or such other incomes as were liable to tax under native custom.4 Every community or unsettled district was required to be notified of the amount assessed against it as well as the time the assessed amount was to be collected.5 The Resident was empowered to appoint chiefs or other suitable persons as district headmen and village headmen (in the case of settled districts) and elders or chiefs (in the case of unsettled districts) to assist in the supervision and collection of taxes and tributes.6 The duties of a district headman included the supervision and collection of tribute in his district; the receipt of all sums collected by village headmen and delivery of same to a recognised chief7 as directed by the Resident; the collection of taxes from persons in his district, where so directed by the Resident; and the rendering of accounts of all tributes and taxes collected to the Resident.8 A district headman was entitled to remuneration at an amount not exceeding one fourth of the tribute or taxes received by him. The duties of village headmen included the collection from each member of the community to which he was appointed, such proportion of the amount at which the community was assessed for tax or tribute; remittance of tribute or tax proceeds to the appropriate district headman or such other person as directed by the Resident; and communication to the district headman the names of persons who either refused or persistently neglected to pay their proportion of tax or tribute.9 A...