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             \author[1]{Okoyeuzu  Chinwe}

             \affil[1]{  University of Nigeria,Nsukka}

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\date{\small \em Received: 15 December 2012 Accepted: 31 December 2012 Published: 15 January 2013}

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\begin{abstract}
        


Taxation is one of the most important revenue generation in any given economy and as such should receive due attention. The need for taxation in an emerging economy cannot be over-emphasised. Taxation is one source of government revenue that could be reliable in terms of certainty .Government has the mandate to impose tax via its numerous regulations. Emerging economies are nations that have large territories and populations, and are saddled with the responsibility of developmental projects that call for new infrastructure, such as power-generating plants and telecommunications systems. Value Added Tax, usually abbreviated as VAT, could be a mega means of funding such projects. This research adopted. Survey research design because of its ability to view comprehensively and in detail the major question raised in the study: Has Vat maintained an increase in revenue yield since inception? Our finding was a continuous decrease in revenue returns. The increasing revenue loss on VAT proceeds is mind bogging. Vat has a good chance of working in Nigeria if it receives the cooperation of tax collectors. We recommend that the Nigerian government should make adequate provision for retrieving the proceeds of VAT from companies and other agents of collection.

\end{abstract}


\keywords{Value Added Tax, usually abbreviated as VAT, new infrastructure.}

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\let\tabcellsep& 	 	 		 
\section[{Introduction}]{Introduction}\par
nherent in the financing of public goods is always a problem of free riding. Taxes are the major tools required to overcome such and also to control other market imperfections, and achieve social justice by wealth redistribution. Tax is a major player in every society of the world. It is a major issue due to its consistency and constancy. It is that compulsory payment imposed on the citizens of a country by its government. It is an ingredient to development in different parts of the world as it is an opportunity for government to collect additional revenue used to provide for the needs of the people (Yahaya, c.2007; \hyperref[b14]{Ogbonna \& Appah, 2012a)}. \hyperref[b8]{(Gloria, 2012)} observe that although taxes may not be the most important source of revenue to the government in terms of magnitude of revenue derivable from it as compared to revenue from petroleum proceeds, fines and royalties, grants and advances, et cetera, its importance stems from the point of view of certainty and consistency.\par
The most important role of a tax system is its revenue-raising function. Government therefore, impose taxes to finance the expenditures they undertake. Tax systems also have an important income distribution function. This recognises a general perception that the tax system imposes a fair tax burden across taxpayers, which is essential to the effective operation of a voluntary compliance system of taxation. The Nigerian tax law is the embodiment of rules and regulations relating to tax revenue and various kinds of taxes. Such laws are continuously reviewed. Kiabel (2009) identified these laws to include fiscal administration between the three tiers of government-the federal, state and local government. Other expectations of the Nigerian tax system according to the Presidential Committee on National tax policy (2008) include: a) Encourage economic growth and development. b) Generate stable revenue or resources needed by government to accomplish laudable projects and or investment for the benefit of the people. c) Provide economic stabilization. d) To pursue fairness and distributive equity. e) Correction of market failure and imperfection. \hyperref[b1]{Abiola and Asiweh (2012)}. Under the current tax laws, the three tiers of the government has specific areas of emphasises. SOME OF THE RELEVANT TAX REGULATIONS emphasised the following: Capital Gains Tax, Value Added Tax (VAT), Education Tax, Petroleum Profits Tax, Nigerian Social Investment Trust Fund (NSITF), Stamp Duties, Withholding Tax, Double Taxation Agreements/ Treaties, Personal Income Tax, Companies Income Tax. \hyperref[b4]{Anyanwu (1993)} viewed VAT as a consumption tax on economic operations including imports except those exempted as par the provision of the decree. VAT being the main focus of this paper was introduced following a study group set up by the federal government in 1991 to review the nation's tax system so as to help boost the government revenue, which has been dwindling for many years. It was this group that proposed VAT. As a follow up, another committee was set up to conduct feasibility study on the implementation of the VAT (Thacker, 2009). There is a growing recognition among developing countries of the crucial role of value added tax revenue as an instrument of economic development. Value added tax (VAT) revenues are increasingly accounting for significant proportion of government revenue to finance the required level of public expenditure both at federal, state and local government levels. Value added tax as a consumption tax has been embraced by many countries worldwide \hyperref[b17]{Owolabi and Okwu (2011)}. Many developing countries have effectively used Vat as a major source of revenue. Examples of such countries include Benin, Guinea, Kenya, Togo Senegal.et cetera. Vat recorded an impressive performance in those areas where they were used hence Nigeria's interest in adopting VAT in 1994. VAT is a self-assessment tax hence, it is a fairly precise measurement of the growth of an economy since purchasing power (which determines yield) increases with economic growth that is paid when returns are being rendered. An observation of the Federal Inland Revenue Service (FIRS) was that Vat being a consumption tax obviously its administration will be easy as evasion will be more challenging.\par
The primary objective of this study, therefore, is to evaluate the performance of VAT as Revenue earners in Nigeria .To assess the revenue generated from VAT since inception to see if it has been on a steady increase or decrease. It is hoped that the insight to be gained from this analysis provide a useful guide to the policy makers. The rest of the paper is as follows: section two discusses the principles of VAT, section three dwells on analysis of Vat performance between 2005 -2011.The fourth section provides the way forward while section five provides the conclusion of the paper. 
\section[{II.}]{II.} 
\section[{Principles of VAT in Nigeria}]{Principles of VAT in Nigeria}\par
Soyode and Kajola (2006) defined VAT as a consumption tax on all VAT able goods and services. Value Added Tax, usually abbreviated as VAT, was first adopted in France in 1954. In France, it is the most important source of state finance accounting for nearly 50\% of state revenue  {\ref (Thacker, 2009)}. The introduction of VAT in Nigeria through Decree 102 of 1993 marks the phasing out for the Sales Tax Decree No. 7 of 1986. The Decree took effect from 1 st December, 1993, but by administrative arrangement, invoicing for tax purpose did not commence until 1st January, 1994. According to the decree, a VAT able organization is an existing firm engaged in the manufacture, distribution, importation or supplying of goods and services. Theoretically under VAT, a supplier, manufacturer, producer or seller of Vat able goods or services returns a percentage of the price he charges his customers to the Vat directorate at regular intervals. This percentage is 5\% and it is the rate. This is the output. Assuming the seller paid Vat on the VAT able goods and services when they were purchased for resale, then the vat paid by him is input tax.\par
The Nigerian vat history could be traced to the Two great financial institutions the international monetary Fund (IMF) and the world Bank. The intention was towards helping Nigeria to increase its non-oil revenue. The value added tax Act is a federal statues and the tax is administered by the Federal Inland Revenue Service (an arm of the Federal Board of Inland Revenue on behalf of the federal, state and local Governments. while the VAT revenue is shared by all levels of government. Thus it can be assumed that VAT revenue is not sterilized but injected into the economy through increased government final consumption expenditure. The proceeds are shared among the three tiers of government in accordance with a formulae determined from time to time by the federal legislature. This is always subject to review.\par
Notably emerging economies have large territories and populations, and they are undertaking extraordinary development projects that call for new infrastructure, such as power-generating plants and telecommunications systems. Value added tax (VAT) is one of the ways of funding such infrastructural developments. Nigeria happens to be an emerging economy whose export product is mainly crude oil. Her other natural resources asserted by Economy Watch (2011) include: Natural gas, tin, iron ore, coal, limestone, lead, zinc and arable land. Her land mass covers about 923, 768 sq km and she have a population of about 149,229,090.The need for revenue generated from VAT in this country cannot be over emphasised. VAT is paid on virtually all goods and services, with the exception of the following: Nevertheless, even with the seeming inescapable nature of VAT, the VAT still remains evaded (if not the most evaded). 
\section[{III.}]{III.}\par
Analysis of VAT Performance 2005-2011    What could be responsible for revenue generated from Vat not to be on a steady increase? The table shows there is always a shortfall between the target and the actual. Several factors were observed to have played a major role.\par
Avoidance of tax payment is not only an international problem or issue but has equally assumed deeper dimension especially in a country like Nigeria .  worrisome as many prefer not to pay tax if given the opportunity. Government's ability to adequately and effectively retrieve the proceeds from companies and other agent of collection remains a problem. It does not appear as if there is adequate machinery for effectively monitoring the remittance of tax withheld to the relevance tax authority. Tax Evasion apart from being morally wrong also amounts to a breach of the tax law.\par
One major areas of reform in recent years has been towards tax administration. However, the reform seems not to have been impressive in its implementation. It is an unwritten law in Nigeria, that people who are rich and well connected evade taxes either directly or indirectly. They are further assisted in these crime by the under developed and inefficient tax collections system in the country.\par
Inefficient tax collection is a failure that has not yet been addressed by the various tax reforms in the past. Obviously one can rightly describe this type of tax system as showing an imbalance or being unfriendly to the poor masses. Olasunkanmi 2011 commented that our tax system allows corruption amongst top government functionaries. Taxpayers also perceive government as not being responsive enough to the needs of the citizens; they largely hold the view that tax revenues are either misapplied and or misappropriated.\par
Tax payment in various parts of the economy is easily manipulated. Tax officials double as consultants. They aid corrupt people to evade tax by helping them to compromise the books and they collect a handsome fee for this type of service rendered. (Olatunde Sanni 2010). The outcome of such dishonest practices by some tax officials is that it ends up having demoralizing effect on the honest tax payers. In an attempt to facilitate adequate and effective collection of taxes, Government designed and designated many collection points. This turned back to pose a challenge .Accountability from these collection points always poses a challenge as the proceeds most times are diverted to wrong channel. The rate of corruption on the part of tax officials is alarming as largely many of them connive and collude with supposed-tax-payer to evade and avoid tax. According to Uwabuike (1998), the success or failure of any tax system depends largely on the extent to which it is properly managed. When some people do not pay and others do, the equity of tax is eroded. The issue of the upsurge of corruption in Nigeria is troubling. Corruption from all indication is endemic in all governments.\par
A common feature of many developing countries is lack of resources, expertise and capacity for building up and improving efficient civil service. While citing (Ola 1998) Kiabel and Nwokah (2009:532) observe that many employers of labour are now using the tax deducted from their employee's emoluments on either their personal acquisitions or business expansion\par
The distribution system of VAT in Nigeria is enough to demoralise tax payers. How much does the Federal government give back to the state? Sharing of Vat proceeds is not strictly based on derivation. This is not proper, the sharing ought to be done according to derivation, this will help to develop and encourage the state where the bulk is generated from.\par
Nigeria has a problem of adequate record keeping and tax assessments. An agency with very poor statistics can never function right because data management becomes challenging. For proper audit, statistical data are crucial. Detailed data collection and enforcement ought to be timely and sufficient. Without these basic data, it becomes very difficult, for example, to accurately calculate the amount that the Government loses annually through non-filing, under reporting and late remittance.\par
VAT-retail trade in Nigeria is incredibly large but substantially informal. VAT collection at this stage is bound to be a logistical nightmare; this situation does not provide much input to policy process.\par
The Nigerian economy to a large extent is dominated by a good number of informal sectors. In fact, income from the self-employed or informal sector activities is grossly unexploited. Inefficiency in tax collection mechanism poses a big problem. That is the reason that makes the quality of their tax collection systems weaker than is the case with more developed economies. The consequence of such is that the economy continues to lose huge amount of revenue through the unwholesome practice of tax avoidance and remittance.\par
IV. 
\section[{The Way Forward}]{The Way Forward}\par
Tax authorities need to be meticulous in ensuring remittance of all Vat revenues. If possible there could be a legislation that will authorise FIRS to look into account books of all vatable organizations account books .The books are a lot more revealing of the true cash flow of organisations than audited reports that are largely manipulated. It is only such legislation that will enable them get the real position of various firms.\par
The global world is a digital world. Computer acquisition is a priority to efficient tax system. Computer technology can help in developing a master file system. There is every need to introduce efficient computer technology. Such must be combined with the political will to enforce tax collection if it is to yield potential for greater revenue. Enforcement procedures are crucial in increasing revenue. Technology without accompanying enforcement procedures will not help in increasing revenue. With all these advanced technology, the System is able to detect potential avoiders and sanction them. From all indications, there is every need to improve the collection pattern and maximize tax\par
revenue. An answer to this lies with availability of honest and capable tax administrators Revenue officials should display good example and as well be responsible. Tax authorities should recruit well trained and honest personnel to handle tax matters. The remuneration accrue to tax officials should be enhanced so as to enable them live above poverty line and resist all tempting offers from citizens.\par
We cannot advance meaningfully if we, as a nation fail to foster respect for law and a feeling of common purpose and joint obligations towards a common goal. Firm and reliable corporate governance is recommended. Lapses in the system could be credited to poor and inexperienced staffing of the taxcollecting organisation, poor funding, bad access road to the interior of the rural areas, poor enlightenment and many more. An urgent need to address these weaknesses is a positive move.\par
Tax education is a necessary tool to engender the citizens to carry out their obligations voluntarily. To achieve this, there is need for periodic education of staff of Federal Inland Revenue Service, Economic and Financial Crime Commission and Joint Tax Force on Taxation. There should be functional VAT offices in every council area to coordinate a vigorous campaign to educate people and seek their cooperation. This without reservation will erode the negative attitude that some of the consumers have developed towards VAT.\par
We further recommend an establishment of operational vat tribunal as a matter of urgency. This tribunal will mete out punishment relating to tax evasion and similar offences as soon as such cases are established. The knowledge of the existence of such a Special Tribunal would make defaulters change their behaviour.\par
Vat revenue ought to be disbursed for specific development programmes that will impact on the lives of the citizenry. Channelling the revenue accruing from VAT into areas such as the education and Health sectors will definitely benefit the masses.\par
Proceeds from VAT must be retrieved .The burden is on the Government to make adequate plan towards such.\par
Government will keep losing the revenue that ordinarily will come from VAT if there is no business data. There is need to embark on business enumeration in each state with a view to having data base on business.\par
V. 
\section[{Conclusion}]{Conclusion}\par
The escalating revenue loss being experienced in Nigeria is mind bogging. There is embezzlement of government revenue, if it is not billions in subsidy rip-off; it is in tax evasion or no remittance of VAT deductions by organisations. The experts in economy have observed that more than 50\% of collectible revenue was lost annually in Nigeria due largely to inefficiencies in the tax system VAT inclusive. The custom has always been to pour invectives on the leaders with less consideration on the poor masses. As a direct consequence of this attitude of government, a good number of Nigerians are equally unresponsive to public concerns. The big question is how has this state of affairs rubbed off on the economy? The result of lack of commitment is evident in the lack of a healthy tax system which makes the rudiments of our economy fragile. This development has contributed to the inability of the government to raise sufficient revenue that should guarantee the provision of adequate infrastructure for the citizens. (Babangida 2012).\par
The Nigerian tax system comprises the laws governing the tax administration. There is every need for the nation to carry out a detailed, honest and comprehensive reform of the tax system including that of value added tax, to ensure the emergent of a system that will plug all the loopholes in the current tax system and ensure meaningful revenue generation through taxation in the country. The success of the scheme will contribute positively to the attainment of economic goals of the nation and as such enhance the social and economic well being of all Nigerians. Observations suggests that there is social disconnect between the people and their government presently, the new tax reform will positively address this.\par
To a large extent, most developing countries will always have need for supports from its taxed Environment. Nigeria therefore requires not just enforcement of tax law alone to bring compliance. Other factors also count, better supervision in the part of tax authorities, more demand for transparency and introduction of incentives for officials that excel in meeting as well as exceeding tax collection targets. Gaps exist in the administration of the tax especially in the Provision of the VAT laws and practice. This has to be corrected.\par
Due to poor economic activities and general poverty index in the country, when people are not highly motivated salary wise there will be no self actualization, one may not be encouraged to put in his best in the performance of a given task. Conditions beyond their control compels them take bribe. Government officials especially politicians should not just be concerned about their own jumbo salary but that of other workers in the economy.\par
Can the expectations of VAT be realized in Nigeria? The answer is yes if VAT receives the cooperation of tax collectors. If, however people evade tax colluding with tax collectors, no meaningful achievement would be made. \begin{figure}[htbp]
\noindent\textbf{11}\includegraphics[]{image-2.png}
\caption{\label{fig_0}11 ©}\end{figure}
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\noindent\textbf{12}\includegraphics[]{image-3.png}
\caption{\label{fig_1}12 Value}\end{figure}
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\noindent\textbf{} \par 
\begin{longtable}{P{0.85\textwidth}}
2013\\
ear\\
? Infant food items; ? Books, newspapers and magazines; ? Educational materials (laboratory equipment); ? Baby products such as carriages, clothes and napkins, as well as sanitary towels; ? Commercial vehicles and spare parts, tractors, public transport passenger vehicles, motorcycles, tanks and other armoured fighting vehicles, and bicycles; ? Agricultural equipment such as those for soil preparation or cultivation, harvesting or threshing, milking and dairy machinery, and poultry keeping machinery; ? Veterinary medicine equipment; and ? Fertilizers and farming transportation equipment. ? All imports are VAT able, whether imported raw materials or finished goods. The Value Added Tax is imposed on the net sales value of non-exempt, qualifying goods and services in Nigeria. It is levied on any individual, corporation sole, group, body corporate or organization that consumes buys, procures or imports taxable goods or services. Y ( )\end{longtable} \par
  {\small\itshape [Note: ? Medical and pharmaceutical products; ? Basic food items such as peas, beans, yam, cassava, maize, rice, wheat, milk and fish; C services were]} 
\caption{\label{tab_0}}\end{figure}
 \begin{figure}[htbp]
\noindent\textbf{1} \par 
\begin{longtable}{}
\end{longtable} \par
 
\caption{\label{tab_1}Table 1 :}\end{figure}
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