ABSTRACT

The major sources of the total foreign exchange accruing to out country comes form oil Beanies which everyone is undoubtedly aware has declined considerably. Consequently there has been a fall in the federation account. It then means that a state such as Enugu state with its major recurrent revenue emanating from its share of federation account will invariably intensity its efforts at internal revenue generation.
Except other non-oil revenue sources are vigorously tapped a bleak economic future is imminent revenue generating exercise are difficult in normal times to accomplish because increase in taxes levies as revenue base are sensitive issues. During economic recession the task is doubled the need to evade civil duties become stronger instead of performing the civil responsibilities.
The researcher saw the need to increase and improve on internal revenue generating effort in the state particularly as Enugu state is a case of worry to everybody in this period of economic recessive bondage and austerity. Enugu state government had in the past made attempts to reform its internally generated revenue base. For example it made some attempts in properly development (Ebeano housing) Transportation business (Entraco) Enugu international market near 9th mile etc but these reform attempts have not yielded the desired result.
In the study new suggestion have been made to study the problem and make some vital recommendation.
Chapter one of the study is the introductory part of the topic. It deals with historical background of taxation in Enugu state importance of taxation in Enugu state, statement of problems purpose of study significance of the study statement of hypothesis scope and limitation of the study and finally definition of terms.
Aware of the fact that some individual have made meaningful contributions by way of write-ups a critical view has been taken in chapter two which reviews those contribution works. Therefore this chapter is titled reviews of related literature. It deals with theoretical review of the contributions so far made by some individuals towards improving revenue generation evaluation of taxation system object of taxation and finally types of taxes.
Chapter three treated research design and methodology sources of data sample frame sample size sample type pilot, study methods of investigation and finally limitation of the methodology.
Chapter four deals with presentation and analysis of data collected in the course of conduct of the sample survey analysis of generated revenue from taxes collected by board of internal revenue for the past three year (2003-2005) and finally analysis of problem of taxation and revenue collection in Enugu collection in Enugu state.
The last one is chapter five which deals with conclusion recommendation for improvement and reformation of tax system for optimum revenue generation in Enugu state to meet up with the rising recurrent expenditure.

CHAPTER ONE

INTRODUCTION 
There is an adage which says that a wounded lion has no weapon expect itself. It fights with its entire strength until it defects its foe. This adage may be likened to the case of some state government now with their likely revenue generation difficulties.
It is an established fact to everybody that the time of economic boom popularly nicknamed “oil boom” is completely gone thereby there is need for increase drive for revenue generation. Most states have intensified their efforts for collection of taxes so as to supplement or argument whatever they receive from the federal government as their own revenue allocation.
The argumentation of the federal government revenue allocation through the imposition of taxes on taxable individual commodities etc. where such taxes are efficiently managed and executed will assists the state government eschews the shackles and fetters of economic excessive bondage which is the main problem disturbing the increase standard of living of the individuals it is therefore the aim of this study to critically examine and apprise tax system as an instrument of revenue generation in Enugu state. The study is equally aimed at finding the pervading problem thereafter a well planned recommendation for the reformation of taxation system.
Since this study focuses on the need for increase revenue drive in the state appraisal of problem militating against such option of revenue generation and its prospects for reformation there would be some consideration of the historical background of taxation in Enugu state and the significance of taxation in the introductory chapter.

1.1 HISTORICAL BACKGROUND OF TAXATION IN ENUGU STATE 
The aim of this resaerch is an attempt to appraise the efficiency and effectiveness of tax as an instrument if revenue generation in Enugu state and probably recommended prospects for its reformation.
It is necessary to recall that originally Enugu state which again was one of the states carved out of the formers Eastern region. Enugu state rightly was carved out form Anambra state in 1991. it was a known fact form history that Eastern region was the last to accept and fall to the regulations and laws of the tax system introduced by the colonial master that canonized Nigeria then.
In Nigeria there were many forms of taxation right from the day of our great grandfather whereby communities taxed themselves through communal labour to execute community projects or to assists to ward-off aggression or attack some kind of evil from outside the community.
The first from of formal taxation in Nigeria was community tax. It was introduced in 1940 by Lord Lugard. It replaced community homage paid usually in kind and by service to the village and clan heads.
After 1904 there were other taxation ordinances the most important one was that of 1917 ie. Native revenue ordinance that applied specifically in the Northern Nigeria. That native revenue ordinance later extended in 1918 to Southern Nigeria. (Abeokwuta) and in 1928 a modify form of native revenue ordinance came into existence in the then eastern Nigeria. The said modified from of native revenue ordinance brought about enornmous dissatisfaction and was treated with object rejection which later culminated to the famous 1929 Aba women’s Riot.
In 1937 however there was the enactment of the native direct tax ordinance for Nigerians and a colony tax ordinance for then Europeans and companies.
In 1940 and 1943 the foundation of our modern tax laws laid down despite that they lacked uniformity among regions with the introduction of federalism application of 1940 direct tax ordinance because a regional affair. The ordinance empowered regions to tax their people according to local government system.
In 1954 consequent upon the introduction of Nigeria (constitution) order in councils each region was empowered to tax all Africans resident within the region or his income that occurs in the region swiftly eastern region acted on this power by replacing direct taxation ordinance and inrtdouced financial law cap 53 of 1956 which became effective and operation form 1st April 1956. 
Finance law cap of 1956 bore pay-as – you-Eam (PA.YE) system of tax collection.
In 1958 there was the Rieasman Fiscal commission which was set up by the outgoing colonial administration recommended among other introduction of basic principles of personal income tax throughout Nigeria. The recommendation which was embodies in the 1960 Nigeria constitution formed the basis of the income tax management act 1961. that order-in-council brought non African with the regional tax set up.
In 1962 Eastern Nigeria passed a finance law to complete the Act of 1961. the purpose of that 1962 financed law was to fill the gap in the 1961 act especially those aspects which the federal legislature could not legislate on. For instance machinery for collection assessment and appeal machinery rate of tax. The law was made retroactive from 1st April 1961 even though it was passed in 1962 to agree with the management act 1961.

1.2 IMPORTANCE OF TAXATION IN ENUGU STATE 
Tax is a compulsory levee imposed by government on eligible individuals and business firms and paid by them to the government. It is a special king of payment in that it is compulsory and benefit for its payment do not necessarily correspond (in magnitude) to the amount of tax paid.
Income tax is one of the major sources of revenue of all government in Nigeria. It is a factor to be reckoned with in all the state of the federation and Enugu state inclusive. Taxes collected come back to the tax-payers in the form of social amenities. Just as individual must be earn income in order to meet their expenditure. Likewise is the government must raise revenue in order to finance its expenditures.
Taxation is an all pervading subject which attests the life of nearly everybody and no major accounting or algal problem can be satisfactorily solved without a consideration of its aspects.
Taxation can be used to redistribute income. This is achievable by making taxation progressive rather them regressive. Progressive taxation means that the higher one receives the more that persons tax will be this inventible helps to bridge the inequality of income gap.
Taxation acts as an instrument in protecting instant indsutries so as to discourage importer who desires to be importing products that are being provided by the infant indsutries.
Through imposition of taxation on such goods it undoubtedly encourage the development of raw materials and helps the infant industrial to wax stronger.
In the research it is my intension to evaluate and analyze the efficiency of taxation as a revenue generation. After the consideration of the above benefits and the purpose of taxation the researcher extracts some probable problems that hinder smooth operation of tax thereafter some prospects for its reformation can be recommended.

1.3 STATEMENT OF THE PROBLEM TAX EVASION
Tax evasion is one of major problems that hinder the maximum collection of tax it is as attempt to escape tax liability (wholly or partially) by breaking the tax it is essentially therefore a criminal act since it is achieved principally by making false declaration such as Linder reporting income or over reporting relief’s and allowance.
Tax avoidance: Tax avoidance is also another aspect of problem that affect tax collection as revenue generation it is an attempt to escape tax liability by circumventing the law not breaking it.
However even though the tax evade have a similar end that is to escape tax liability them means to achieve their aim differ. The tax evader is smart tax payer who exploits loopholes in tax laws and related laws to reduce his tax liability.
Tax delinquency or tax default: This is a situation in which a tax paper refuse ton one reason or the other to pay his assessed tax in full and/or in time.
There are other problems that obstruct efficient taxation system in Enugu state (improper revenue collection method. Manpower and other facilities shortage). Tax evasion is due principally to administrative ineffectiveness Enugu state government tend to be relatively unwilling to provide increase and adequate resources for its tax collecting machinery. Yet one of the major determinates of the effectiveness tax administration is volume of resources at its disposal. There is the prevalence of bribery and corruption. This is a factor which tends to negate attempts at controlling evasion and which introduced a certain perversion into the aims and process of tax investigation by officials.
Consequently, it deprives the state government of the tax due to it thereby giving rise to the reduction in revenue generated. Equally, it will create adverse effect because the amount available to provision of necessary social and economic activities will also reduce resulting in the state government being liable to provide the citizens with those basic necessities of life.
When this problem becomes obvious government will therefore look out for alternative means of raising revenue externally e.g by borrowing to cope with the necessary social and economic activities. 
Sourcing revenue through external means like borrowing has its own problems because the borrowed money must be repaid with the accrued interest.
Having stated the problem associated with revenue generation in Enugu state the recommend prospects for their reformation in order to enhance efficient taxation system and optimum revenue generation from tax it is pertinent to look at the purpose of the study.

1.4 PURPOSE OF THE STUDY 
The sole purpose of the researcher is to appraise and investigate on the possible factors which undoubtedly are the main constraints that hinders the efficiency of tax system which ought to be a powerful tool for revenue generation in the state. For this objective the study identified and established the existence of tax evasion, tax avoidance tax delinquent or tax default in the state shortage of manpower and facilities in the board of internal revenue , Enugu state causes of tax evasion and avoidance analyzing the revenue generated through taxes in the state and recommend possible avenues for improvement towards efficient tax system and prospects for its reformation.

1.5 SIGNIFICANCE OF THE STUDY 
The significance or relevance of this study or what it is intended to achieve is to enable anybody that is interested groups on government to have in-depth knowledge of the factors that are detrimental to the smooth operation of tax matters and its resultant effects on the optimal revenue collection in the state.
In like manner member of the public as the major tax payers will find the study beneficial for the information contained and explained therein will enlighten then on the great imprtoance of proper tax payment and the effects of its non payment the research will be of immeasurable assistance of future researcher as well as those interested in tax matters Adherence to the corrective steps and recommendations for reformation steps and recommendations for reformation will improve the efficiency of tax system in the state.

1.6 STATEMENT OF HYPOTHESIS 
Hi: Taxation: A system of generating revenue is not faulty therefore 
maximum revenue is generated from taxes in Enugu state.
Ho: Taxation A system of generating revenue is faulty in Enugu satte due 
to its high level of tax evasion and other problem against maximum revenue generation

1.7 SCOPE AND LIMITATION OF THE STUDY
This research is restricted to sources Enugu state government as power to generate revenue through taxes and outside the scope of this study are petroleum profit tax companies income tax other taxes that are within the jurisdiction of the federal government. Equally it will cover the operations of the board of internal revenue the problems hindering its efficiency causes of tax evasion and avoidance in the state as well as their impact on revenue generation with particular reference to the following reason for tax evasion and avoidance how they are carried out contributions of tax official in avoiding tax evaders problem of tax administration machinery and extent of revenue generated.
Recommendation are base on the limitation of the study particularly its sample size. The survey was limited to some selected areas of the state. The data collected were used as parameter for other areas not covered by the survey. It was a few selected civil servants and privately empowered ones that were used as the variables in the study to treat the cause of tax evasion.

1.8 DEFINITION OF TERMS 
According to oxford advanced learner’s dictionary tax is defined as contributions levied on persons according to income property or business fro support of government for its public purpose.
Mr. D.A Olrunleke director of the federal board of inland revenue in his article in the business times of May 27th 1985 titled “taxation in Nigeria prospect for reform” defined taxation as the “process or machinery by which communities or group of persons are made to contribute part of their income in some agreed quantum and method for the purpose of the administration and development of the society”2
According to Arepyie Oyebola in his book a modern approach to economics of west Africa defined tax as “money raised by the government in order to provide the services and basic needs which the citizen of a country expect form the state”3 
Tax therefore is a compulsory payment from income and other earning of both the residents and non-residents who receive drive bring into or accrued income from a defined territory.

REVENUE DEFINED 
According to oxford advance learners dictionary revenue is defined as “income especially of large form any sources state “annual income form which public experiences are met”4
Koleade Oshisani in his book government accounting and financial control principles and practice defined revenue as “receipt form taxation as well as those which are not the proceed of taxation but of either the realization form sale of government property or form interest and returns from loan and investment or earnings form user charge”5
TAX EVASION AND ACCIDENCE 
Tax evasion is a fraudulent effort by a tax payer to escape the legal tax obligation and such act is direct violation of the tax law. Tax evasion is a criminal act.
Tax avoidance is a process whereby a tax payer can without violating any tax law arrange his affairs in such a way that the pays little or no tax.
The tax payer can accomplish this in the short run through the use of loopholes in existing tax laws to avoid paying tax but in the long he accomplishes this influencing tax laws through lobbying and pressure groups which represent the special interests of the tax payers.
The distinctive features between tax avoidance are tax evasion is unlawful and it is a criminal wrong while tax avoidance is lawful.