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This is the complete lecture note for ACC 305 Taxation I. You can read it online below, open it in the full viewer, or download the PDF for offline study. It pairs with the course's video lectures, so you can read and watch together.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS COURSE CODE:ACC 305 COURSE TITLE: Taxation I COURSE UNIT LOAD(3 Units C: LH 30; PH 45) SERIES LIST Series 1: Principles and Concepts of Taxation Series 2: Administration of the Nigerian Tax System Series 3: Tax Procedures and Compliance Series 4: Personal and Employment Income Taxation Series 5: Taxation of Business, Investment, and Trusts SERIES 1 Principles and Concepts of Taxation #### Series outline Part 1.1: Objectives and Types of Taxation 1.1.1 Objectives of taxation 1.1.2 Types of taxation Part 1.2: Principles of Taxation 1.2.1 Canon of taxation 1.2.2 Equity and efficiency in taxation 1.2.3 Modern principles of taxation Part 1.3: Basic Concepts of Taxation 1.3.1 Tax base and tax rate 1.3.2 Direct and indirect taxes 1.3.3 Progressive, proportional, and regressive taxation Part 1.4: Overview of Nigeria’s Tax Policy Framework 1.4.1 Revised National Tax Policy, 2017 1.4.2 Tax Identification Number (TIN) 1.4.3 Voluntary Assets and Income Declaration Scheme (VAIDS) Introduction Taxation is one of the oldest instruments of governance, and it remains central to the functioning of modern economies. Every society requires revenue to provide public goods and services, and taxation is the most reliable means of achieving this. For learners of taxation, it is important to first grasp the principles and concepts that underpin the system before moving on to its administration and application. This Series therefore lays the foundation for your study of Taxation I, helping you to appreciate why taxes are levied, how they are structured, and the guiding principles that make them fair and effective. The aim of this Series is to introduce you to the objectives, types, principles, and basic concepts of taxation, while also familiarising you with Nigeria’s tax policy framework. We shall commence this Series by examining the objectives and types of taxation, which will help you understand the reasons governments impose taxes and the different forms they take. Next, we will explore the principles of taxation, focusing on the canons and modern principles that ensure equity and efficiency. Following that, we will move on to basic concepts such as tax base, tax rate, and the distinctions between direct and indirect taxes. Finally, we will conclude with an overview of Nigeria’s tax policy framework, including the Revised National Tax Policy of 2017, the Tax Identification Number system, and the Voluntary Assets and Income Declaration Scheme.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Series learning outcomes – Series 1: Principles and Concepts of Taxation By the end of this Series, you should be able to: SLO 1.1: Define the objectives of taxation and explain the different types of taxes. SLO 1.2: Analyse the principles of taxation, including the classical canons and modern principles of equity and efficiency. SLO 1.3: Distinguish between key concepts such as tax base, tax rate, direct and indirect taxes, and progressive, proportional, and regressive taxation. SLO 1.4: Evaluate Nigeria’s tax policy framework, including the Revised National Tax Policy of 2017, the Tax Identification Number system, and the Voluntary Assets and Income Declaration Scheme. ## 1.1 Objectives And Types Of Taxation ### 1.1.1 Objectives of taxation The **objectives of taxation** are the reasons governments impose taxes. Taxes are not only a means of raising revenue, they also serve wider economic and social purposes. The primary objectives include: - **Revenue generation**: Providing funds for public goods and services such as education, healthcare, and infrastructure. - **Redistribution of income**: Reducing inequality by taxing higher earners more and using the revenue to support social programmes. - **Economic stabilisation**: Using taxation to control inflation, encourage investment, and regulate consumption. - **Encouragement of certain behaviours**: For example, tax incentives may promote savings or investment, while higher taxes on harmful goods discourage their use. Fill in the blank: One of the main objectives of taxation is __________ generation for public services.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Short description: Diagram showing the objectives of taxation such as revenue generation, redistribution, stabilisation, and behavioural influence. Caption: Figure 1.1 Objectives of taxation --- ### 1.1.2 Types of taxation The **types of taxation** describe the different forms taxes can take. They are generally classified into: - **Direct taxes**: Levied directly on individuals or organisations, such as personal income tax or company tax. - **Indirect taxes**: Levied on goods and services, such as value added tax (VAT) or customs duties. - **Progressive taxes**: Where the tax rate increases as income increases, ensuring fairness. - **Proportional taxes**: Where the tax rate remains constant regardless of income level. - **Regressive taxes**: Where lower-income earners pay a higher proportion of their income compared to higher earners, often seen in consumption taxes. Fill in the blank: Taxes levied directly on individuals or organisations are called __________ taxes.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Caption: Table 1.1 Types of taxation Short description: A table listing direct, indirect, progressive, proportional, and regressive taxes with examples. --- ###### Pilot questions 1.1 1. State one objective of taxation. 2. Which type of tax is levied on goods and services? 3. What type of tax increases as income rises? 4. Name one way taxation can be used to encourage certain behaviours. 5. Which type of tax is considered unfair to lower-income earners? ## 1.2 Principles Of Taxation ### 1.2.1 Canon of taxation The **canon of taxation** refers to the classical principles laid down by Adam Smith in his work *The Wealth of Nations*. These canons are considered the foundation of tax systems and include: - **Equity**: Taxes should be fair, with individuals contributing in proportion to their ability to pay. - **Certainty**: Taxpayers should know how much tax they owe, when it is due, and how it will be collected.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS - **Convenience**: The method and timing of tax payment should be convenient for taxpayers. - **Economy**: The cost of collecting taxes should be minimal compared to the revenue generated. Fill in the blank: According to Adam Smith, one of the canons of taxation is __________, which requires that taxes be fair and proportionate. Caption: Box 1.1 Classical canons of taxation Short description: A boxed summary of Adam Smith’s four canons of taxation. --- ### 1.2.2 Equity and efficiency in taxation The principle of **equity in taxation** means that taxpayers should contribute according to their ability to pay. This ensures fairness and reduces inequality. Equity can be horizontal, where people with similar incomes pay similar taxes, or vertical, where those with higher incomes pay proportionately more. The principle of **efficiency in taxation** refers to designing tax systems that raise revenue without distorting economic decisions. Efficient taxes minimise negative impacts on work, savings, investment, and consumption.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Fill in the blank: Equity in taxation can be classified into __________ equity and vertical equity. Short description: Diagram showing equity and efficiency principles in taxation. Caption: Figure 1.2 Equity and efficiency in taxation --- ### 1.2.3 Modern principles of taxation Beyond the classical canons, modern principles of taxation have evolved to reflect contemporary needs. These include: - **Flexibility**: Tax systems should adapt to changing economic conditions. - **Simplicity**: Taxes should be easy to understand and administer. - **Neutrality**: Taxes should not favour one sector or activity over another. - **Productivity**: Taxes should generate sufficient revenue to meet government needs. - **Elasticity**: Tax revenue should grow with the economy. Fill in the blank: A modern principle of taxation that requires tax systems to adapt to changing economic conditions is called __________.
LA-NET | ONLINE LEARNING VIDEO PLATFORM FOR POST-SECONDARY & HIGHER INSTITUTION STUDENTS Caption: Table 1.2 Modern principles of taxation Short description: A table listing modern principles of taxation with brief explanations. --- ###### Pilot questions 1.2 1. List Adam Smith’s four canons of taxation. 2. Which principle ensures that taxpayers know how much tax they owe and when it is due? 3. What is the difference between horizontal and vertical equity? 4. State one way taxation can be efficient. 5. Mention one modern principle of taxation. ## 1.3 Basic Concepts Of Taxation ### 1.3.1 Tax base and tax rate The **tax base** refers to the total amount of income, wealth, or transactions that can be taxed. It is the foundation upon which a tax is levied. For example, in income tax, the tax base is the taxable income of an individual or company.
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