10,000 3,000

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1.0 Introduction
1.1 Background to the study
The political, economic and social development of any country depends on the amount of revenue generated for the provision of infrastructure in that given country. According to AZUBIKE (2009), tax is a major player in every society of the world. The Nigerian tax system is lopsided and dominated by oil revenue. According to Statistics from the Central Bank of Nigeria (2000), oil and gas exports accounted for more than 98 percent of export earnings and about 83 percent of federal government revenue, as well as generating more than 40 percent of its GDP. It also provides 95 percent foreign exchange earnings. Therefore, a highly lucrative means of generating the amount of revenue needed for providing the necessary infrastructure for our country through tax is no doubt through a well-structured tax system.
According to the Presidential Committee on National tax policy (2008), the central objective of the Nigerian tax system is to contribute to the well-being of all Nigerians directly through improved policy formulation and indirectly though appropriate utilization of tax revenue generated for the benefit of the people. Over the years our tax system has not been able to reach these perceived objectives as a result of some setbacks and challenges some of which include lack of stewardship amongst tax payers, multiplicity of taxes, complex tax payment system and tax offsetting, lack of technological exposure, tax evasion, corruption, government instability which instigates noncompliance with relevant tax laws, poor information base and record keeping etc.
Technology is influencing our lives and continues to change the way we do things from the simple day to day activities to the complex and less routine task. The impact of technology can be felt in every area of our lives such as education, entertainment, communication, commerce including taxation. Information Technology (IT) is a very crucial component of tax administration reform as it enables tax administrators to better gather and analyze information, to proactively manage workload and resources, to foster a co-operative engagement with taxpayers and to standardize the treatment of tax payers and thus facilitate the uniform application of the law (USAID leadership in public financial management). The use of IT to aid tax administration is the initiative that gave birth to the now popular E-tax system today
The integration of information technology in tax administration in the form of E-tax known as electronic taxation has proved to be a master tool in combatting the challenges of any tax system as it provides information, education and support to tax payers and facilitates compliance and administration. It basically involves the automation of core tax processes. The E-tax systems are often thought of solely as IT support to taxpayer services. It should be clear, however, that E-tax systems do more than provide information, education, and assistance to taxpayers due to its unique components such as electronic registration and filling, automatic updates of taxpayer information etc. It also guarantees reduced cost of administering taxes. According to the World Bank and PwC Paying Taxes Report 2013, sixty six economies had fully implemented electronic filing and payment of taxes as at 2010.Also, twenty of them adopted the system in the past seven years.,..

1.2. Statement of the Problem
The Nigerian tax system which is made up of tax policy, laws and administration has faced so many challenges over the years which have brought about inefficiency and increased administrative cost. The amount of revenue to be derived from taxation in every nation is completely dependent on the tax system put in place. This probably influenced the decision of the Federal Government of Nigeria (FGN), which in 1991 set up a Study Group on the Review of the Nigerian Tax System and Administration so as to optimize revenue from various tax sources In a FIRS press release, it was reported that approximately 12 billion naira traditionally vanishes into the pocket of individuals not to mention the problems of complexity of payment, unavailability of tax statistics and information, and also poor technological exposure on the part of both tax payers and tax authorities.
The introduction of E-tax has done more good than harm since its adoption into the tax system. The system as practiced by other countries such as Malaysia, Slovenia, Germany, America and so many others has helped reduce time to comply with the 3 main taxes(profit, labor and consumption) as well as provided reliable and accurate tax statistics. The Joint Tax Board, the Federal Inland Revenue Service and some State Internal Revenue Service have or are in the process of implementing electronic tax systems. Whilst the initiative is commendable it is important to note that there are expected challenges facing the adoption of this system that could put a strain on the already flawed tax system.
E-tax when if administered properly can be the solution to the irregular tax system in operation in Nigeria. Hence the aim of this study is to evaluate the benefits of e-tax and proffer it as a solution to the Nigerian tax system.
1.3 Research Objectives
The aim of this study is to analyze and evaluate the draw backs facing the legal tax system prevailing in our country and combat these challenges with a well-structured electronic tax system. The goals of this research work are as follows;
 To identify and understand the weaknesses of the traditional tax system in Nigeria
 To evaluate and analyze E-tax, its origin and benefits over the years and proffer it as a solution to the traditional tax system

 To highlight the challenges and risks of adopting an electronic tax system in the country
 To suggest ways to overcome these challenges so as to achieve positive changes in the traditional tax system which will lead to overall increased returns and tax efficiency.
1.4 Research Questions
 What are the events that led to the questioning of the prevailing tax system in Nigeria?
 What are the challenges that have been identified and traced to the traditional tax system on account of the events above?
 What is E-tax all about and to what extent has it benefited other economies on its adoption?
 What are the expected challenges of E-tax in its bid to eliminate the challenges observed in the traditional tax system in Nigeria?
 How can we overcome these challenges and create a good E-tax system that will improve the effectiveness and efficiency of the traditional tax system in Nigeria?
1.5 Research Hypothesis
The hypothesis on which this study is based is stated in the null and alternative form as follows;
i. H0; There are no problems with the traditional system of taxation in Nigeria
H1; there are problems with the traditional system of taxation in Nigeria
ii. H0; The adoption of E-tax will not provide significant solution to the identified problems with the traditional system

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