(2) in order to regulate a particular activity or
(3) for the purpose of imposing penalties.
In some cases--such as many user charges, admission fees, and some regulatory fees--the
payment is closely linked to the cost of providing a particular service to an individual
beneficiary or regulated party. In other cases--for example, certain environmental or
regulatory fees--the payment may not be directly related to the costs associated with
particular participants, but more loosely related to a discrete group of participants or an
industry. In some situations, the payment may not relate to direct regulation per se, but
rather to broad social costs associated with particular activities--for example, environmental
mitigation fees. Ideally, some link must exist between these payments and the related cost to
governments in order to avoid it progressing to a "tax." Fees or charges must be based on
some established relationship between the amount of the payment, on the one hand, and
the costs associated with the regulation of an activity or the provision of a good or service,
on the other. Similarly, penalties must be considered reasonable given the specific incident
of noncompliance. If a sufficient relationship, or "nexus," is not established between the fee
and costs of provision or regulation, the charge is considered a tax. This is an area for which
legislation is required to conclusively make this distinction.
An example of this difference lies in the distinction between the tenement rate and the
property tax. They are not and should not be confused as one and the same thing.
Tenement rates are typically linked to charges by the local authorities for the provision of
public services to residential dwellings including multi storey, multi flat dwellings with multiple
owners which may be owner occupied or rented. Property tax on the other hand is a tax
based on the value of a house or other property. In Nigeria, the constitution provides for
tenement rate, while Property tax is still a new concept in the tax system. Similarly, there is
scope to have Environmental taxes, fees, charges or fines, none of which exist today.
in conclusion, the National Tax Policy recognises that the Federal Government through the
National Assembly is empowered exclusively to impose taxes on incomes, profits and capital
gains and on documents of corporate organizations and governments (stamp duties), while
each State Government is empowered to collect those taxes from individuals resident in their
respective States as may be determined by the National Assembly. The taxes imposed by
the Federal government include Companies Income Tax, Personal Income Tax, Education
Tax, Petroleum Profits Tax, Capital Gains Tax, Value Added Tax and Stamp Duties. Apart
from income taxes, State Governments, through their Houses of Assembly are also