Tax Compliance Expenditure and Personal Income Tax Generation in Nigeria
Abstract
The study evaluated the implication of tax compliance expenditure on personal income tax in Nigeria from 1981 to 2021. The study employed taxpayer education, law enforcement, technology adoption, taxpayer service, and legal support as proxies for tax compliance expenditures. Secondary data were collected from the Central Bank of Nigeria Statistical Bulletin and the Federal Inland Revenue Service annual report. The analytical techniques used include stationarity, Johansen's co-integration, error correction estimations, and Granger causality tests. The study observed that taxpayer education is observed to be significant at first lag with a negative relationship with personal income tax in Nigeria. Law enforcement displayed at the current level, a positive and significant influence on personal income tax. Technology adoption demonstrated a positive but insignificant influence on variations in personal income tax as a government tax revenue collection indicator in Nigeria. Taxpayer service showed a positive and insignificant influence on Personal income tax in Nigeria. Legal support has at current and first lags positive and significant influences on Personal Income Tax. Despite the unexpected negative sensitivity of Personal Income Tax to taxpayer education, it is crucial to continue investing in educational initiatives. However, these efforts should be tailored to address specific barriers to compliance. Conducting targeted educational campaigns and workshops could help bridge the gap between taxpayer education and actual compliance. Recognizing the positive impact of law enforcement on Personal Income Tax, there is a need to strengthen legal and regulatory frameworks. This includes improving the enforcement of tax laws and ensuring that legal measures serve as reliable collateral for tax revenue. Policymakers should consider initiatives to enhance the capacity and effectiveness of law enforcement agencies in dealing with tax-related matters.
Downloads
References
Abudul, F & Wong’ ombe, D. (2018). Tax costs and tax compliance behaviour in Kenya. Journal of Accounting and taxation, 10(1),1-18.
Adegboye, A.C., Alao-Ownna, I. &Egharevbu, M.I.(2018). Business characteristics, tax administrator and tax compliance by SMEs in Nigeria. Oradea. Journal of Business and Economics, 3(2),7-17
Ahmed, A. &kadir, S. (2015). Tax compliance and its determinant the case of Jimma zone, Ethiopia. International Journal of research in Social Sciences, 6(2),7-12
Akhiwu, W., &Enabunene, S. (2021). Exploring the Determinants of Tax Compliance in Nigeria. Journal of Economic Studies, 48(2), 453-471.
Alade, S., Abiola, J., & Afolabi, G. (2020). Tax Compliance and Small and Medium Enterprises in Nigeria. African Journal of Economic and Management Studies, 11(1), 23-41.
Aladejebi, O. (2018). Measuring tax compliance among small and medium enterprises (SME) in Nigeria. International Journal of Accounting and Taxation, 6(2),29-40
Alasfour, F.(2019). Costs of distrust: The virtuous cycle of tax compliance in Jordan. Journal of Business Ethics, 155(1),243-258
Alm, J., & McKee, M. (1998). Extending the lessons of laboratory experiments on tax compliance to managerial and field settings. Academy of Management Review, 45(2), 171-180.
Alm, J., Sanchez, I., & De Juan, A. (2020). Economic and noneconomic factors in tax compliance. Journal of Economic Psychology, 56, 141-159.
Assfaw, A.M. & Sesha, W. (2019). Analysis of tax compliance and its determinants: Evidence from Kaffa, Bench Moji and Sheka, zones category B taxpayer. SNNPR, Ethiopia. Journal of Accounting, Finance and Auditing Studies, 5(1),32-58
Brooks, C. (2014). Introductory Econometrics for Finance. Cambridge University Press.
Dasilva, F.P., Guerreiro, R. & Flores, E. (2019). Voluntary versus enforced tax compliance: The slippery slope framework in the Brazilian context. International Review of Economics, 66(2), 147-18
Edori, D.S. Edori, I.S. &Idotara, A.R.(2017). Issues and challenges inherent in the Nigerian tax system. American Journal of Management sciences and Engineering, 2(4),52-57
Eriksen, K & Fallah, L. (2016). Tax knowledge and attitudes towards. A report on a quasi experiment: Journal of economic psychology, 17(2),387-402
Feyitimi, O. & Yusuf, S. A. (2014). The level of the effectiveness and efficiency of tax administration and voluntary tax compliance in Nigeria: A case study of the Federal Inland Revenue Service. Research Journal of Social Sciences & Management, 3(18), 44-58.
Hite, P. &Hasseldine, J. (2019). A primer on tax education in the United States of America. Accounting Education, 19(1),3-13
Ibrahim, A., & Alkali, N. (2020). A Study of Tax Compliance in Nigeria. International Journal of Business and Social Research, 10(1), 10-23.
Jamel, L. Michael, W. (2021). Ethics, norms and tax compliance. Journal of economics Psychology. Research school of social sciences. Australian national University: Canberra – Australia.
James, S. & , C. (2014). Tax compliance, self-assessment and tax assessment and tax administration. Journal of Finance and Management in Public Service, 2(2),27-42
Kirchler, E., Hoelzl, E., & Wahl, I. (2008). Enforced versus voluntary tax compliance: The "slippery slope" framework. Journal of Economic Psychology, 29(2), 210-225.
Ladi, O.M. & Henry, I.T (2015). Effects of tax audit on revenue generation: Federal Inland Revenue Service. Journal of Good Governance on Sustainable Development in Africa, 2(4),67-80
Le, T.N. (2016). Measuring efficiency and productivity of taxation: A review of tax system in Mozambique. Case studies in Business and Management, 3(2),1-17
Liucija, B. (2013). Effects of tax auditing: Does the deterrent deter? Research Journal of Economics, Business and ICT, 8(2),1-8
Machogu, C. & Amayi, J. (2013). The effect of taxpayer education on voluntary tax compliance among SMEs in Masamza city, Tanzania. International Journal of Marketing Financial Service & Management Research, 2(8), 27-42
Mbilla, S.A.E., Abiire, M.A., Atindaara, P.A. &Ayimpoya, R>N. (2020). Tax education and tax compliance in Ghana. Research JournalisJournal of Accounting, 8(1),1-23
Mehari, D., Abdulmojeeb, J. & Pasha, U. (2017). Factors affecting voluntary compliance of taxpayers: Attitude of Abaminah, SNNPR, Ethiopia. International Journal of Scientific and research Publications, 7(6),48-63
Mohammed, B.T. (2015). Tax enforcement: practice and procedure research. Journal of Finance and Accounting, 6(7),143-147
Mos’ud, A., Aliyu, A.A. & Gambo, E. J. (2014). Tax rate and tax compliance in Africa. European Journal of Accounting Auditing and Finance Research, 2(3),22-30
Nwaiwu, J.N. &Ironkwe, U.I. (2021). Tax contribution and Revenue generation in Nigeria. Journal of Accounting, (2),45-55
OECD (2014). Money laundering awareness handbook for tax examiners and tax auditors. London: Organization for economic co-operation and development.
Okafor, R.G. (2012). Tax revenue generation and Nigeria economic development. European Journal of Business and Management, 4(19),49-56
Olaoye, C.O., Ashaolu, T. O. &Adewoye, J.O. (2019). A review of revenue generation in Nigerian local government: A case study of EkitiState. International Business Management, 3(3),54-60
Olurankinse, F.I. &Oloruntoba, S.R. (2021). Good governance and personal income tax compliance in Nigeria. European Journal of Accounting, Auditing and Finance Research, 9(5),10-35
Oyedele, T. (2019). Tax incentive as tools for compliance, Lagos: The chartered Institution of Taxation of Nigeria.
Tanzi, V. & Zee, H.H. (2020). Tax policy for emerging markets. Developing countries. IMF Working Paper WP/00/35 and International Monetary Fund.
Verborn, P. &Dijke, M. (2021). When do severe sanctions, enhance compliance? The role of procedural fairness. Journal of Economic Psychology, 32(1),120-130.
Copyright (c) 2023 Gbakoro, Neka-Oloo Serekara, Akani, Fyneface Nmecha & Ogbonna, Gabriel Nkwazema
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Author(s) and co-author(s) jointly and severally represent and warrant that the Article is original with the author(s) and does not infringe any copyright or violate any other right of any third parties and that the Article has not been published elsewhere. Author(s) agree to the terms that the GPH Journal will have the full right to remove the published article on any misconduct found in the published article.
