INFLUENCE OF INSTITUTIONAL QUALITY ON TAX FRAUD MANAGEMENT IN SOUTH WEST NIGERIA STATE

Author: Lukuman Adewale Jimoh

ABSTRACT

Tax revenue is to be the surest way for the government to finance its budget but institutional deficiency is one of the factors militating against effective tax revenue in Nigeria. This study examined the influence of institutional quality on tax fraud management in South West Nigeria. This study used a quantitative method of data collection with a population of 504,263; the sample size was 400. The inferential statistics of the Partial Least Square Structural Equation Model (PLS-SEM) were used to analyze the data collected. The result of the finding indicated that in the context of control of corruption (β = -0.817, t = -22.043, p=0.000 < 0.05), rules of law (β = -0.116, t = -2.392, p=0.000 < 0.05) and quality of regulatory (β = -0.204, t = -2.169, p =0.043 < 0.05); there was a significant negative relationship between the variables of interest (control of corruption, rule of law and quality of regulatory)  and tax fraud management in South West Nigeria. This study concluded that control of corruption, rule of law, and quality of tax regulation by the government reduce the tendency by which taxpayers will engage in tax fraud in South West Nigeria. It is also concluded that the taxpayers’ low rating on control of corruption and adherence to the rule of tax laws by the government and its agency contributed to the high rate of tax fraud among the taxpayers in South West Nigeria. This study, therefore, recommended that government live up to the expectation of taxpayers to block corruption, enhance adherence to the rule of law and maintain the high quality of tax regulatory agencies (FIRS) for better performance of tax revenue generation.

REFERENCE

  • Ajaz, T., & Ahmad, E. (2010). The Effect of Corruption and Governance on Tax Revenue. The Pakistan Development Review, 49(4), 405-417.
  • Ajide, F. M., & Olayiwola, J. A. (2020). Remittances and Corruption in Nigeria. Journal of Economics and Development. 19-31
  • Akinyomi, O. J., &  Okpala, K. E. (2013). Appraisal of Factors Influencing Tax Avaoidance and Evasion in Nigeria. International Journal of Research in Commerce and Management, 4(5), 107-111.
  • Ashraf, M., & Sarwar, S. (2016). Institutional Determinants of Tax Buoyancy in Developing Nations. Journal of Emerging Economies and Islamic Research.
  • Augustine, A. A., & Enyi, E. P. (2020). Control of Corruption, Trust in Government, and Voluntary Tax Compliance in South West, Nigeria. Journal of Research and Innovation in Social Science, 3(4), 2454 -6186.
  • Bhartia, H. L. (2009). Public Finance. (14th Ed)., Vikas Publishing House PVT Ltd, New Delhi
  • Bird, R. M. & Zolt, E. M. (2005). ‘Redistribution via taxation: the limited role of taxation.
  • Bird, R. M., Martinez-Vazquez, J., & Torgler, B. (2008). Tax Effort in Developing Countries and high Income Countries: The Impact of Corruption, Voice and Accountability. Economic Analysis and Policy, 38(1), 55.
  • Chong, A., & Gradstein, M. (2007). Institutional Quality and Government Efficienc, Working Paper 606, Inter-American Developemnt Bank, http://hdl.handle.net/10419/51529.
  • Christie, E. & Holzener, M. (2006). What Explains Tax Evasion? An Empirical Assessment based on European Data, Working Paper 40, The Vienna Institute for International Economics Studies.
  • Fadjar, O. P. (2013). The Effect of Tax transparency and trust on taxpayers’ voluntary compliance. GSTF Journal on Business Review, 2(3), 4 -8.
  • Fjeldstad, O. H., Schulz-Herzenberg, C., & Hoem Sjursen, I. (2012). People’s views of taxation in Africa: a review of research on determinants of tax compliance. Available at SSRN 2411424.
  • Hojjat, I., Ydollah, D., & Pouria, B. (2021). Investigating the Simultaneous Impact of Institutional Quality and Tax Evasion on the Performance of the Tax System in Selected Mena Countries. https://jqe.scu.ac.ir/article_16669.htm1?lang=en.
  • Ishola. K. A. (2016). Taxation Priciples and Fiscal Policy in Nigeria. Ibadan, Cresthill Publishers Ltd.
  • ICPC. (2015). Understanding the nature of corruption. Training manual: National anti-corruption volunteers. FCT, Abuja, Nigeria: Independent Corrupt Practices and Other Related Offences Commission.
  • Kaufmann, D., Kraay, A., & Mastruzzi, M. (2006). Governance Matters V: Aggregate and Individual Governance Indicators for 1996-2005. World Bank
  • Klomp, J., & De Haan, J. (2015). Bank regulation and financial fragility in developing countries: does bank structure matter? Review Development Finance 5 (2): 82–90.
  • Ljungholm, D. P. (2015). The impact of transparency in enhancing public sector performance. Contemporary Reading in Law and Social Justice, 7(1), 172-178.
  • Mahdieh, R., & Amirhosein, A. (2021). Institutional Quality and Tax Evasion in Iraq. Quarterly Journal of Quantitative Economics, https://jpe.scu.ac.ir/article_16404.htm1?lang=en-institutionalqualityandtaxevasioniniran.
  • Mckerchar, P. K., & Evans, C. (2009). Sustaining Growth in Developing Countries through improved Taxpayers’ Compliance: Challenges for Policy Makers and Revenue Authorities. Working Paper 17, Sydney University of New South Wales.
  • Moore, M. (2004). Revenue, State Formation and the Quality of Governance in Developing Countries. International Political Science Review, 25(3), 297 – 319.
  • Nwocha, M. F. (2017). Tax Evasion Law in Nigeria: Problems of Legality, 139, 286-295.
  • OECD, (2008a). Governance, Taxation and Accountability: Issues and Practices, DAC Guideline and Reference Services, OECD, Paris. www.oecd.org/doc/governance-development/402100055.pdf.
  • Okoduwa, R. A. (2009). The Anti-corruption Crusade: ICPC Perspective, Review of Accounting and Finance, 6(8), 347-349.
  • Omodero, C. O., & Dandago, K. I. (2019). Tax Revenue and Public Service Delivery: Evidence from Nigeria. International Journal of Financial Research, 10(2), 82-91. https://doi.org/10.5430/ijfr.v10n2p82.
  • Picur, R. D., & Riahi-Belkaoui, A. (2006). The Impact of Bureacracy, Corruption and Tax Compliance. Review of Accounting and Finance, 5(2), 174-180.
  • Torgler, B. (2003). To Evade Taxes or not to evade: That is the question. Journal of Socio Economics, 32, 283-302.
  • Torgler, B., & Schneider, F. (2009). The Impact of Tax Moral and Institutional Quality on the Shadow Economy, Journal of Economic Pyschology, 30, 228-248.
  • Tsikas, S. A. (2017). Enforce tax compliance, but cautiously: The role of trust in authorities and power of authorities (No. 589). Hannover Economic Papers (HEP).
  • Uche, J & Bariyima, S. K. (2020). Fraud and Corruption in Nigeria Taxation: Eradication or Control, Research Gate, 3-15, https://www.researchgate.net/publication/342476099