CRITICAL SUCCESS FACTORS TO TAX ADMINISTRATION EFFICIENCY IN NIGERIA: EVIDENCE FROM BAUCHI STATE BOARD OF INTERNAL REVENUE

Shamsudeen Ladan Shagari,Natrah Saad

doi:10.32890/mmj.21.2017.9050

Abstract

This study investigates the determinants of tax administration efficiency in Nigeria. The Nigerian tax system is faced with challenges, such as loss of revenue through high level of tax defaulters from both the legislative arm of the government and public institutions, corruption and financial irregularities and limited government administrative capability. Therefore, current study examines the influence of autonomy of the State Board of Internal Revenue (SBIR), use of information and communications technology, public enlightenment, strong auditing practice, motivation and incentives and perceived corruption on tax administration efficiency in Nigeria. A total of 124 questionnaires were collected out of 144 questionnaires that were administered. The study revealed that there is a significant positive relationship between tax administration efficiency and: autonomy of board of internal revenue, information and communications technology and public enlightenment. However, findings from the study revealed that there is insignificant relationship between tax administration efficiency and strong audit practice and motivation and incentives and perceived corruption. Based on the findings above, the study recommended that government should put an effective measure in place to collect taxes from tax defaulters across the different groups of the economy.

Highlights

Due to the economic and financial crises, governments at international and national levels have recognized the key role of an efficient tax system in enhancing development, good governance, and adequate revenue generation
Okauru (2011) stated that it is wrong to assume that only the tax authority constitutes a tax system; it encompasses individual taxpayers, institutions, agencies, the process involved in tax legislation, collection and distribution of tax revenues and other auxiliary issues related to efficient performance of tax functions and the tax system
The Nigerian tax administration is faced with challenges which make it inefficient, as a result of high level of tax defaulters in the country

Summary

Introduction

Due to the economic and financial crises, governments at international and national levels have recognized the key role of an efficient tax system in enhancing development, good governance, and adequate revenue generation. According to Ogbonna, (2011), the tax system is an opportunity for the government to raise additional revenue apart from other sources of income, required to carry out its obligations. He further maintained that a sound tax system offers one of the most effective means of generating a nation’s internal resources as well as in creating an enabling environment to promote economic growth and development. FIRS (2017) estimated that they are only 14 million taxpayers in Nigeria, out of which about 96% have their taxes deducted from source from their salaries This amount of taxpayers indicated a wide variance with the structure of the Nigerian economy, where it was estimated that about 70 million Nigerians are economically active. Only 20% are duly registered and pays tax (Osibanjo, 2017)

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