Abstract
Inefficient tax system causes the government to lose a huge amount of revenue. Tax administrators are primarily responsible for collecting taxes due from taxpayers following the relevant tax laws and regulation in a way that instils confidence on taxpayers through efficient tax administration. This paper aims at validating relevant and reliable measurement scale for assessing the effectiveness of tax administration efficiency in dealing with oil and gas companies operating in the Nigerian oil sector. Hence, an adapted questionnaire comprising four items was administered on 300 local and multinational oil and gas companies in Nigeria. All the items were subjected to evaluations and validations by eight experts’ reviewers with cognate experience in oil and gas activities. Evaluation of reliability and validity of the measures of tax administration efficiency was performed through Confirmatory Factor Analysis (CFA) using SPSS version 25 and Smart PLS version 3.8. The results provide evidence that the proposed tax administration efficiency scale attained reliability and validity criteria. Consequently, Policymakers, practitioners and researchers can adapt this scale to assess the effectiveness of tax administration efficiency by companies in different jurisdictions across the globe. This study expands existing literature and contributes new ideas to the subject area. By implication, the validated scale will assist oil and gas producing countries to come up with policies that ensures efficiency in tax administration and increase government revenues.
Highlights
The main key obligation of a tax administration is to harness and pilot the collections of appropriate amounts of taxes due to the government at minimum level of cost to the public
The current study aims at developing and validating relevant and reliable measurement scale for assessing the effectiveness of tax administration efficiency in taxing oil and gas companies operating in the Nigerian oil sector
We designed a questionnaire with five-point Likert-type scale to measure the extent of agreement on the tax administration efficiency among oil and gas taxpayers
Summary
The main key obligation of a tax administration is to harness and pilot the collections of appropriate amounts of taxes due to the government at minimum level of cost to the public. Other objectives of tax administration are to efficiently collect and manage taxes, implement tax policies as well as encourage investment (Rahman, 2009). Tax administration is considered efficient if the tax administrators are able to increase government revenue while restoring taxpayer’s confidence through active and efficient implementation of tax policies (Baurer, 2005). Lack of robust tax policies encourages tax evasion which is described as generally illegal and socially undesirable attitudes (Houston & Tran, 2001). Taxation system effectiveness is determined by tax administration efficiency in revenue generation (Nyabwengi & K’Akumu, 2019). Tax administration can be considered efficient if it initiates robust policies to encourage voluntary tax compliance. It is obvious that some tax policies are inefficient due to poor tax administration efficiency which invariably discourages voluntary tax compliance
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