EMPIRICAL INVESTIGATION OF TAX COMPLIANCE DETERMINANTS IN KATSINA STATE, NIGERIA

Abstract

Tax compliance is determined by many factors, which are categorized into social, economic, institutional, demographic and individual factors. In this regard, the main objective of this study is to empirically evaluate and understand tax compliance determinants usingdata generated from agro-allied industries in some selected local government areas of Katsina state, Nigeria. As such, primary source of data was employed through the use of structured questionnaire to collect relevant information from all the 133 agro-allied industries in the study area and multinomial probit model was adopted for estimation. Basically, the findings from this study indicate that tax rate, level of income, perception on government spending, change in government policy, simplicity of tax system and efficiency of the tax authority are significant determinants of tax compliance among agro-allied industries in the study area; whereas perception on equity and peer influence are insignificant determinants. In this connection therefore, the study recommends that government should ensure efficient allocation of public funds, in order to fiscally motivate taxpayers to develop compliance attitude. Also, policy formulation and implementation should physically be centered towards improving the quality of life of citizens, so as to improve taxpayers’ belief in policy makers thereby increasing the level of compliance. And finally, the tax authorities should be transparent and accountable in tax collection, which may result to positive compliance as well as increase in tax revenue yield for national development.