English

Okoye Francis

doi:10.5897/jat2019.0349

Abstract

The paper examined the influence of tax amnesty programme on tax compliance in Nigeria moderating the effect of political trust. The survey research design was employed to understand the taxpayer's perception of the Voluntary Assets and Income Declaration Scheme (VAIDS). We collected the data through the administration of questionnaires to taxpayers across the most commercial states in Nigeria.  The data obtained were analysed using the frequency table, the Cronbach alpha test, and the binary logistic regression technique. The survey showed that the compliance rate was about 22%. The study showed that the primary driver of tax compliance in Nigeria is unannounced ad hoc tax audit; this implies that tax compliance will increase when taxpayers are aware there is an unannounced ad hoc tax audit. It is evident from this study that the low tax compliance was as a result of the moderating effect of political trust of the taxpayers as indicated by the amnesty*trust and trust showed a negative relationship with tax compliance in Nigeria. Based on the empirical analysis, the paper concludes that the Tax Amnesty Programme VAIDS has a significant influence on tax compliance in Nigeria. The paper recommended that the government should build and strengthen the institutions, which give a sense of accountability and perception of good governance to the taxpayers, which will encourage voluntary tax compliance in the long run.   Key words: Tax amnesty, tax compliance, political trust, Voluntary Assets and Income Declaration Scheme (VAIDS).

Highlights

The Nigerian Government has recognised that the revenues from the oil sector can no longer sustain the economy; the issue bothering the government is how it plans to fund the economy from internally generated revenue
The current state of the Nigerian economy in the face of dwindling revenue and growing budget deficit, and increase in the cost of servicing Nigeria‟s debt, these issues have to led to changing the revenue model by focusing on the non-tax revenue especially as it relates to taxation
It is in pursuit of this economic agenda to diversify its revenue streams that the Federal Government of Nigeria introduced its tax amnesty called the Voluntary Assets and Income Declaration Scheme (VAIDS)

Summary

Introduction

The Nigerian Government has recognised that the revenues from the oil sector can no longer sustain the economy; the issue bothering the government is how it plans to fund the economy from internally generated revenue. The Federal Inland Revenue Service (FIRS) observes that Nigeria has one of the lowest tax collection rates in the world at about 6% of GDP and that the reliance on crude oil has made the Nigerian government to forsake other revenue collection systems. Not paying taxes has gradually become a culture of Nigerians, as they do not see taxes as a sustainable source of revenue to Nigeria. As part of the plan the Voluntary Assets and Income Declaration Scheme (VAIDS) a tax amnesty programme was introduced by the Federal Government of Nigeria to revive the Nigerian economy. VAIDS is expected to transform the Nigerian tax system and ensure sustainable funding for the government at all levels. The scheme should positively influence the country‟s tax revenue (KPMG report, 2018)

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