Statistical Analysis of Citizen’s Personal Income Tax Compliance in Lagos State, Nigeria

Saidi O Amusa ,G O Bamidele ,E.m Ikegwu ,Esther A Ojebiyi

doi:10.7176/jesd/10-22-14

Abstract

This study focused on tax compliance in Lagos State, Nigeria among employees that are gainfully employed. A survey design was adopted for collecting data with a self - designed questionnaire administered among residents of Shomolu Local Government Area. The instrument was validated by experts and through a pilot study and the Cronbach’s Alpha reliability coefficient was 0.834. A two - stage sampling technique was used to select 344 respondents of which 318 were completed, returned and used. The data thus collected were analysed using descriptive statistics, Spearman’s correlation and Chi-square tests with the aid of Statistical Package for Social Sciences (SPSS). The result showed that tax compliance was 74.9% and there is significant positive relationship between taxpayers’ tax compliance (TTC) and the revenue generation (RG) in Lagos (p < 0.05), tax morale (TM) (p < 0.05) and taxpayer’s confidence in legal system (TCL) (p < 0.05). However, a significant negative relationship exists between taxpayers’ tax compliance (TTC) and tax rate (TR) (p < 0.05). It is therefore concluded that a high tax morale and high taxpayers’ confidence in the legal systems will enhance their tax compliance which in turn will lead to higher revenue generation in Lagos. It was recommended that Government should boost the morale of tax payers through accountability and efficient utilisation of taxpayers’ fund in providing qualitative education, free and affordable healthcare and good roads; implement the available laws to enhance taxpayers’ confidence in the legal systems and reduce existing tax rates to enhance tax compliance among the citizenry. Keywords: Tax Compliance, Tax Morale, Revenue, Taxpayers’ Confidence, Spearman’s correlation DOI : 10.7176/JESD/10-22-14 Publication date: November 30 th 2019

Highlights

It is widely acknowledged that people do not like paying taxes especially in developing countries (Alm & Martinez-Vazquez, 2003) as a result of mismanagement of public fund by public administrators
The findings suggest that there are various reasons and facilitating factors for tax compliance in the Lagos State
Based on the analysis result and the findings the following conclusions were made: It is concluded that tax policy like progressive tax should be adopted in the country in order to encourage compliance of tax payment

Summary

Introduction

It is widely acknowledged that people do not like paying taxes especially in developing countries (Alm & Martinez-Vazquez, 2003) as a result of mismanagement of public fund by public administrators. Tax is a compulsory contribution to state revenue levied by the government on individual’s income and business profits or value added to the cost of qualifying goods, services and transactions. Taxpayers in such regions fail to comply with their country’s existing tax laws and administrators do not enforce such laws because they are not accountable nor faithful in the handling of public trust. The growing responsibility of government coupled with its shrinking revenue made the issue of tax non – compliance, mostly, tax evasion and avoidance persist as the core focus of strategic decisions in most developed and developing countries. Tax non - compliance have attracted research efforts in the recent past had produced a number of models which help understand tax compliance behaviour of taxpayers and led to conclude that economic, social, psychological and cultural factors are influencing tax compliance (Alabede, et al, 2011; Anyadiuba, et al, 2012)

Methods

Discussion

Conclusion