Abstract
This study investigates the influence of the informal sector and graft on income accruing to the government through taxation in Nigeria. Informal economy and graft are the two critical activities that inhibit government tax revenue collection and negatively affect the performance of an effective government. The study employs secondary data that cover a period from 2000 to 2018.This period is the millennium period which the country is expected to overcome corruption and curtail the level of informal economic activities prevailing in the nation, but it appears that all efforts seem not to be yielding the required results. In order to achieve the objective of this study, the multi-regression analysis is performed and the results indicate that corruption is very harmful to tax revenue collection while the informal economy has no significant impact on tax revenue within the millennium period covered by this study. Thus, the study suggests formalization of legal unofficial economy activities and total eradication of corruption in Nigeria through the strengthening of the anti-graft agencies, reinforcement of the legal structure and introduction of a more severe penalty for the perpetrators.
Highlights
Taxation income is usually a major income source of the government which enables her to fulfill her social obligations to the public. Omodero and Dandago (2019) submit that, the government cannot achieve proper public service delivery except the citizens are committed to payment of taxes as part of their civic responsibility
Tax evasion is a product of the informal sector activities which have over the years robbed the government of nations the taxation income that should have accrued to the government but are hidden from the authorities (Omodero, 2019)
The coefficient of determination has a value of 75.9% indicating that graft and informal economy describe up to 75.9% of the changes in tax revenue while the remaining 24.1% are attributable to other variables that were not considered in the model
Summary
Taxation income is usually a major income source of the government which enables her to fulfill her social obligations to the public. Omodero and Dandago (2019) submit that, the government cannot achieve proper public service delivery except the citizens are committed to payment of taxes as part of their civic responsibility. As per Petrescu (2016) individuals who do non-crimes in the casual division ordinarily think that it is hard to change to the formal area Those that connect with into crimes during authorizations, reject openings for work in the official work market notwithstanding when the approvals have been disposed of (Petrescu, 2016). Aruba (2010) sets that the decrease in residents' trust in their administration is one of the outcomes of defilement clear in absence of straightforwardness and narrow-minded demonstrations of government authorities Be that as it may, the test of assessment profound quality improves debasement (Ogunc and Yilmaz, 2000) and the circumstance will more often than not impact charge income and monetary movement (Ivanyna, Moumouras and Rangazas, 2016). Shadow economy is typically advanced by assessment framework flaws, wasteful open division and carefully managed work showcase (Gaspareniene, Remeikiene and Heikkila, 2016)
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