In Nigeria, the need to improve voluntary payment of taxes or voluntary tax compliance has resulted in the various tax reform attempts by various successive governments. Suffice to mention that these reforms have not been able to stimulate the expected increase in tax revenue over the years, and this has snowballed into an unarguable tax gap as revealed in the share of income taxes in total revenue profile of the country.
This poor tax compliance behavior often referred to in the literature as the “compliance puzzle” is a challenging experience across countries but suspected to be more critical in developing economies.
In modeling tax compliance, the answer under the traditional theory of compliance is fear of detection and punishment. However, this model has been found to be inadequate in explaining the motives and intentions for tax compliance. The argument is that tax compliance may be subdivided into compliance resulting from enforcements or influence of tax authorities and voluntary compliance.
This leads to a logical question which interestingly extends the compliance issue; what would lead citizens to behave more honestly, provide correct information and improve the tax compliance rate voluntarily?
One answer to this question is the existence of an intrinsic motivation to pay taxes, which have been sometimes called, “tax morale”. Tax morale has evolved as an instrumental component in understanding voluntary tax compliance using a more integrated approach with a bias for non-economic factors. This study argues that the citizens’ perception of government accountability is an instrumental factor that shapes the emergence and maintenance of tax morale resulting in voluntary tax compliance. The underlining framework is that there is a social contract that defines the relationship between the government and the governed.
Inhaltsverzeichnis (Table of Contents)
- EFFECT OF GOOD GOVERNANCE ON VOLUNTARY PAYMENT OF TAXES
- Introduction
- The Compliance Puzzle and the Allingham and Sandmo Model
- Tax Morale as an Intrinsic Motivation
- The Nexus between Government Accountability and Voluntary Tax Compliance
- Limitations of the Allingham and Sandmo Model
- The Concept of Tax Morale and its Determinants
- Taxation and State Responsibility
- The Social Contract and Accountability
- The Impact of Governance Accountability on Voluntary Tax Compliance
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This study aims to explore the relationship between good governance and voluntary tax compliance in Nigeria. It seeks to understand why citizens may be more likely to pay taxes voluntarily when they perceive their government as accountable and responsible.
- The significance of voluntary tax compliance in achieving economic growth and development
- The limitations of traditional economic models in explaining voluntary tax compliance
- The role of tax morale and its determinants in shaping tax compliance behavior
- The importance of government accountability and its impact on tax morale
- The social contract between citizens and the state and its implications for voluntary tax compliance
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This chapter introduces the topic of voluntary tax compliance and highlights the need to improve tax revenue in Nigeria. It also discusses the limitations of existing tax reforms in achieving this goal.
- The Compliance Puzzle and the Allingham and Sandmo Model: This chapter examines the traditional economic model of tax compliance developed by Allingham and Sandmo, which emphasizes the role of detection probability and punishment in influencing taxpayer behavior. It also discusses the limitations of this model in explaining voluntary compliance.
- Tax Morale as an Intrinsic Motivation: This chapter introduces the concept of tax morale as a key driver of voluntary tax compliance. It explores the various factors that can contribute to positive tax morale, such as trust in government, fairness, and social norms.
- The Nexus between Government Accountability and Voluntary Tax Compliance: This chapter investigates the link between citizens' perceptions of government accountability and their willingness to pay taxes voluntarily. It argues that a strong social contract between the state and citizens is essential for fostering tax morale.
- Limitations of the Allingham and Sandmo Model: This chapter examines the limitations of the Allingham and Sandmo model in explaining tax compliance behavior, particularly in developing countries. It highlights the importance of considering non-economic factors, such as tax morale, in understanding compliance decisions.
- The Concept of Tax Morale and its Determinants: This chapter provides a detailed discussion of tax morale, exploring its definition, theoretical frameworks, and the factors that can influence it. It also examines the role of socio-demographic factors, such as gender and religiosity, in shaping tax morale.
Schlüsselwörter (Keywords)
Key words and focus topics of this work include voluntary tax compliance, tax morale, government accountability, social contract, Nigeria, economic growth, development, and the Allingham and Sandmo model. These terms are central to understanding the relationship between good governance and voluntary tax compliance in the context of developing countries.
- Quote paper
- Agu Okezie David (Author), 2018, The effect of good governance on the voluntary payment of taxes, Munich, GRIN Verlag, https://www.grin.com/document/427240