Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Tax Morality and Tax Compliance Among Small and Medium- Size Enterprises in Bayelsa State, Nigeria

Michael Ayakoroma, Mathias Avendei

Abstract

s This study investigated how tax morality (equity & transparency) influences tax compliance among SMEs in Bayelsa State, Nigeria. The research was anchored on social norm theory. The paper utilised descriptive survey design, targeting 313 SMEs registered with the Small and Medium Enterprises Development Agency of Nigeria in Bayelsa State. A validated questionnaire was used to collection data. The mean and standard deviation were used to answer the research questions, while the PPMC was applied to test the hypotheses at 0.05 level of statistical significance. The findings revealed that equity in taxation, and transparency in tax laws positively and significantly influence tax compliance behaviour among SMEs. Specifically, equity (r = 0.487), and transparency (r = 0.782) were all significantly correlated with tax compliance. The study concludes that equity and transparency are critical to encouraging voluntary tax compliance. It was recommended that tax agencies should ensure that tax policies reflect fairness in assessment and enforcement so that all taxpayers feel equally responsible and justly treated.

References

Abubakari A., & Adafula C.J. (2013) Evaluating taxpayers’ attitude and its influence on tax compliance decisions in Tamale, Ghana: Journal of Accounting and Taxation. 5(3): 48- 57 Adekoya, A. A., Oyebamiji, T. A. &Lawal, B. A. (2019). Rule of law, moderated by trust in government and voluntary tax compliance behaviour among individual taxpayers in Nigeria. International Journal of Economics, Commerce and Management, 7(10), 65- 78. Akinleye, G. T., & Ogunmakin, A. A. (2016). The effect of tax avoidance on government budget implementation in Southwest Nigeria. International Journal of Accounting and Taxation, 4(1), 53-68. Akintoye, I. (2013). The effect of tax compliance on economic growth and development in Nigeria. Ali-Nakyea, A. (2008). Taxation in Ghana: Principles, practice and planning (2nd ed.). Accra, Ghana: Black Mask Limited. Alm, J., & Torgler, B. (2006). 'Culture Differences and Tax Morale in the United States and in Europe.' Journal of Economic Psychology, 27(2), 224-246. Amah, N., Rustiarini, N. W., & Hatmawan, A. A. (2021). Tax compliance option during the pandemic: Moral, sanction, and tax relaxation (case study of indonesian msmes taxpayers). Review of Applied Socio-Economic Research, 22(2), 21-36. Atawodi, O. W., & Ojeka, S. A. (2012). Factors that affect tax compliance among small and medium enterprises in North Central Nigeria. International journal of business and management, 7(12), 87. Atuguba, R. (2021). Tax Culture: Perspectives from an African State. American Journal of Trade and Policy, 8(1), 25-58. Bello, O. I., & Kasztelnik, K. (2022). Observational Study of Tax Compliance and Tax Evasion in Nigeria. Financial Markets, Institutions and Risks, 6(4), 1-14. Bird, R. M., & Zolt, E. M. (2008). 'Tax Policy in Emerging Countries.' Environment and Planning C: Government and Policy, 26(1), 73-86. Blau, P. M. (1964). Exchange and power in social life. New York: Wiley. Braithwaite, V. (2009). Defiance in Taxation and Governance: Resisting and Dismissing Authority in a Democracy. Edward Elgar Publishing. Braithwaite, V. (2009). Defiance in Taxation and Governance: Resisting and Dismissing Authority in a Democracy. Edward Elgar Publishing. Damayanti, T. W., Subekti, I., & Baridwan, Z. (2015). Trust and uncertainty orientation: An efforts to create tax compliance in social psychology framework. Procedia-Social and Behavioural Sciences, 2(11), 938-944. Diamond, P., & Saez, E. (2011). 'The Case for a Progressive Tax: From Basic Research to Policy Recommendations.' Journal of Economic Perspectives, 25(4), 165-190. Engida, T. G., & Baisa, G. A. (2014). Factors influencing taxpayers' compliance with the tax system: An empirical study in mekelle city, Ethiopia. eJTR, 12, 433. Evans, C., Carlon, S., & Massey, D. (2005). Record keeping practices and tax compliance of SMEs. eJournal of Tax Research, 3(2) ,288-334. Feld, L. P., & Frey, B. S. (2002). 'Trust Breeds Trust: How Taxpayers are Treated.' Economics of Governance, 3(2), 87-99. Frey, B. S., & Torgler, B. (2007). 'Tax Morale and Conditional Cooperation.' Journal of Comparative Economics, 35(1), 136-159. Gavin H. (2022). Tax education takes centre stage. Access on 1st July, 2024 from https://abmagazine.accaglobal.com/global/articles/2022/mar/public/tax-education- takes-centre-stage.html Hardika, N. S., Wicaksana, K. A. B., & Subratha, I. N. (2021). The Impact of Tax Knowledge, Tax Morale, Tax Volunteer on Tax Compliance. In International Conference on Applied Science and Technology on Social Science 98-103. Homans, G. C. (1958). Social behavior as exchange. American Journal of Sociology, 63(6), 597–606. Igbeng, E., Tapang, A. T., & Usang, O. E. (2012). Analysis of tax morale and tax compliance in Nigeria. European Journal of Business and Management, 4(14), 182-207. Ihenyen C. J., Epekele W., & Kojo P. B. (2023). Influence of tax morality and tax culture on tax compliance. International Journal of Accounting, Management, Economics and Social Sciences (IJAMESC), 1(5), 500–509. Inasius, F. (2019). Factors influencing SME tax compliance: Evidence from Indonesia. International Journal of Public Administration, 42(5), 367-379. International Monetary Fund (2018). Fiscal Transparency Handbook. IMF. Larsen, C. A. (2013). The Rise and Fall of Social Cohesion: The Construction and De- construction of Social Trust in the US, UK, Sweden and Denmark. Oxford University Press. Lisi, G. (2015). Tax morale, tax compliance and the optimal tax policy. Economic Analysis and Policy, 45, 27-32. Makovicky, N., & Smith, R. (2020). Introduction: Tax beyond the social contract. Social Analysis, 64(2), 1-17. McKerchar, M. (2005). 'The Impact of Complexity upon Unintentional Noncompliance for Personal Taxpayers in Australia.' Australian Tax Forum, 20(4), 529-554. Mirrlees, J. A., et al. (2011). Tax by Design: The Mirrlees Review. Oxford University Press. Musgrave, R. A. (1959). The Theory of Public Finance: A Study in Public Economy. McGraw- Hill. OECD (2015). Building Tax Culture, Compliance and Citizenship: A Global Source Book on Taxpayer Education. OECD Publishing. Oladipo, O., Nwanji, T., Eluyela, D., Godo, B. & Adegboyegun, A. (2022). Impact of tax fairness and tax knowledge on tax compliance behaviour of listed manufacturing companies in Nigeria. Problems and Perspectives in Management, 20(1), 41-48. Orumwense, K. E. and Aiwoho, D. (2021). Determinants of tax morale and tax compliance: evidence from Nigeria. Journal of Contemporary Issues in Accounting, 2(1), 36-53 Piketty, T. (2014). Capital in the Twenty-First Century. Harvard University Press. Prasetyarini, A. N., Rusmana, O. & Putri, N. K. (2019). The affectivity of self-assessment system on application of tax revenue in Indonesia. Acta Universitatis Danubius. Economica, 15(4), 21 - 32 Slemrod, J., & Bakija, J. (2008). Taxing Ourselves: A Citizen's Guide to the Debate over Taxes. MIT Press. Stetsenko, T., & Nishcheretov, O. (2021). TAX culture and tax morale: impact on tax compliance in Ukraine. Social economics, (61), 83-91. Stiglitz, J. E. (2015). The Price of Inequality: How Today's Divided Society Endangers Our Future. W.W. Norton & Company. Tanzi, V., & Zee, H. H. (2000). 'Tax Policy for Emerging Markets: Developing Countries.' National Tax Journal, 53(2), 299-322. Torgler, B. (2004). 'Tax morale in Asian countries.' Journal of Asian Economics, 15(2), 237- 266. Torgler, B. (2007). Tax Compliance and Tax Morale: A Theoretical and Empirical Analysis. Edward Elgar Publishing. Torgler, B., & Schneider, F. (2007). 'What shapes attitudes toward paying taxes? Evidence from multicultural European countries.' Social Science Quarterly, 88(2), 443-470.

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT

Bridging Legal, Financial, and Data Governance in Enterprise AI: Emerging Trends

Author: Funmilayo Ashore-Onisemo, Ebehiremen Faith Iziduh, Uchechi Mary-Linda Unamma, Ifeanyichukwu Jeffrey Okwesa

Macroeconomic Policies and Economic Stability in Nigeria

Author: Abel-Tariah Emmanuel Onate, Okon, Ekanem Nsikhe, Nwenyi Francis Onwe

Determinants of Bank Liquidity in Nigeria

Author: Nelson Johnny Ebifemo-ere Stephen