1.1 Background of the Study

Taxation is an important source of revenue to government in both developing and developed countries to provide the basic infrastructural, and social amenities. This can only be realised if all taxpayers willingly comply with the tax laws and the desire to uplift one’s society is the utmost desire of every patriotic citizen, in which tax payment is a demonstration of such a desire. The payment of tax is a civic duty and an imposed obligation by government on her subjects and companies to enable her finance or run utilities and perform other social responsibilities. But the amount of revenue generated by government from such taxes for its expenditures depends among other factors, on the willingness of the taxpayers to voluntarily comply with tax laws. The failure to follow the provisions of the tax implies that the taxpayer may be committing an act of noncompliance. Tax non-compliance occurs through failure to file tax return, misreporting income or misreporting allowable subtractions from taxable income or tax due (Serkan, Tamer, Yüzba & Mohdali, 2016).

Following the increasing cases of tax noncompliance, especially tax evasion and its consequences on the ability of government to raise public revenue, the critical questions that comes up is why do some individuals pay their taxes and others rather evade taxes? This issue of tax evasion, avoidance and tax compliance has being a serious growing problem in almost all countries of the world (Mohd, Mohd, & Wan,2013).

According to Okonjo-Iweala (2014), tax contributes about 7% to the gross domestic product (GDP) in Nigeria as against 15% expected of a comparable country. Furthermore, the price of oil has dwindled in the world oil market and this is having a negative effect on the revenue profile of the country because the country has been a monoproduct economy depending on oil revenue since the 1970’s. Tax remains the inexhaustible source of revenue and should be the focus of government especially in the era of the volatility of oil price in the world.

Raising more domestic revenue is a priority for most sub‐Saharan African countries (Drummond et al. 2012). Mobilizing revenue is a way for governments’ to create fiscal space, provide essential public services, and reduce foreign aid and single resource dependence. However, the domestic tax bases in most African countries are undermined by widespread tax avoidance and evasion (IMF 2011). Although taxpayer non‐compliance is a continual and growing global problem (McKerchar and Evans 2009), many indications suggest that developing countries, many of them in Sub‐Saharan Africa, are the hardest hit (Cobham 2005; Fuest and Riedel 2009).

Dealing with the problem of tax evasion requires at least some understanding of the factors underlying the individual taxpayer’s decision whether to pay or evade taxes. However, little is known about tax compliance behavior in developing countries (Andreoni et al. 2010; D’Arcy 2011; Fjeldstad and Semboja 2011). This study attempts to explore factors that determine citizens’ tax compliance behavior in Nigeria using attitude and perception data from a new round of Afrobarometer surveys (Round 5; 2011/12). This survey includes a series of questions about tax that are new and not included in previous rounds of Afrobarometer. This allows for a more comprehensive empirical analysis of tax compliance attitudes based on nationally representative public opinion survey data from Nigeria.

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