CHAPTER ONE

1. INTRODUCTION

1.1   BACKGROUND OF 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 realized 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 and 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, and 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 mono product 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. The tax compliance has been an issue in many developing countries. Most of the earlier researches on tax compliance have focused on economic factors such as tax audits and penalties in order to deter tax evasion. However, this approach has been criticized by researchers who believe in the need of examining the non-economic factors in order to fully understand taxpayers’ compliance behavior. One of such non-economic factors which have been neglected by most researches on tax Compliance is religiosity. Gender and culture has an influence on behaviour and tax compliance is a behavioural issue. The cultural values held by most individuals are generally expected to effectively prevent negative attitudes and encourage positive attitudes in an individual’s daily life and, hence, gender and culture is presumed to positively motivate taxpayers to voluntarily comply with tax laws. In other words, religiosity might provide a possible explanation for the observation of most taxpayers’ strong positive compliance attitudes as apparent in the extant literature. In the light of the above, this proposed study attempts to empirically examine the influence of gender and culture on tax compliance in Nigeria.

1.2   STATEMENT OF THE PROBLEM

        Nigerian tax system has witnessed improvement over the years and the recent development in tax revenue generation is a prove that the Nigeria tax system is heading towards the right direction. However, despite the improvement made in the recent years there are problem of tax compliance. There is lack of voluntarily compliance on the part of the tax payer. There is low tax morale on the part of self-employed taxpayer to voluntarily succumb to tax legislation. This thereby calls for some level of enforcement from the government to compel compliance. In most instances however, governments lack the necessary political will to enforce tax laws for fear of losing popularity.

 Gender is one of the factor affecting tax compliance attitude and behavior of taxpayers(Jackson and Milliron,1986).Majorly men are more liable to be non-compliance to tax than women, so the attitude of the tax payer would result to gender  difference which would result to inequality of the tax payer when it comes to assessing each tax payer to tax and also the relationship between gender and voluntary tax compliance in Nigerian modern tax administration undergo several legal amendment during this time but the improvement is not as big as its age as far as citizen’s voluntary compliance is concerned and the tax system in the country mainly stress on legal enforcement as a remedy to ensure its proper functioning.

Lack of education is considered to influence the attitude of the tax payer in tax compliance because most of the tax payer don’t really know and understand the law and there is need for them to be educated on tax in other to ensure higher compliance.  It is therefore necessary to ensure that more educative measures is put in place by the tax authority to ensure high tax compliance.

 Another problem to be considered is the internal value that comes from an individual him/herself which mainly derive from his/her family, value and culture which also makes cultural differences have effect on tax payer level of tax compliance. The Yorubas are known to be more compliance when it comes to taxation matters due to their rich history of payment of tax e.g Owo ori ,Isakole ,while the  Igbos are likely to be non-compliance since there was no track of good good taxation system in their history. Most businessmen and women lacks accurate data of their financial records.

1. OBJECTIVES OF THE STUDY

The main objective of the proposed study is to examine the influence of gender and culture on tax compliance in Nigeria. Specifically, the objectives of the proposed study are to:

   1. To determine the relationship between gender and voluntary tax compliance.

   2. To assess whether cultural differences have effect on tax payer level of tax compliance.    

  3. To know the extent at which lack of education negatively influences the attitude of the tax                                                             payer in tax compliance.

1.4   RESEARCH QUESTIONS

1. Does gender have effect on voluntary tax compliance?

2. Does cultural differences have any impact on tax compliance ?.

3. Does education of tax payer have effect  on the level of tax compliance?

1.5   RESEARCH HYPOTHESES 

          HYPOTHESIS 1                

H0:   There is no significant relationship between gender and voluntary tax compliance.

H1:   There is a significant relationship between gender and voluntary tax compliance.

HYPOTHESIS 2

H0:   Cultural differences do not have effect on tax payer level of tax compliance.

H1:   Cultural difference have effect on tax payer level of tax compliance.

  HYPOTHESIS 3

H0:   Lack of education negatively influence the attitude of tax payer in tax compliance.

H1:    Lack of education does not influence the attitude of tax payer in tax compliance.

1.6   SIGNIFICANCE OF THE STUDY

This study focuses on the effect of gender and culture on tax compliance, this will attempt to study how gender and cultural differences affect voluntary tax compliance in Nigeria. This study will also make recommendations on various findings. The need to appraise the effect of cultural and gender on tax compliance in Nigeria. This study will also contribute to the base knowledge on for further research on related topics and it will also form a theoretical background for other research.

This is particularly pertinent given the acute financial situation of the Board of Internal Revenue Service. The situation is a common knowledge, which manifest sometimes in delay of payment of salaries for some months, and in ability to execute needed projects for the good of the people. Yet among the revenue sources at the disposal of the Lagos State Board of Internal Revenue Service, taxation constitute a lion share, hence there is a need to establish why maximum taxes are not collected. This study therefore, as much as possible

1. Will help in achieving maximum tax collection.
2. Help in identifying and appraising the problem inhibiting tax compliance, with the view to addressing them.
3. It will create the right perspective about tax payment and thus encourage commitment to it.
4. It will throw challenge to the need, to review the existing tax laws with the view of amendment where desirable.
5. It will provide a body of information for reference for other researchers on the same subject.

1.7   LIMITATIONS OF THE STUDY

This study is restricted to examining the influence of gender and culture on tax compliance in Nigeria. Taxation being a wide subject is bound to constitute a bottleneck for its coverage. It therefore explains why only one aspect of it is undertaken in this study which is “gender and culture effect on tax compliance in Nigeria. Even this, is further delimited to the Western (Yoruba) part of the country for the purpose of thoroughness so that justice could be done to it. In addition, the following are identified proposed challenges to be faced:

1. Poor respondents attitude
2. Time constraints, and

     iii.          Finance

1.8   DEFINITION OF TERMS

Effect      A change which is a result or consequence of an action or other cause.

Gender       is the range of characteristics pertaining to, and differentiating between, masculinity and femininity.

Culture    Culture is the social behavior and norms found in human societies. 

Tax  A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures

Compliance     The action or fact of complying with a wish or command.

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