TAX ENFORCEMENT MEASURES AND TAX REVENUE IN NIGERIA.

Abstract

This study investigated tax enforcement measures and tax revenue in Nigeria. The Federal Inland Revenue Experience and the state Internal Revenue Service aim to ascertain the relationship between tax enforcement measures whose proxies are disdain and litigant, and tax revenue with adopted indices of company income tax, and personal income tax in Nigeria. Data was collected via questionnaire distributed to 371 respondents across 25 firms in Port Harcourt, with a high response rate of 95%. The methodology involves pooled least squares regression, diagnostic tests for multicollinearity and heteroscedasticity, and preliminary analyses including descriptive statistics, Cronbach's Alpha, correlation matrix, and normality tests. The study finds that tax enforcement through litigation has a positive but insignificant effect on personal income tax and a negative and insignificant effect on capital gains tax. Conversely, tax enforcement through disdain positively and significantly impacts capital gains tax revenue. These findings suggest that while litigation may not be effective, leveraging social norms and public perception through disdain can enhance compliance and tax revenue. The study, therefore, recommends that frequent tax audits be implemented, with a focus on significant taxpayers and high-net-worth individuals who are known to engage in tax disdain. Fear of a recurring tax audit makes tax defaulters fearful, which makes them comply. Tax penalties ought to be sufficiently harsh to discourage potential taxpayers from filing false tax returns. To further inform people on the necessity of meeting tax obligations and the consequences that follow a default, tax education is also advised.