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The purpose of this study was to investigate the perception of tax
evasion to the payment of tax on ethical reasons. A case study of some
selected Local Government Area in Akwa Ibom State. Extensive review
of the existing literature was made and relevant information was
extracted. The Design of the study is descriptive field survey and
observation method and the study was conducted at the selected Local
Government Area in Akwa Ibom State. The instrument for data
collection is structured questionnaire and the source of data used was
primary and secondary sources. The data collected were analyzed using
Chi-square test (X2
). Based on the analysis of this research, the
researcher discovered the following as her data findings, that there is
widespread ethical support for tax evasion, the study showed varying
degree of justification for tax evasion, that tax evasion is ethical
sometime and also found that the perceived government corruption can
make respondent to evade tax. Therefore, until those underlying cause
are addressed, tax evasion may continue to be widespread.
Title page – – – – – – – –
Approval page – – – – – – – – ii
Certification – – – – – – – – iii
Dedication – – – – – – – – iv
Acknowledgement – – – – – – – v
Abstract – – – – – – – – vi
Table of Contents – – – – – – – vii
List of tables – – – – – – – – viii
1.1 Historical background to the study – – – – 1
1.2 Statement of the Problems – – – – – 4
1.3 Objective of the study – – – – – – 5
1.4 Research Questions – – – – – – 5
1.5 Research Hypothesis – – – – – – 6
1.6 Significance of the study – – – – – 6
1.7 Scope of the Study – – – – – – 7
1.8 Definition of Terms – – – – – – 7
2.1 Empirical investigation of tax evasion – – – 8
2.2 Overview of taxation system in Nigeria – – – 10
2.3 Taxation as a tool for fiscal policy – – – – 13
2.4 Problem of effective tax administration in Akwa Ibom
State – – – – – – – – – 16
2.5 Tax administration bodies in Nigeria – – – – 19
2.6 Objective of taxation – – – – – – 19
2.7 Tax effects – – – – – – – – 22
2.8 Agents of tax administration – – – – – 23
2.9 Three opinions on the ethic of tax evasion – – 24
2.10 Reasons for tax evasion – – – – – 26
2.11 Forms of tax evasion – – – – – – 27
2.12 Comparison of tax evasion and tax avoidance – – 29
2.13 Different between tax avoidance and tax evasion – 30
3.1 Research Design – – – – – – – 34
3.2 Sources of data – – – – – – – 35
3.3 Area of the study- – – – – – – 35
3.4 Population of the study- – – – – – 35
3.5 Sampling size determination and sampling technique
– – – – – – – – – – 36
3.6 Reliability Test – – – – – – – 37
3.7 Validity Test – – – – – – – 38
3.8 Method of data analysis – – – – – 38
3.9 Decision criterion for validation of hypothesis – – 40
4.1 presentation of data – – – – – – 41
4.2 Test of Hypothesis – – – – – – 52
5.1 Summary – – – – – – – – 61
5.2 Conclusion – – – – – – – – 62
5.3 Recommendations – – – – – – 62
Table 4.1 shows questionnaire administered – – – 41
Table 4.2 Analysis of sex respondents – – – – 42
Table 4.3: Analysis to know if local government
really maintain tax department? – – – – 43
Table 4.4:- Analysis to know, if the management uses tax
funds for decision making in their local government
area. – – – – – – – – 44
Table 4.5:- Analysis to know whether people agree to pay
tax in their local government or not. – – – 45
Table 4.6:- Analysis to show how often do people pay tax in
their local government. – – – – – 46
Table 4.7:- Analysis to show whether tax evasion is ethically
justifiable in their local government area? – – 47
Table 4.8:- Analysis to show whether government is really making
use of the tax paid by the tax payer for development?
– – – – – – – – – 48
Table 4.9: Analysis to show whether governments take
actions on people that are practicing tax evasion. – 49
Table 4.10:- Analysis to know what people think is the main reason
for tax evasion in their local government. – 50
Table 4.11:- Analysis to show whether their local government
keep proper tax record? – – – – 51
4.11a: Question 7 and 11 in the questionnaire will be used to
test for the hypothesis stated above – – 52
Table 4.11b: Table showing computed value of X2
hypothesis I – – – – – – 54
Table 12a – – – – – – – – – – 55
Table 4.12b: Table showing computed value of X2
hypothesis III – – – – – – 57
Table 13a: Question 8 and question 15 in the questionnaire
will be used to test for the hypothesis stated above. 58
Table 13b- – – – – – – – – – 60
The word tax first appeared in the English language only in the
14th century, it is derived from the Latin word taxare, which means to
“Assess” before that, English used the related word task derived from
old French, for a while task and tax were both in common use, the first
requiring labour, and the second money.
In the Stone Age, tax was collected in Nigeria long before the
coming of Europeans; it was collected by the local Chief for the purpose
of administration and defense. Every one was expected to give part of
his or her proceeds from cultivation of land to the state, those who were
not cultivating were required to give their human (labour) sources for
public work such as clearing the bush, digging the pit latrine, wells etc.
for the benefit of the community, as a whole. Failure to render such
services usually resulted in loss of property which might be reclaimed
after payment. With the coming of the Europeans, taxes were collected
from individuals through local chief in 1964; a legislative council was set
for the whole country which obliged the regional council with a large
measure of financial responsibility. After independence, state
government were to fine out other sources of generating revenue which
is today known as pay as you earn (PAYE).
Tax is a levy imposed by the federal board of Inland Revenue
(federal government) on the chargeable income generated by
individuals, organizations and other corporate bodies for the betterment
of the society as a whole.
Taxation is the act of taxing, it is also the amount assessed as a
tax, it is revenue raised from taxes. Taxation is the means of progress
through which the government generate revenue for national
development through the contribution by the citizens.
According to Ogundele (1999) taxation is defined as a process or
machinery by which communities or group of persons are made to
contribute in some agreed amount of money for the propose of the
administration and development of the society. It can be inferred that
the payment of tax will in turn be beneficial to the entire community of
they pay their tax properly.
Tax constituted an important source of revenue to the government
of any country both direct and indirect taxes that are collected by the
government inform of income tax, excise duty, import and export duties,
purchase and sales tax and so on help the government to generate a lot
of revenue for the smooth administration of a nation. There are two
elements in every form of taxation and that is the base and rate
element. The tax base is the object which is taxed or a measure of the
private sector income or wealth that can be taxed. The tax rate is the
percentage of the measured amount taken from the tax base. As earlier
stated, taxation is one of the most important and major source of
government revenue, in this case the money realized from is used to
provide social goods and services so that both the rich and the poor will
have equal chance of making use of them through the provision of social
amenities such as good roads, electricity, pipe borne water, hospitals
welfare organization, schools and so on.
In spite of these benefits from tax, most people still run away from
tax indulging themselves in what is called tax evasion and avoidance.
Attempt to avoid some portion of inability or not to pay tax will affect
the revenue generation of the government and that is the most
condition why government frowns at the issue of tax evasion and uses
its authority to enforce compliance. But in spite of the frown by the
government of Nigeria, there have not been adequate and sincere
efforts towards enforcing the tax evaders on the need for them to pay
their tax instead, they concentrated on the revenue from oil sector,
while overlooking the taxes on agriculture which is supposed to yield
revenue to the country as a whole.
Arowomole and Oluwalayode (2006:39) define tax evasion as a
deliberate act on the part of the tax payer to reduce their tax liability
through illegal means or an attempt not to pay tax due. While tax
avoidance is defined as a legal way by which a taxpayer reduces his or
her tax liabilities. Tax evasion is considered as a criminal offence.
The researcher has observed that tax evasion has become
rampant in Akwa Ibom state, individuals and firm manover or try to
evade paying tax based on their perceptions of tax.
The researcher has through this investigation observed that most
people formulate their tax in order to underpay tax while some
companies and individuals as well smuggle goods into the country in
order to evade tax payment.
Most people see tax paying as government exploiting them while
some try to bribe government officials in order that they may evade tax
payment. It has been observed to that most people fail to register their
company or goods in order to equally avoid tax payment. This is as a
result of ignorance or an attempt to cheat the government.
Finally, it has been observed by the researcher that as tax
payment is one of the ways government generate revenues, tax evasion
would only trigger off lack of revenue for development and tax evasion
is detrimental to the government. Hence, the decision of the researcher
is to investigate the stated problem, the reason why individuals and
firms indulge in tax evasion and to offer suggestion for solving the
i. To investigate the perception of tax payers to the payment of tax
on ethical reasons.
ii. To identify specific key areas that tax payer link to tax evasion.
iii. To examine the effect of perceived corruption in government on
tax evasion.
iv. To state the seriousness of tax evasion according to the Nigerian
i. Is tax evasion ethically justifiable?
ii. What are the reasons for tax evasion?
iii. What is the attitude of tax payer when government is perceived to
be corrupt?
iv. What is the most rampant ethical justification for tax evasion?
Because of the above research questions, the following hypothesis
was formulated;
i. Tax evasion is not ethically justifiable
Tax evasion is ethically justifiable
ii. There is no reason for tax evasion
There are reasons for tax evasion
iii. There is no rampant ethical justification for tax evasion
There is rampant ethical justification for tax evasion
This research work would be referred to various tax authorities,
the federal board of Inland Revenue, local government revenue
committee as well as their tax officials who are responsible of collecting
tax on individuals or corporate bodies, it gives them insight on how to
improve the tax administration. The research would also help the
professional bodies like the chartered institute of taxation of Nigeria and
the institute of chattered accountant of Nigeria as well as the members
to see the areas of deficiency on tax collection and call for improvement
in tax revenue. This research would also be relevant to the future
researchers and students of economics, business administration,
accounting and other social and management sciences as well as the
legislations which will also benefit immensely from this research because
it will form basis of tax policy formation, implementation and
This research is premised on obtaining evidence on the ethics of
tax evasion, by obtaining responses from business owners, professional
bodies, tax officials, the federal board of inland revenue, organizations
and others in Akwa Ibom state, thus the study was restricted to some
selected local governments in Akwa Ibom state.
TAX EVASION: An illegal practice where a person, organization
or corporation intentionally avoid paying his or her true tax
TAX ETHICS: It is the rule and regulations governing or guiding
the payment of tax.


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