Tax Compliance and The Moderating Role of Taxpayer's Financial Condition: A Proposed Model for Nigeria.
Keywords:
tax compliance, taxpayer's financial condition, nigeriaAbstract
The issue of service quality was initially thought to be a concept related only to the private sector but with systematic extension of the principles of marketing to the public sector, it is now realized by organizations operating within the public sector that customer service and quality are strategic issues that desire attention. The concern for improvement of public service delivery in Nigeria prompted the Federal Government to establish the Service Compact office to monitor quality of service delivery by public sector organizations. Just like other public organizations in Nigeria, the issue of service quality should also be critical to tax offices because they provide numerous services to the Nigerian taxpayers. But prior statistical evidences reveal that tax compliance level is dropping in Nigeria especially at individual income tax level. Although a multitude of factors may account for such phenomenon, the perception of taxpayers on the quality of tax service could also play a role. Considering the cultural antecedent of extended family burden and high rate of poverty in Nigeria and some other developing countries, the moderating role of taxpayer’s financial condition equally may not be less important. Therefore, this paper proposes further expansion to tax compliance model to incorporate perceived tax service quality as well as moderating effect of taxpayer’s financial condition to capture the environmental reality of some developing countries. This paper discusses relationship between perceived tax service quality and compliance behavior together with moderating effect of taxpayer’s financial condition. The proposed study’s framework shows the determinants of perceived tax service quality (interaction quality, physical environment quality and tax service outcome quality) possibly having direct relationship with compliance behavior but the relationships could be moderated by the financial condition of the taxpayers.TA
Downloads
References
Abdulrazaq, M. (1993). Nigerian tax offences and penalties. Ilorin: Batay Law Publication Ltd.
Alabede, J. O. (2001). Improving effeciency of tax administration for effective revenue generation in democratic Nigeria. SBS national conference. Damaturu: Federal Polytechnic.
Allingham, M., & Sandmo, A. (1972). Income tax evasion:A theoretical analysis. Journal of Public Economics, 1(3-4), 323-338.
Alm, J. (1999). Tax compliance and tax administration. In H. W. Bartley, Handbook on taxation. New York: Marcel Deker.
Alm, J., Martinez-Vazquez, J., & Schneidler, F. (2003). Sizing the problem of the hard-to-tax. Andrew Young School of Policy Studies international conference. Altanta: University of Georgia.
Andreoni, J., Erard, B., & Feinstein, J. (1998). Tax compliance. Journal of Economic Literature, 36, 818-860.
Asabe, D. (2005). The administration of personal income tax in Nigeria: Some problem areas. Working paper, University of Jos,Nigeria.
Asubonteng, D., McCleary, K. L., & Swan, J. E. (1996). SERQUAL revisited:A critical review of service quality. Journal of Service Marketing, 10(6), 62-81.
Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169-217.
Bloomquist, K. M. (2003). Income inequality and tax evasion: A synthesis. Tax Notes International, 31(4), 347-367.
Brady, M. K., & Cronin Jr., J. J. (2001). Some new thoughts on conceptualising perceived service quality: A hierarachical approach. Journal of Marketing, 65, 34-49.
Brett, J. F., Cron, W. L., & Slocum Jr., J.W. (1995). Economic dependency on work: A moderator of the relationship between organizational commitment and performance. Academy of Management Journal, 38 (1), 261-271.
Brysland, A., & Curry, A. (2001). Service improvement in public service using SERQUAL. Managing Service Quality, 11(6), 389-401.
Caro, L. M., & Garcia, J. A. M. (2007). Measuring perceived service quality in urgent transport service. Journal of Retailing and Consumer Services, 14(1), 60-72
Carroll, J. S. (1989). A cognitive-process analysis of taxpayer compliance. Symposium on Taxpayer Compliance Research. Texas: National Academy Sceinces.
Central Bank of Nigeria. (2008). Annual report and statement of account. Abuja: Central Bank of Nigeria.
Chan, C. W., Troutman, C. S., & O’Bryan, D. (2000). An expanded model of taxpayer compliance: Empirical evidence from USA and Hong Kong. Journal of International Accounting, Auditing and Taxation, 9(2), 83-103.
Chartered Institute of Taxation of Nigeria. (2010, May 7). Why Nigeria’s tax system is weak. Punch.
Chau, G., & Leung, P. (2009). A critical review of Fischer’s tax compliance model:A research synthesis. Journal of Accounting and Taxation, 1(2), 34-40.
Chen, C., & Kao, Y. (2009). Relationship between process quality, outcome quality, satisfaction and behavioral intentions for online travel agencies: Evidence from Taiwan. The Service Industries Journal, 1-12.
Cobham, A. (2005). Tax evasion, tax avoidance and development. United Kingdom: Finance and Trade Policies Research Centre,University of Oxford.
Donnelly, M., Dalrymple, J. F., Wisniewski, M., & Curry, A. C. (1995). Measuring service quality in local government:The SERVQUAL approach. International Journal of Public Sector Management, 8(7), 14- 19.
Doran, L. I., Stone, V. K., Brief, A. P.,& George, J.M. (1991).Behavioral intention as predictors of job attitude: The role economic choice. Journal of Applied Psychology, 76(1), 40-46.
Dubin, J. A., & Wilde, L. L. (1988). An empirical anaysis of federal income tax auditing and compliance. National Tax Journal, 41(2), 61-74.
Dubin, J. A., Graetz, M. A., & Wilde, L. L. (1987). Are we a nation of tax cheater?: New econometric evidence on tax compliance. American Economic Review, 77(2), 240-245.
Eshag, E. (1983). Fiscal and monetary policies and problems in development countries. Cambridge: Cambridge University Press.
Ewepu, G. (2010, March 8). Welfare and service delivery. Leadership, p. 4. Feige, E. (1998). The underground economics: Tax evasion and information
distortion. Cambridge: Cambridge University Press.
Feld, L. P., & Frey, B. S. (2003). Deterrence and tax morale: How tax administration and taxpayers interact. Organisation for Economc Co- operation and Development Papers, 3(10), 1-19.
Feld, L., & Frey, B. (2006). Tax evasion in Switzerland: The role of deterrence and tax morale. Working paper No 284, Institute for Empirical Research in Economics, University of Zurich.
Feust, C., & Riedel, N. (2009). Tax evasion, tax avoidance and tax expenditure in developing countries: A review of the literature. United Kingdom: Oxford University Centre for Business Taxation.
Fischer, C. M. (1993). Perceived detection probability and taxpayer compliance: A conceptual and empirical examination. Ann Arbor: UMI.
Fischer, C. M., Wartick, M., & Mark, M. (1992). Detection probability and tax compliance:A review of the literature. Journal of Accounting Literature, 11(2), 1-46.
Franzon, L. (2000). Tax evasion and tax compliance. In B. Bouckaert, & G. DeGeest, Encyclopedia of Law and Economics . Cheltenham: Edward Elgar.
Goradnichenko, Y., Martinez-Vazquez, J., & Peter, K. (2009). Myth and reality of flat tax reform:Micro estimates of tax evasion response and welfare effects in Russia. Andrew Young School of Policy Studies international conference. Altanta: Georgia State University.
Gronroos, C. (1984). A service quality model and its marketing implications. European Journal of Marketing, 18(4), 36-44
Jackson, B. R., & Millron, V. C. (1986). Tax compliance research: Finding, problem and prospects. Journal of Accounting Literature, 5, 125-165.
Job, J., & Honaker, D. (2003). Short-term experience with responsive regualtion in the Austrailian Taxation Office. In V. Braithwaite, Taxing democracy: Understanding tax avoidance and evasion. Aldershort: Ashgate Publishing Ltd.
Job, J., Stout, A., & Smith, R. (2007). Culture change in three taxation administrations: From command - and - control to responsive regulation. Law and Policy , 29(1), 84-101.
Kiabel, B. D., & Nwokah, N. G. (2009). Curbing tax evasion and avoidance in personal income tax administration: A study of the south- south states of Nigeria. European Journal of Economics, Finance and Administrative Sciences, 15, 16-61.
Kirchler, E. (2007). The economic psychology of tax behavior. Cambridge: Cambridge
Kirchler, E., Muelbacher, S., Kastlunger, B., &Wahl, I. (2007). Why pay taxes? A review of tax compliance decisions. Working paper 07-03, Altanta: Georgia State University.
Lago-Penas, I., & Lago-Penas, S. (2008). The determinants of tax morale in comparative perspectives:Evidence from a multilevel analysis. Spain: Instituto de Estdios fiscales.
Lewis, A. (1982). The psychology of taxation. Oxford: Martin Robert.
Madhavaiah, C., Rao, S. D., & Akthar, P. (2008). Perceived service quality measure in parcel delivery services: Development and validation of a multidimensional and hierarchical model. Journal of Marketing and Communication, 4(1), 4-22.
Manaf, N. A. (2004). Land tax administration and compliance attitude in Malaysia. Unpublished doctoral thesis, University of Nottingham, United Kingdom.
Mathieu, J. E. &Zajac, D. M. (1990). A review and meta-analysis of the antecedents, correlates and consequences of organization commitment. Psychology Bulletin, 108, 171-194.
McGee, R. W. (2006). The ethic of tax evasion: A survey of international business academic. 60th International Atlantic Economic Conference. New York.
McGill, G. A. (1988). The CPA’s role in income tax compliance: An empirical study of variability in recommending aggressive tax position. Unpublished doctoral dissertation, Texas Tech. University, Texas.
Murphy, K. (2007). Procedural justice and the regulation of tax compliance behavior:The moderating role of personal norm. Andrew Young School of Policy Studies international conference. Atlanta: Georgia State University.
Mustafa, M. H. (1997). An evaluation of Malaysian tax administrative system and taxpayers perceptions towards assessment system, tax law fairness and tax law complexity. Unpublished doctoral thesis, Universiti Utara Malaysia.
Niemirowski, P., & Wearing, A. (2003). Taxation agents and taxpayer compliance. Journal of Australian Taxation, 6(2), 166-200.
Nzotta, S. M. (2007). Tax evasion problems in Nigeria:A critique. The Nigerian Accountant, 12(1), 40-43.
Odinkonigbo, J. J. (2009). Rethinking the Nigeria’s tax policy toward achieving tax compliance. Unpublished doctoral thesis, York University, Toronto.
Odusola, A. (2006). Tax reform in Nigeria. Research paper, World Institute for Development Economic Research, United Nation University.
Olaofe, E. O. (2008). Overview of tax administration and three tiers of government in Nigeria. ICAN Students Journal, 12(2), 7-15.
Oliver, R. L. (1980). A congnitive model of the antecedents and consequences of satisfaction decisions. Journal of Marketing Research, 17, 460-469.
Ott, K. (1998). Tax administration reform in transistion: The case of Croatia. Financijska Praksa, 22(1/2), 1-40.
Parasuraman, A., Zeithmal, V. A., & Berry, L. L. (1985). A conceptual model of service quality and its implications for future research. Journal of Marketing, 49(fall), 41-50.
Powpaka, S. (1996). The role of outcome quality as a determinant of overall service quality in different categories of services industries: An empirical investigation. Journal of Service Marketing, 10(2), 5-25.
Plyle, D. J. (1998). Tax evasion and black economy. New York: St Martin Press.
Proctor, T. (2007). Public sector marketing. New York: Prentice Hall.
Riahi-Belkaoui, A. (2004). Relationship between tax compliance international and selected determinants of tax morale. Journal of International of Accounting, Auditing and Taxation, 13(1), 135-143.
Rotberg, R. I., & Gisselguist, R. M. (2009). Strengthening African governance: Index of African governance results and rankings. Cambridge: World Peace Foundation.
Sandmo, A. (2005). The theory of tax evasion:A retrospective view. National Tax Journal, 53(4), 643-648.
Sani, A. (2005). Contentious issues in tax administration and policy in Nigeria: A governor’s perspective. First National Retreat on Taxation. Lagos: Joint Tax Board.
Slemrod, J. (2009). Old George Or’well got it backward: Some thoughts on behavioral tax economic. Working paper No2777, CESIFO.
Staple, W. J., Darlrmple, J. F., & Bryar, R. M. (2002). Assessing call centre quality using SERVQUAL mode. Retrieved April 15, 2010, from www.crm2day.com/library/docs/ap0055.pdf.
Staurt, F. I., & Tax, S. S. (1996). Planning for service quality: An intergrative approach. International Journal of Service Industry Management, 7(4), 58-77.
Tanzi, V., & Shome, P. (1993). A prime on tax evasion. New York: Working paper, IMF.
Tayib, M. B. (1998). The determinants of assessment tax collection: The Malysian local authority experience. Unpublished doctoral thesis, University of Glamorgan, United Kingdom.
Terkper, S. (2003). Managing small and medium size taxpayers in developing economies. Tax Note International, 211-234.
Thomson, W. (2004). Delivery service in Nigeria: A roadmap. United Kingdom: Office for Public Service Reform.
Torgler, B. (2007). Tax compliance and tax morale. Cheltenham: Edward Elgar Publishing Ltd.
Torgler, B. (2003). Tax morale: Theory and analysis of tax compliance. Unpublished doctoral dissertion, University of Zurich,Switzerland.
Torgler, B., & Schaffner, M. (2007). Causes and consequences of tax morale: An empirical investigation. Working paper No 2007-11, CREMA.
Volkerink, B. (2009). Tax policy in Sub-saharan Africa: A survey of issues for anumber of countries. Working paper, Centre for Taxation and Public Governance, Utrecht University.
Wallshutzky, I. G. (1984). Possible causes of tax evasion. Journal of Economic Psychology, 5(1), 371-384.
Weigal, R., Hessing, D., & Elffer, H. (1978). Tax evasion research:A critical appraisal and theoretical model. Journal of Economic Psychology, 8(2), 215-235.
Wenzel, M. (2004a). The social side of sanctions: Personal and social norms as moderators of deterrence. Law and Human Behavior, 28(5), 547-567.
Wenzel, M. (2004b). An analysis of norms processes in tax compliance. Journal of Economic Psychology, 25(2), 213-238.
Wisniewski, M. (1996). Measuring service quality in the public sector:The potential for SERQUAL. Total Quality Management and Business Excellence, 7(4), 357-366.
Wisniewski, M. (2001). Using SERQUAL to access customer satisfaction with public sector services. Managing Service Quality, 11(6), 380- 388.
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Disclaimer
Global Business Management Review (GBMR) has taken all reasonable measures to ensure that material contained in this website is the original work of the author(s). However, the Journal gives no warranty and accepts no responsibility for the accuracy or the completeness of the material; no reliance should be made by any user on the material. The user should check with the authors for confirmation.
Articles published in the Global Business Management Review (GBMR) do not represent the views held by the editors and members of the editorial board. Authors are responsible for all aspects of their articles except the editorial screen design.
Submission of an article is done with the understanding that the article has not been published before (except in the form of an abstract or as part of a published lecture, or thesis) that it is not under consideration for publication somewhere else; that if and when the article is accepted for publication, the author's consent to automatic transfer of the copyright to the publisher.