Assessment Of Causes And Effects Of Personal Income Tax Evasion In Nigeria (A Case Study Of Imo State)

ABSTRACT

 The major problem facing the Nigerian tax system has been high rate of engagement of personal income tax earners in certain anti-tax activities/strategies thus widening the gap between the governments budgeted tax revenue and actual tax revenue collected. It is based on this problem that the research is carried out to access the causes and effects of personal income tax evasion in Nigeria. The study adopts a combination of survey research design and longitudinal design. Tax records on estimated and actual revenues for a period of five years were collected from Imo state Board of Internal Revenue. This was complemented with survey data obtained from 216 respondents using research designed questionnaire validated by experts. Descriptive statistics, correlation and regression techniques were used in analyzing the data. Our result implicates tax evasion and avoidance as a major cause of gap between assessed and collected personal in come tax revenue. The work further identifies insufficient provision of social amenities, poverty, corruption of tax officials/government officials, high rate of illiteracy among tax payers and ignorance/misunderstanding of tax laws as major causative factors of tax evasion and avoidance. With R2of .744 and a t value of (-2.951) significant at 1% level shows that evaded personal income tax has significant effect on collected personal income tax revenue. The study therefore concludes that sustainable revenue generation to Nigerian government could be achieved by checkmating tax evasion and avoidance contrivance through the imposition and implementation of stiff penalty for tax evaders, provision of basic amenities and proper assessment of tax payers' incomes.