Chapter one

Introduction

1.1.    Background to the study

Several studies have suggested that tax compliance behaviour requires effective budgetary responsibility. It has been suggested that if government is economically responsible, taxpayers' perception and tax compliance behaviour will improve. This argument seems to imply that encouraging voluntary tax compliance requires public accountability and fiscal openness by the government. The cornerstone of good governance is fiscal prudence, which takes the shape of increased public accountability, fiscal transparency, etc. Fiscal responsibility is a vital component of public governance because it ensures better public accountability, smart use of the nation's limited resources, and fiscal sustainability and helps to create positive tax payers perception towards tax cxompliance. Public accountability and fiscal responsibility are synonymous, which essentially implies that individuals in charge of creating and carrying out policies should be required to provide an explanation to the general public for their acts and/or inactions  on tax payers funs(Moore & Rakner, 2016; Adeyeye, Otusanya & Aromowole, 2016). This implies that there are two people involved in fiscal responsibility cum public accountability: the one who assigns the responsibility and the other who agrees to fulfil it (Ibrahim & Okwoli, 2012).

A government that practices fiscal responsibility will create a budget that is both sustainable and long-term. It makes responsible and honest financial decisions and uses resources wisely in order to live within its means this has a positive influence on tax compliance (Osirim, 2016). In a similar assertion, Monguno (2018) posits that a highly accountable person or government is open-minded and transparent in all that they do, adhering strictly to rules, regulations, and procedures. The people hold responsible and accountable governments accountable for their actions and they truly exercise stewardship. It provides information in a clear, open, and comprehensive manner, leaving no space for ambiguity or doubt. A responsible government is very trustworthy and demonstrates a high level of probity, which increases public trust and encourages voluntary tax compliance. One cannot isolate a low degree of government fiscal responsibility from a poor level of tax compliance. The notion that the government ought to be fiscally accountable to the people it serves may increase the voluntary tax compliance of the typical taxpayer. It's thought that Nigeria has a low rate of tax compliance (Mark, 2014 & Elemah, 2015). Furthermore, poor voluntary tax compliance and a lack of a tax culture in Nigeria are acknowledged in the National Tax Policies of 2012 and 2017. These issues are severe because they have repeatedly resulted in a budget deficit and a decrease in the funds required to fund social amenities and public services. Nigeria has a poor tax compliance rate for a variety of reasons, but it is important to recognise the importance of fiscal responsibility, public accountability, and fiscal transparency (Adeyeye & Otusanya, 2015;Bird & Zolt, 2015). When governments and tax authorities are not accountable, transparent and are corrupt the result is likely to have some influence on taxpayers' perception and compliance (Adeyeye, 2013; Ibrahim & Ahmad, 2017). This suggests that lack of fiscal responsibility in governance may have impact on the culture of the people towards tax payer. It has been observed that most individuals and corporate entities with substantial income evade and avoid tax due to lack of fiscal responsibility, poor accountability, fiscal transparency, effective and efficient tax administration (Joshi, Prichard & Heady, 2014).

Joshi, et al. (2014) posits that the states' responsiveness and accountability to taxpayers may encourage quasi-voluntary compliance. As part of the social contract deal, government is expected to provide social amenities and infrastructural facilities to the citizens from the revenues generated from tax collection.. It has been reported that citizens' perception of government fiscal irresponsibility that the taxes they pay are not spent or judiciously utilized in the provision of public goods and services is one of the problems undermining tax compliance (Odd-Helge, Ngalewa & Katera, 2006). The aforementioned suggests that the degree of voluntary tax compliance can be increased by the government's visible presence in terms of infrastructure development and the public's favourable opinion of the government's ability to deliver quality services. It seems that earlier research has not considered the more expansive definition of citizens perception on tax compliance. Thus, this study focuses on citizens perception of tax compliance in Edo state

1.2 STATEMENT OF PROBLEM

Issue Policymakers face a significant challenge in that low tax compliance restricts the government's capacity to raise the personal income tax to fund growth. The poor perception of tax compliance by citizens in Edo state has been an issue this is because the government of Edo state does little or nothing with tax payers funds in the state which has created a negative perception in tax compliance and morale among citizens in the state. It is to this the study centres on citizens perception of tax compliance in Edo state

1.3 OBJECTIVES OF THE STUDY

The objective of the study is to examine citizens perception of tax compliance in Edo state. Other specific objectives include:

1.To examine the determinants of tax compliance among citizens in Edo

2.  To examine the influence of fiscal responsibilities of government on the perception of tax compliance in Edo state

3 To examine the relationship between procedural fairness and tax compliance among citizens in Edo state

4 To examine how level of education influences the perception of tax compliance in Edo state.

1.4 RESEARCH QUESTIONS

1.What is the determinants of tax compliance among citizens in Edo?

2.  what is the influence of fiscal responsibilities of government on the perception of tax compliance in Edo state?

3 how is  the relationship between procedural fairness and tax compliance among citizens in Edo state?

4 How does level of education influences the perception of tax compliance in Edo state?

1.5 HYPOTHESIS

HO1: there is no influence of fiscal responsibilities of government on the perception of tax compliance in Edo state

1.6 SIGNIFICANCE OF THE STUDY

The need for the appraisal of citizens perception of tax compliance in edo state has been over due. The study will give an insight as how positive perception of tax compliance Will help in achieving maximum tax collection. Help in identifying and appraising the problem inhibiting  poor perception tax  compliance, with the view to addressing them, It will create the right perspective about tax payment and thus encourage commitment to it

1.7 SCOPE OF THE STUDY

The researcher work covered board of Internal Revenue Edo, both the management and the staff of the board of Internal Revenue, Edo state. 

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 OPERATIONAL DEFINITION OF TERMS

  The following terms are define operationally as it was used in the study

TAX COMPLIANCE: Tax Compliance is the individual or business decision to comply with the tax laws in a given country. Diametrically opposed to tax compliance is tax evasion

TAX: A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer by a governmental organization in order to collectively fund government spending, public expenditures, or as a way to regulate and reduce negative externalities.

PERCEPTION: Perception is the organization, identification, and interpretation of sensory information in order to represent and understand the presented information or environment