DETERMINANTS OF TAX MORALE IN NIGERIA
  CHAPTER ONE
INTRODUCTION
1.1    BACKGROUND OF THE STUDY
Taxation has ever been an important policy field throughout history and will stay a crucial aspect in future policies since it creates the basis for the state to work.
    Tax can be defined as a compulsory levy paid out of the profit or income of an individual, companies, etc. for the development of the state or country in which they operate.  In other words, a tax is an impose levy by the government against the income, property, wealth and consumption of individual and corporate organization to enable government obtain the required revenue to provide basic amenities, security and well being of the citizens. First detailed about taxation can be found in ancient Egypt (Webber & Wildavsky, 1986).
    Tax revenues provide government with the funds they need to invest in development, relieve poverty, deliver public services and build the physical and source infrastructure for long term growth. (Daft  march 2013, OECD TAX & DEVELOPMENT).
    Adams (1993) begins with the inscription over the entrance to the Internal Revenue Service building. “Taxes are what we pay for a civilized society”. An essential question for policy makers is the extent to which individuals are willing to pay this prices given that the probability of being audited by the tax administration rather low.
    However, there is an apparent disconnect between much of the academic literature on tax compliance and the administration of tax policy. While tax administrators  are obviously concerned about the enforcement, they also tend to place a great deal of emphasis on improving “tax morale” by which they generally mean increasing voluntary compliance with the laws and  creating social form of compliance. The OECD, for example, noted that “the promotion of voluntary compliance should be a primary concern of revenue authorities” in its principles for good tax administration (OECD 2001) and has highlighted the importance of tax moral more generally (OECD 2013).
Why is it important to analyze tax morale? The reasons of tax compliance and noncompliance have obtained increased attention in the last few years. It can be supposed that nobody likes paying taxes even though everybody knows that taxes are essential to the government. One possibility is to “enforce” citizens to pay taxes with a deterrence policy.  However, conducting a universal enforcement strategy is connected with high costs and cannot be achieved unless there is a tax administrator under every bed.
Slemrod (1992), for example states: “From the tax collection standpoint, it is extraordinarily expensive to arrange an enforcement regime so that, from a strict cost-benefit calculus, noncompliance does not appear attractive to many citizens. It follows that methods that reinforce and encourage taxpayers’ devotion to their responsibilities as citizens play an important role in the tax collection process (p. 7)”).
    A widely accepted alternative explanation for the inconsistency between enforcement and tax compliance is tax morale, synthetically defined as a “moral obligation’ or an ‘intrinsic motivation” to pay taxes (Togler & Schneider, 2006). Tax morale has turned into a key issue in the most recent empirical research on tax compliance.
    The OECD working paper no 315 of November 2012, defined tax morale as the motivation of a country’s citizen to paying taxes, in addition to legal obligations. Furthermore, Multivariate analysis, show that tax morale is an important determinant of the “shadow economy” and has therefore an impact on tax evasion (Torgler, 2011). Tax morale is also closely linked to the term tax payer ethics by Alm & Torgler 2006:228) and used the definition by song and yarbrough (1978:443) that, “the norms of behaviour governing citizens as taxpayers in their relationship with government” Torgler and Murphy (2004:301) defines the concepts as ”tax morale  can generally be understood to described the moral principles or value individuals hold about paying their tax.  A major difficulty on analyzing tax evasion lays in its measurement.
    Furthermore, given that persecution of tax evasion is not far from being perfect, but also expensive, opening the black box of tax morale may contribute to the efforts of designing alternative mechanism of enforcement as reduce tax evasion.
    The determinant of tax morale varies between regions that is what determines tax morale in country A might not determine tax morale in country B. For this research work we will look at the common determinant of tax morale among countries.
1.2 statement of the problem
Low tax compliance is a matter of serious concern in many developing countries. This is because it limits the capacity of government to raise revenue for development purpose (Torgler, 2003). This implies that the higher the revenue, the more likely government will put in place developmental plans for the enhancement of the living standard of the people.
    Tax evasion is one of the major problem, some individuals are dodging their responsibility which is the remittance of taxes. Another problem of this research therefore, is to determine the effect of tax morale on the tax paid in compliance with tax policies of government as a useful avenue for revenue generation. There is range of factor that might influence tax payer’s behaviour.
     The role of individual in the society and accepted norms of behaviors have also shown to have a strong influence  (Wenzel 2002).
    There are limits for a government to increase compliance using traditional policies sum as audit an fines. Therefore, if the government can influence a norm, tax evasion can be reduced by policy activities.
This study seeks to formulate the following research question
1.    What is the relationship between tax morale and demographic factors?
2.    What is the relationship between tax morale and trust in government?
3.    What is the relationship between  tax morale and marital status?
4.    What is the relationship between tax morale and employment status?
5.    What is the relationship between tax morale and economic status?
1.3     Statement Of The Research Objective
This study is aimed at examining the determinants of tax morale. Specifically, the objective of this study are to:
i.)    examine the effect of demography factors on tax morale.
ii.)    examine the effect of trust in government on tax morale.
iii.)    examine the effect of marital status on tax morale.
iv.)    examine the effect of employment status on tax morale.
v.)    examine the effect of economic status on tax morale
1.4 Statement of Research Hypothesis
In the course of the research work, the following hypothesis (H0) will be tested
H01: there is no significant relationship between tax morale and demographic factors.
H0: there is no significant relationship between tax morale and trust in government.
H0: there is no significant relationship between tax morale  and marital status.
H0: there is no significant relationship between tax morale and employment status.
H0: there is no significant relationship between tax morale and economic status
1.5 Scope of the Study
This study evaluates the effect of tax morale on tax evasion, tax avoidance and tax compliance in Nigeria. This study will look at some employees in the public, private and informal sector of the Nigerian economy, that are duly registered with the Federal Inland Revenue for Pay As You Earn.
1.6 significance of the study
The significance of the study, is to motivate individuals so as to be able and willing to pay tax i.e  a compulsory levy imposed by government. And so as to put a stop to the criminal act i.e tax evasion. To examine tax morale in environment where tax enforcement is limited or non existent and await pecuniary benefits of compliance are likely to be minimal.
    Dwenger, Kleven, Rasul and Rincke (2014), focus on such an environment in studying compliance with the local protestant which tax in a metropolitan area in Bavaria.
1.7 Limitation of the Study
The limitation of this study however, is
I.)    Despite some individual in the bracket of the determinant of tax morale some are still not willing to pay tax.
II.)    Another limitation of the study is lack of fund and time constraint
1.8 Definition of the Terms
Tax: Tax is a compulsory levy imposed by the government against the income, profit, wealth of individual and corporate organization
Tax Evasion    : Is a deliberate act on the part of tax payer not to pay tax
Tax Avoidance: Is a way of identifying the loop-hole in the tax law then taking advantage of such a loop-hole to the tax payable.
Tax compliance: Willingness to pay taxes without threat or force
Tax Morale: Is the intrinsic motivation to pay tax . A legal system for assessing and collecting taxes.
Social Norms: As set of behavioral models and wiliness or standard of behavior shared by member of a social group tax policies.