| Content | THIS REEARCH WORK IS ON FACTORS INFLUENCING ADOPTION OF AGRONOMIC PRACTICES OF NERICA RICE PRODUCTION.
ABSTRACT
This study was conducted to evaluate the factors influencing the adoption of NERICA rice agronomic practices among farmers in three selected Local Government Areas of Kano State, Nigeria. The specific objective were to: Determine the rate of adoption of NERICA agronomic practices; determine factors influencing adoption of NERICA rice; determine the relationship between adoption of NERICA rice and yield, income and level of living of the farmers and identify the constraints encountered by the farmers in adoption of NERICA rice agronomic practice. The study areas were: Tudun Wada, Garin Malam, and Kura. These three Local Government Areas are located between latitudes 110151 N11o 161N and Longitudes 80251E, 8o281E of the equator respectively. A multistage sampling method was employed: Firstly, three LGAs with highest level of NERICA rice production were purposively selected; secondly, two villages were purposively selected on the basis of being the most prominent NERICA rice producing areas from each LGA. Thirdly, 20% of the farmers (548) engaged in NERICA production was randomly selected to get 110 respondents for this study. It was found that 96%of the respondents were males with mean age of 38. About 93% of the respondents adopted NERICA varieties and seed rate; spacing was adopted by 51% and weed control adopted by 63%. Multiple regression analysis revealed that the level of education, age, family size, extension contact, farming experience, access to credit facilities, and membership of the association. Technological characteristic like complexity, and compatibility collectively contributed 46% to the variability in the adoption of NERICA rice agronomic practices. The survey found that 22% of the respondents obtained N31, 000 and above as increase in income due to adoption of NERICA rice. It was also found that 53% of the farmers reported higher cost of fertilizer, 47.3% poor credit facilities, 34% inadequate extension services, 16.4% insufficient agrochemicals as major problems. It was recommended that farmers should be encouraged to adopt agronomic practices as a package to improve their level of production through participation in extension training and advisory services. It was therefore adoption of NERICA rice agronomic practices was found to have significant effects on, yield, income and level of living of the respondents. Based on this success it is hereby recommended that the NERICA rice productions should be scaled up, replicated in other Local Government Areas within the State.
CHAPTER ONE
I NTRODUCTION
1.1 Background to the Study
Rice is regarded as one of the most important cereal grains in many regions of the world and reported to be the most cultivated crop and consumed for more than 10,000 years ago all over the world (World Bank 2001). Total land area under rice cultivation globally was estimated at 150,000,000 hectares with annual mean production of 500,000,000 metric tons that represents 29% of the total output of grain crops worldwide (Tsuboi, 2004, Kuangdi and Guofang, 2003).
Surveys conducted in 2009 by the National Agricultural Research Systems (NARS) and the National Agricultural Statistical Services (NASS) in 21 Sub-Saharan African countries discovered that land area under NERICA rice production was 140,000 hectares in Guinea and 244,000 hectares in Nigeria. Diagne et al. (2006) and Adegbolaet al. (2006) estimated that the total land area under NERICA rice cultivation was 51,000 hectares in Guinea in 2004 and 5,000 hectares in Benin in 2003. The National Food Reserve Agency (NFRA) of Nigeria reported 186,000 hectares under NERICA 1 cultivation in Nigeria in 2007. The Uganda National Agricultural Research Institute, cited from the Statistics Office in the country‟s Ministry of Agriculture that 35,000 hectares under NERICA 4.
Before NERICA rice biotechnology research program was set up in 1991, rice was the staple food crops for more than half of the world‟s population, and some 240 million people in West Africa were dependent on rice as their primary source of food energy and protein (Kijima, et al, 2008). | The Role of Auditors in the Nigerian Banking Crisis
CHARPTER ONE
- Introduction
In societies marked by divisions of expert labour, external auditing is promoted as a trust engendering technology with the capacity to promote a certain kind of social order (Power, 1999). Accountants, as auditors, have cemented their status and privileges on the basis of claims that their expertise enables them to mediate uncertainty and construct independent, objective, true and fair accounts of corporate affairs (Sikka, 2009). It has been argued, however, that such claims are not good indicators of corporate performance, because capitalist economies are inherently prone to crises (O’Connor, 1987; Sikka, 2009). Furthermore, the claims of expertise are frequently affected by unexpected corporate collapses, fraud, financial crime and the general crisis of capitalism (Baker, 2007; Sikka, 2009; Sikka et al, 2009)
Since 2007, major Western economies have been experiencing a deepening banking and financial crisis arising from subprime lending practices by banks, which in turn has restricted the availability of credit and has led to what has been described as the ‘credit crunch’ (Sikka et al, 2009). Some commentators have attributed this economic crisis to the unethical practices of corporate bank managers and to the inability of auditors to expose such anti-social practices from previous audits (Broad Street Journal, 21 October 2009; Sikka, 2009). Some auditors may have failed to comply with expected standards. If a company fails shortly after being audited, the auditors may be blamed for conducting an inferior audit (Dopuch, 1988). Thus, whenever there is a financial scandal, it must be questioned whether the auditors carried out their duties and obligations with due care and diligence.
In Nigeria the spate of corporate failures witnessed in the financial sector in the early 1990s brought auditors into sharp focus and caused the Nigerian public to question the role of accountants and auditors (Okike, 2004; Bakre, 2007; Ajibolade, 2008). Furthermore, the investigations launched by the regulators and other stakeholders into the cases of distress and disclosure revealed that accountants and auditors were implicated (NDIC, 1995). With the recent banking crisis in Nigeria members of the auditing profession in Nigeria are once again in the limelight, as the banking crisis and the revelation of unethical practices by bank executives and board members has raised many questions about the ethical standards of the accounting profession and about the integrity of financial reports issued by professional accountants (ThisDay, 9 December 2009). The question has been raised as a result of the failure on the part of accountants and auditors to alert regulators when they have discovered fraud and other irregularities in company records (Bakre, 2007; Ajibolade, 2008; Okike, 2009; Neu et al, 2010).
In respect of the banking crisis, attention has focused on the role of accountants and auditors who have been involved. Accountants and auditors may be expected to report financial irregularities in company accounts by enhancing transparency and accountability and by developing techniques for fraud detection. However, an emerging body of literature argues that accounting professionals have increasingly used their expertise to conceal and promote anti-social practices (Sikka, 2008a; US Senate Permanent SubCommittee on Investigations, 2005; Bakre 2007). For example, Akintola Williams and Deloitte (AWD) was indicted for facilitating the falsification of the accounts of Afribank Plc and for deliberately overstating the profits of Cadbury Nigeria Plc. It has been reported that between 1990 and 1994 the Nigerian economy lost more than N6 billion ($42.9 million) to fraud within the banking sector alone (Bakre, 2007).
The social cost of the banking crisis is difficult to estimate, but huge amounts of public money are being used to bail out distressed banks (Sikka, 2009). In 2008, almost every Reserve Bank across the globe, in collaboration with finance ministries, was forced to adopt extraordinary measures to stave off the collapse of the financial institutions and to restore confidence in the banking system. Some countries, such as the UK, took direct stakes in their banks as a temporary measure in order to ensure that they kept lending. The German and French governments offered to guarantee inter-bank deposits to achieve the same purpose, while the US government rolled out the Emergency Economic stabilization Act authorizing the US Treasury
Department to spend up to $700 billion to purchase distressed assets from sick banks and to make a direct capital injection into those institutions (The Guardian, 30 August 2009).
While the global recession was biting hard on advanced economies, the governors of the Central Bank of Nigeria (CBN) had stated that ‘what the rest of the world is now trying to do as the bailout option was what Nigeria did about four years ago, through a pro-active initiative, the result of which we are celebrating today’ (ThisDay, 16 October 2008). Less than a year later, however, Nigerians were awoken to the reality that the Nigerian banks were not so stable after all (The Guardian, 21 August 2009). The audit conducted by the CBN into the activities of the 24 registered banks in 2009 revealed that they were experiencing huge financial difficulties in their operations. As a consequence, in August 2009, CBN injected N420 billion ($2.8 billion) into the first five banks (Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank) which had failed the CBN audit. Two months later, an additional N200 billion ($1.33 billion) was injected to stimulate the liquidity of four other banks (Bank PHB, Equitorial Trust Bank, Spring Bank and Wema Bank) (Nigerian Tribune, 8 December 2009; ThisDay, 12 December 2009). This injection of money was done in order to stabilize the banks and to ensure that they remained going concerns after their former managers had been sacked for reckless lending and for lax corporate governance which had rendered the institutions undercapitalized (Nigerian Tribune, 17 August 2009; ThisDay, 12 December 2009).
Although the global financial and banking crises have attracted the attention of policy-makers (TI, 2009) and scholars (Njanike et al, 2009; Sikka, 2009; Sikka et al, 2009), comparatively little scholarly attention has focussed on the role of auditing firms in facilitating the mismanagement of bank assets, liabilities and depositors’ funds in developing countries. This paper therefore provides evidence on the inadequacy of audit reports for disclosing nonperforming loans and the mismanagement of banking assets. Such evidence can help understand the auditing practices which have been adopted, but which are in direct conflict with the express claims of auditors and accountants to be acting in an ethical and socially responsible way. This paper contributes to the on-going debate on the usefulness of auditing and the need for accounting professionals to ensure that they continue to play a leading role in providing credibility to published financial statements and in maintaining the confidence of depositors in banks and investors in the capital market.
The paper is organized as follows. Part II examines the literature on the role of auditing in corporate collapse, particularly in respect of banking failures. Part III considers the theoretical framework of professionalism and the pursuit of profits. It is argued that, despite the regulatory framework governing the professional activities of auditors and accountants, the pursuit of profits and systemic pressure to increase corporate performance have been prioritized. Part IV describes the auditing environment in Nigeria in order to provide an understanding of the socio-political and economic contexts within which such accounting and auditing practices are embedded. Part V provides empirical evidence on the role of auditors in bank failures and the recent banking crisis in Nigeria by way of case-studies. Part VI concludes the paper by providing a summary and discussion of the issues raised and offers suggestions for reform. | CHAPTER ONE
1.1 INTRODUCTION
This research is on Fiscal Accountability Dilemma in Nigeria Public Sector: A Warning Model for Economic Retrogression. Government exists to serve the needs of the citizens and ensure those needs are provided efficiently and effectively. It accomplishes these goals by providing clear processes and structures for all aspects of executive management (decision-making, strategic alignment, managerial control, supervision and accountability). Governance in both private and public arena has been a hot topic and now hotter due to various recent financial scandals. Citizens and regulators are calling for higher levels of transparency and accountability in all areas of business especially in public service. In a recent study, the World Bank found a significant relationship between good governance and high level of performance (Word Bank 1997). This generated the issue of using appropriate accounting method and today, many countries government are adopting accrual basis of accounting to improve governance and control which is a common practice in the private sector. Accountability is made possible when there is an established clear link between expenditures and performance. Accrual accounting helps agencies focus on outcomes and results rather than budgets and spending. Accountability is a concept in ethics and governance with several meanings and it is often used synonymously with such concepts as responsibility, answerability, blameworthiness, liability, and other terms associated with the expectation of account-giving. It stands out as a cherished goal of every civilized and well Statement of Research Problem constituted government all over the world. Accountability is increasingly being used in political discourse and policy documents because it conveys an image of transparency and trustworthiness (Bovens, 2006) and its evocative powers make it indescribable. Government is entrusted with public funds and other resources, and must adhere to the highest ethical standards, honesty, integrity, propriety and objectivity to ensure optimum utilization. These goals can be achieved only through a combination of individual professionalism, personal standards and a rigorous control framework. Openness and transparency help instill public confidence and trust, and are increasingly considered basic operating requirements for any government.
The diagnostic survey conducted in 2001 into the Federal Government) public procurement revealed that "Nigeria lost several hundred billions of Naira over the last few decades due of flagrant abuse of procedures, lack, of transparency and merit in the award of contracts in the public sector and accountability quandary (Uremadu, 2004). The problem of this research paper is based on the perceived weak accountability of government fund by public servants in Nigeria which has not only increased the height of corruption but also resulted in enormous waste of national resources and decay of economic infrastructure within the economy. Other problems include poor planning and implementation of national budget experienced in all facets of Nigeria public sector, lack of transparency leading to mistrust and other negative consequences, weak accounting infrastructure which may not support accountability of government funds and finally, all the above problems has created room for diverse economic disorder and resulted in under backwardness.
1.2 Research Objectives
The main objective of this paper is to investigate the extent of accountability in the public sector of Nigeria economy within 2006 and 2010 and to achieve this; the following will also be investigated:
- The relationship between existing accounting infrastructure and accountability in Nigeria
- The control parameters and oversight bodies established by the government and it is effectiveness
- The accountability regulatory framework within Nigeria public sector.
1.3 Research Question
- T o what extent is accountability institution working in the Nigerian public sector?
- Does professional base of Accountants exist in terms of number and quality that support public expenditure management in Nigeria?
- T o what extent has Nigeria government lost money due to lack of accountability?
- Does public resources managers in Nigeria rendered a timely, adequate and reliable stewardships accounting?
- Are the electorate satisfied with the state of public infrastructure and services compared with the amount of resources so far invested in the country?
- How effective and efficient is the audit process providing potential for establishing accountability and detection of corruption?
- Do competent oversight bodies exist and functioning effectively in the public sector?
- Does the accountability arrangement contribute to the availability of information about former and current administrative actions for the administrative body involved and a wider range of administrative bodies?
1.4 Research Hypothesis
In order to validate the above research questions, the following hypotheses shall be empirically tested using Pearson Product Moment Correlation:
Hypothesis (I)
Ho: There is no accountability of public fund in Nigeria public sector Hypothesis (II)
Ho: There is no significant relationship between accounting infrastructure and accountability in Public Sector in Nigeria.
Hypothesis (HI)
Ho: The Nigeria Economy is not developing due to financial indiscipline and wastages in the system resulting from lack of Accountability in Nigeria public sector. | IMPACT OF FINANCIAL INFORMATION ON THE PROFITABILITY OF BUSINESS ORGANIZATION IN NIGERIA
CHAPTER ONE
INTRODUCTION
Background of the Study
This research is on Impact of financial information on the profitability of business organization in Nigeria. The impact of financial information on the profitability of a business organization is becoming more apparent to user groups of a financial statement.
Information is a not an exact science neither are business operations without some subjective and judgmental errors when it comes to reporting them. A financial reporting therefore is a document statement which informs the various interest groups to a business on the operations and performance of their business in a period under review its present state of affairs as well as its anticipated future, in accordance with the statutes. If a financial report is to service its purpose it ought to be characterized by the following;
- Relevance
- Understandability
- Reliability
- Completeness
- Objectivity
- Timeliness
In the information process of an organization is to provide the information required to prepare a financial report which shall have the above characteristics then the transaction doing the period must be recorded prompt by and accurately and interpreted in conformity with the Generally Accepted Information Principles (GAAP), Statements of Information Standard Board (NASB), International Information Standard committee and the companies and Allied Matters Act cop LFN (CAMA).
Financial information reporting become necessary with the obvious need for accountability of stewardship from the managers to whom investors entrusted their financial resources. The Railway age in the UK. Occurred between 1830 to 1870 and for the first time the world same the emergence of multimillion corporations with large numbers of shareholders. It was a period of disorder but it brought the basis for the present day system of corporate financial report. Financial reporting is a duty of stewardship assigned to the directors of a company by section 334 of the company and Allied Matters Act Cap L20 LFN, equally the mandatory responsibility of companies to keep information records derives its strength from section 331 and 382 of the same act. These sections explicitly defined the necessary content and manner in which financial records should be kept.
1.2 STATEMENT OF THE PROBLEM
The study “The impact of Financial information on the profitability of business organization” aims at investigating the financial reports of selected companies in Enugu State with a view to determine the following ;
- The extent to which a standard financial report contributes to or detracts from the growth of a business organization.
- The extent to which the financial reports of corporate business organization comply with statutory provisions.
- The uniformity and conflict which exist in the financial reporting regulations given the multiplicity of regulators.
Therefore, bused on the above statements, the researcher shall investigate the financial information reporting standards and every regulation their bear on the financial statement and to the extent the selected company (s) has either complied with or disobeyed the relevant statutes.
1.3 OBJECTIVES OF THE STUDY
The objectives of this study are to critically examine the financial reports of the selected company and to probe into the fundamental for their preparation as well as its presentation with a view to determining:
- The adequacy of the basis and the fundamental that guides its preparation.
- The degree to which the financial report meets the needs of its various users.
- The extent to which the financial report conform to the established standard.
- The influence that financial report has on business performance.
- Finally, to present suggestions and recommendations based on my findings.
1.4 RESEARCH QUESTIONS
In order to determine the impact of financial reporting on the corporate performance of business organizations, it is pertinent to test the following question;
- Does the information disclosed in the financial statements adequate to support good decision making?
- Does the disclosure requirement of the statutes affect corporate performance positively or negatively?
- Do companies comply strictly with the regulation?
- Does the financial report meet the needs of the various users?
This study will offer solutions to ones raised it is my believe that the result of these finding will go a long why to helping researchers in this area of study, it will also enhance the understanding of the structure of published reports and accounts by the users.
The various users groups of the published financial report have their benefits from this study as follows:
- The Potential Investors: These are groups who are interested in committing their financial resources to the buying of the company’s shares. These set of people will benefit from this study as the result of this study still arm them with the necessary tools with which to evaluate the financial report of a corporate organization as it affects them.
- The General Public: This group shall benefit from this report by the knowledge that the business organization exists for them and not against them, as such has to live up to its full responsibilities.
- The Regulators of Financial information Report: This group includes the Nigerian Information Standard Board (NASB), the companies and Allied Matters Act 2004 Cap (20 LFN (CAMA) the Banking and Other Financial Institutions Act of 1991 (BOFIA), prudential guidelines for licensed Banks. The Insurance Act 2003. The study will help them to standardize and harmonize their operations.
- The Employee Group Including Existing: Potential and past employees.
- The Government Including Tax Authorities Department who have Interest in the Financial Reports of Companies: The result of this work shall be of immense assistance to each to these user groups in the advancement of their interest.
1.5 RESEARCH HYPOTHESES
The following null and alternative hypothesis shall be tested in this research works:
- H0: The information provided in financial statements is not adequate to support good decision making.
Hi: The information provided in financial statements is not adequate to support good decision making.
- H0: The disclosure requirements of statements do not affect corporate performance positively.
Hi: The disclosure requirements of statements do not affect corporate performance positively.
- H0: corporate organizations do not comply strictly to the statutory regulations.
Hi: corporate organizations do not comply strictly to the statutory regulations.
- H0: Financial reports do not meet the needs of the various users of financial information.
Hi: financial reports do not meet the needs of the various users of financial information.
1.6 SIGNIFICANCE OF THE STUDY
This study is a very important one and most significant at this period of economic situation which has witnessed the collapse of giant corporate with impressive profit and loss accounts and balance sheet statement, because the financial report serves is a “prima facie” evidence on the state of attains of such companies as well as its performance and could be relied upon as a certificate because it had the auditors certification, financial reporting could be done with every serious business, utmost good faith and diligence.
1.7 SCOPE OF THE STUDY
This study could have covered the impact of financial information reporting on corporate performance of all the sectors of the Nigerian economy but due to the challenges of such a task especially the financial resources with which to execute it, it is limited to braving industry. The study used the Nigerian Breweries plc, Enugu.
1.8 LIMITATIONS OF THE STUDY
The limitations encountered by the researcher of this work are given as follows:
- The confidential nature of financial information information in the business organization posed as a problem to this business organization posed as a problem to this study.
- The researcher was unable to reach all the members of the sample as a result of their frequent travels and busy schedule.
- The sample used in the research though representative but it is relatively small compared to the population, as a result of lack of financial with which to carry out the research on a greater sample.
1.9 DEFINITION OF TERMS
Auditor: A person who is qualified to examine the accounts of an organization to see that they are in order. 17
Balance Sheet: A business as at a specified date.
Bank: A financial institution whose responsibilities among others is to keep deposits for their client and customers.
Government: An institution of the state whose responsibility is to maintain law and order in the society.
Prima facie: Sufficient to establish something legally until disprove later.
Researcher: An enquiring basically concerned with search knowledge. | CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
This project is on Analysis of tax morale and tax compliance in Nigeria. The subject of taxation has received considerable intellectual and theoretical attention in the literature. Taxation is one of the most volatile subjects in governance both in the developing and developed nations. Tax refers to a “compulsory levy by a public authority for which nothing is received directly in return” (James and Nobes, 1992). According to Nightingale (2001), “a tax is compulsory contribution, imposed by government, and while taxpayers may receive nothing identifiable in return for their contribution, they nevertheless have the benefit of living in a relatively educated, healthy and safe society”. She further explains that taxation is part of the price to be paid for an organized society and identified six reasons for taxation: provision of public goods, redistribution of income and wealth, promotion of social and economic welfare, economic stability and harmonization and regulation.
In other words, a tax is an imposed levy by the government against the income, profits, property, wealth and consumption of individuals and corporate organizations to enable government obtain the required revenue to provide basic amenities, security and well-being of the citizens. First detailed information about taxation can be found in Ancient Egypt (Webber and Wildavsky, 1986). The Pharaohs appointed tax collectors (called scribes) and paid them high salaries to reduce the incentives to enrich themselves. Furthermore, scribes working in the field were controlled by a group of special scribes from head office. Today, corruption of the tax agency is still a problem, especially in developing countries.
According to the traditional model of tax compliance by Allingham and Sandmo (1972), taxpayers choose how much income to report on their tax returns by solving a standard expected utility-maximization problem that trade off the tax savings from underreporting true income against the risk of audit and penalties for detected non compliance. In this framework, both the threat of penalty and audit makes people pay their taxes (Allingham and Sandmo, 1972).
Some preliminary tax morale research was conducted during the 1960s by the Cologne School of Psychology, that tried to narrow the bridge between economics and social psychology by emphasizing that economic phenomena should not only be analyzed from the traditional neoclassical point of view but also from social psychology perspective. In particular, they saw tax morale as an important and integral attitude that was related to tax noncompliance.
Tax morale is defined as the “intrinsic motivation to pay taxes”. Torgler (2002) and Fred (2003) stress its relevance to understand the high observed level of compliance. Three key factors are important in understanding tax morale: they are, moral rule and sentiments, fairness and the relationship between taxpayer and government. According to James, Murphy and Reinhart (2005), tax laws cannot cope with every eventuality and has to be supplemented with administrative procedures and decisions and just as importantly, in order to work, it has to have a reasonable degree of willing compliance on the part of the taxpayers themselves.
Therefore, a more appropriate definition of compliance could include the degree of willingness with tax laws and administration that can be achieved without the immediate threat or actual application of enforcement activity. Tax compliance may be viewed in terms of tax avoidance and evasion. The two are conventionally distinguished in terms of legality, with avoidance referring to legal measures to reduce tax liability and evasion as illegal measures. Compliance might therefore be better defined in terms of compliance with the spirit as well as the letter of the law (James, Murphy and Reinhart 2005).
Nigeria is governed by a Federal system and the government's fiscal power is based on a three- tier tax structure divided among the Federal, State, and Local governments, each of which has different tax jurisdictions. The Nigerian tax system is lopsided. The federal government controls all the major sources of revenue like import and excise duties, mining rents and royalties, petroleum profit tax and company income tax, value added tax among other revenue sources. State and local government taxes are minimal, hence, this limits their ability to raise independent revenue and so they depend solely on allocation from Federation Account.
In 1992, the government introduced self assessment scheme, under which a taxpayer is expected to fill a tax assessment form to determine his taxable income. Here, the intrinsic motivation to pay tax (that is, tax morale) will determine the level of compliance with reporting requirements. Which means that the taxpayer files all required tax returns at the proper time and that the returns accurately report tax liability in accordance with the law. The advent of democratic rule in 1999 has put greater pressure on the three-tier of governments to generate enough revenue and meet electoral promises in terms of provision of basic necessities and infrastructure for the economic empowerment of the people. To achieve these goals taxpayers must pay their taxes willingly as and when due. In other words, a high tax morale is required from the taxpayer in order to achieve a high degree of tax compliance.
Webley et al. (1991), detect a positive relationship between government performance and tax compliance But in spite of all the researches that have been done, more empirical work is needed to confirm the existence of these relationships and to measure the strength of their influence on tax compliance. This is particularly so, since tax compliance is of obvious importance fo r most countries. This work aims to study tax compliance in Nigeria, thereby supplementing empirical research on this important international problem. This is therefore an opportunity to take a stroll through theoretical and empirical findings in the tax morale literature, focusing on Personal Income tax morale.
1.2 STATEMENT OF RESEARCH 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 developmental purposes (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. This is because when people pay taxes more revenue accrues to the government. The major problem of this research therefore, is to determine the effect of tax morale on the taxpayer in compliance with tax policies of government as a useful avenue for revenue generation.
The more modern approach to tax compliance has benefited from many contributions from different disciplines. There is a range of factors that might influence taxpayers behavior. For instance, work in sociology has identified a number of relevant variables such as age, gender, race and culture. The role of individuals in the society and accepted norms of behavior have also shown to have a strong influence (Wenzel, 2002). Also Polinsky and Shavell (2000), present a survey of the economic theory of public enforcement of law, and emphasize the aspect of social norms, that can be seen as a general alternative to law enforcement in channeling individual behavior.
There are limits for a government to increase compliance using traditional policies such as audits and fines. Therefore, if the government can influence a norm, tax evasion can be reduced by policy activities. Most researchers on tax compliance for example, (Torgler, 2003), (McBarnet, 2003) and (Murphy and Harris, 2007). focused their attention on the Western World and some Asian countries. Socio-cultural factors are important components in the lives of a people and given the deep-rooted and pervasiveness of these in the Nigerian societies, there is a clear need for more empirical research on the factors involved in the decision making process regard ing compliance, since a better understanding of these factors can give birth to strategies that improve compliance. It is therefore, the focus of this study to subject tax compliance to empirical analysis in the Nigerian context.
1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to determine the effect of Tax Morale on the taxpayer in compliance with tax policies of government in Nigeria. In doing so, it seeks to:
i Determine the extent of tax morale on the tax payer and its effect on tax compliance.
ii Ascertain the effect of trust in government on tax compliance.
iii Examine the effect of Nigerian Traditional Institution on tax morale of tax payers.
iv Determine the effect of cultural norms on the tax payers morale.
v Ascertain the tax payers confidence in the legal system on tax morale.
1.4 RESEARCH QUESTIONS
This study is an effort at understanding the effect of tax morale on tax compliance in the Nigerian context. Therefore, the study is hinged on the following questions;
i What is the effect of tax morale on taxpayers compliance?
ii Will trust in government affect tax compliance?
iii To what extent has confidence in the legal system affect tax compliance?
iv What is the relationship between Traditional Institution and tax morale?
v To what extent has social norms affect tax morale?
1.5 HYPOTHESES
Hypotheses are assumptions on which a researcher bases his investigation and on the basis of which a confirmation of the assumed conditions are tested and validated. The hypothesis on which this research study is based are stated in null form as follows:
i Hο; Tax Morale has no significant effect on tax payer compliance.
ii Ho; There is no significant relationship between trust in government and tax compliance. iii Ho; There is no significant relationship between the Nigerian Traditional Institution and tax compliance.
iv Ho; There is no significant relationship between taxpayers cultural norms and the extent of their tax compliance
v Ho; There is no significant relationship between the tax payers‟ confidence in the legal system and tax compliance.
1.6 SIGNIFICANCE OF STUDY
1.6.1 Theoretical Significance
The deterrence doctrine can be traced back to the classical works of Jeremy Bentham and Cesare (Murphy,2008). Their classical utility theory of crime is that people are rational actors who behave in a manner that will maximize their expected utility. Becker (1968) argued that authorities needed to and appropriately balance between detection of non-compliers and sanctions to the point where non-compliance becomes irrational.
In the early 1970s, Alligham and Sandmo (1972) extended Becker‟s work on the economics of crime to the taxation context. They examined taxpayers‟ decision to evade taxes when they were filling out their tax returns and examined the relationship between penalty rate for tax evasion at the time, the probability of detection, and degree of tax evasion engaged in. What they found was that there was a relationship between these variables; with a higher penalty rate and probability of detection deterring individuals from evading their taxes. In the 1980s, therefore, many scholars began to question the value of deterrence alone in regulating behavior. They began to focus their attention on researching compliance rather than deterrence and began to realize the importance of persuasion and cooperation as a regulatory tool for gaining compliance. In fact, research has shown that the use of threat and legal coercion, particularly when perceived as illegitimate, can produce negative behavior; these actions are more likely to result in further non-compliance (Murphy and Harris 2007), creative compliance (McBarnet 2003), criminal behavior or opposition (Fehr and Rokenbach 2003).
According to Kagan and Scholz (1984), unreasonable behavior like disrespect for citizens, arbitrary refusal to take their concerns into consideration by regulators during enforcement generates resistance to compliance. Tyler (2006) argues that if regulators are prepared to first engage in dialogue and fair treatment with those they regulate, then, this will serve to encourage support for the law. Most research works in this area of study have focused on Western world and some Asian countries; therefore, the significance of this study lies in the fact that it will provide a framework for inter-state comparison between nations of the world. Moreover, our findings and conclusion will form a basis for further research work.
1.6.2 Practical Significance
With the current effort at social and economic development by Third World countries, a study like this is significant, as it is capable of contributing to the present knowledge in the area of interaction between socio-cultural factors and tax compliance, which may be in terms of consequences for policy issues and development programmes.
1.6.3 Operational Significance
Tyler (1997) has specifically shown that people value respective treatment by authorities and view those authorities that treat them with respect as more entitled to be obeyed. The operational significance of this study therefore, lies in the fact that; tax authorities will tend to be more oriented towards seeking result, through cooperation rather than by coercion alone, and prefer to see themselves as service providers rather than as strict law enforcers.
1.7 SCOPE AND LIMITATION OF STUDY
This study evaluates the effect of tax morale on tax evasion, tax avoidance and tax compliance in Nigeria. The study however, is limited to the study of organizations in the public, private and informal sectors of the Nigerian economy. These organizations are selected because they are duly registered with the Federal Inland Revenue Service and the Lagos State Internal Revenue Service for Pay As You Earn (PAYE). Also from the notes to their audited accounts, there has never been any negative report regarding tax evasion or tax avoidance. The limitation of this study, however, is in the area of methodological constraints in terms of which type of analytical technique is most appropriate for the work. In addition, because of funds and time constraint, the work is further limited to the selected organizations.
1.8 SUMMARY OF RESEARCH METHODOLOGY
The study adopted survey research design for data collection through standardized questionnaires administered to respondents. The population for this study comprised anybody of eighteen (18) years and above who is in employment (both in the private and public) sectors of Nigerian economy. Six organizations in the public, private and informal sectors formed the sample size of this study. Furthermore, a total number of 100 questionnaires were administered in each of the six public and private organizations. The nominal as well as the 7-point Likert Scale was employed in the study.
The data collected allow for measuring tax compliance as dependent variable and to search for factors that shape tax morale. Survey provides a good source of information about tax morale. The main advantage is that they include many socio-economic, demographic and attitudinal variables, thus, in a multivariate analysis; we can analyze what shape tax compliance using the multiple linear regression model. But it should be noted that surveys can be biased if they do not cover a representative share of the population. In other words, a high response rate is required. The sensitive nature of compliance information might discourage participation in such a survey, therefore, to reduce this problem, this study covered a broad variety of questions on different topics. Furthermore, the way we describe tax morale is less sensitive compared to a question asking whether a person has evaded taxes or not. Hence, we expect a higher degree of honesty in the answers to these questions.
1.9 SOURCES OF DATA
The study made use of primary source for data collection through standardized questionnaire administered to respondents and literatures. Questionnaire was administered to the respondents because of its advantage. It enables vital information, which cannot be obtained from written records to be at the disposal of the researcher. This is because in a questionnaire, the respondent's anonymity is assured.
1.10 OPERATIONAL DEFINITION OF TERM
Tax; Tax is an imposed levy by the government against the income, profit, property, wealth and consumption of individuals and corporate organizations.
Tax Evasion; Tax evasion is a deliberate act on the part of taxpayer not to pay tax due.
Tax Avoidance; Tax avoidance is a way of identifying the loop-hole in the tax law and then taking advantage of such a loop-hole to reduce the tax payable.
Tax aversion; Tax aversion is a situation where the tax law might be unclear, thereby, confusing taxpayer as to the correct tax payable.
Tax Morale; Tax Morale is the intrinsic motivation to pay tax.
Tax Compliance: Willingness to pay taxes without threat or coercion
Social Norms: A set of behavioural models and rules or standard of behaviour shared by members of a social group.
Cultural Norms: Are behavior patterns that are typical of specific groups.
Legal System: A system for interpreting and enforcing the laws
Tax System: A legal system for assessing and collecting taxes | The Impact of product development on banks performance ( A Case study of first bank plc )
The need for this study being the impact of product development on bank performance was to determine the rate at which the performance of this product is helping the economic development an growth in the banking industry in the terms of employment and amended in 1997. The public became aware of the importance especially through the introduction of privatization and the N25 billion capital bases for banks. There is no gainsaying therefore that the Nigerian capital market has come a long way to stay as the powerhouse for mobilizing and allocating long-term capital funds for commerce and industry. |
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