Re-thinking the Nigerian tax policy toward achieving tax compliance

The viability of every government depends on its fiscal independence. That independence comes not only from the exploitation of natural resources with which such government and its people are endowed, but also, and most importantly, taxation. Unfortunately, due to the availability of rich natural resources as alternative means of revenue generation; prevalence of corruption; political instability; large scale of informal activities; lack of political will; and other similar problems discussed, Nigeria has neglected or failed to use taxation, especially personal income taxation, as a veritable tool for revenue generation. The neglect or failure is reflected in the prevalence of tax noncompliance evident in the country. As a result, this dissertation examines the problems of tax noncompliance in Nigeria and how tax compliance could be encouraged in the country. To achieve this, the dissertation relies on a compliance framework temied the "Holistic Approach". This approach incorporates complementary ideas already developed in other compliance frameworks (such as the Australian Tax Office (ATO)'s Compliance model, the Organisation for Economic Co-operation and Development (OECD)'s Compliance Risk Management Approach and the Jit B.S. Gill's Diagnostic Framework for Revenue Administration developed for the World Bank). In the main, the holistic approach recognizes that Nigeria is a developing country with peculiar local problems and environmental context that affect tax compliance differently from other countries, especially the developed world. With this in mind, several existing tax compliance theories and few hypotheses developed in this dissertation are used to offer explanations as to the causes of tax noncompliance and the corrective measures that could be deployed to control them. Drawing inspirations from the theories and hypotheses discussed, several policy instruments are canvassed as credible strategies that Nigeria could employ to encourage tax compliance in the country. It is argued that the proposed policy instruments needs consistent, prolonged implementation and continuous review in order to sustain a durable solution to noncompliance problems in Nigeria.