THE ETHICS OF TAX EVASION; PERCEPTUAL EVIDENCE FROM NIGERIA A CASE STUDY OF SOME SELECTED LOCAL GOVERNMENT AREA IN AKWA IBOM STATE

THE ETHICS OF TAX EVASION; PERCEPTUAL EVIDENCEFROM NIGERIA A CASE STUDY OF SOME SELECTED LOCAL GOVERNMENT AREAIN AKWA IBOM STATEamp;lt;pamp;gt;amp;lt;strongamp;gt;ABSTRACTamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;The purpose of this study was to investigate the perception of tax evasion to the payment of tax on ethical reasons. A case study of some selected Local Government Area in Akwa Ibom State. Extensive review of the existing literature was made and relevant information was extracted. The Design of the study is descriptive field survey and observation method and the study was conducted at the selected Local Government Area in Akwa Ibom State. The instrument for data collection is structured questionnaire and the source of data used was primary and secondary sources. The data collected were analyzed using Chisquare test X2. Based on the analysis of this research, the researcher discovered the following as her data findings, that there is widespread ethical support for tax evasion, the study showed varying degree of justification for tax evasion, that tax evasion is ethical sometime and also found that the perceived government corruption can make respondent to evade tax. Therefore, until those underlying cause are addressed, tax evasion may continue to be widespread.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;CHAPTER ONEamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;HISTORICAL BACKGROUND OF THE STUDYamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;1.1 INTRODUCTIONamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;The word tax first appeared in the English language only in the 14th century, it is derived from the Latin word taxare, which means to Assess before that, English used the related word task derived from old French, for a while task and tax were both in common use, the first requiring labour, and the second money.amp;lt;/pamp;gt;amp;lt;pamp;gt;In the Stone Age, tax was collected in Nigeria long before the coming of Europeans; it was collected by the local Chief for the purpose of administration and defense. Every one was expected to give part of his or her proceeds from cultivation of land to the state, those who were not cultivating were required to give their human labour sources for public work such as clearing the bush, digging the pit latrine, wells etc. for the benefit of the community, as a whole. Failure to render such services usually resulted in loss of property which might be reclaimed after payment. With the coming of the Europeans, taxes were collected from individuals through local chief in 1964; a legislative council was set for the whole country which obliged the regional council with a large measure of financial responsibility. After independence, state government were to fine out other sources of generating revenue which is today known as pay as you earn PAYE.amp;lt;/pamp;gt;amp;lt;pamp;gt;Tax is a levy imposed by the federal board of Inland Revenue federal government on the chargeable income generated by individuals, organizations and other corporate bodies for the betterment of the society as a whole.amp;lt;/pamp;gt;amp;lt;pamp;gt;Taxation is the act of taxing, it is also the amount assessed as a tax, it is revenue raised from taxes. Taxation is the means of progress through which the government generate revenue for national development through the contribution by the citizens.amp;lt;/pamp;gt;amp;lt;pamp;gt;According to Ogundele 1999 taxation is defined as a process or machinery by which communities or group of persons are made to contribute in some agreed amount of money for the propose of the administration and development of the society. It can be inferred that the payment of tax will in turn be beneficial to the entire community of they pay their tax properly.amp;lt;/pamp;gt;amp;lt;pamp;gt;In spite of these benefits from tax, most people still run away from tax indulging themselves in what is called tax evasion and avoidance. Attempt to avoid some portion of inability or not to pay tax will affect the revenue generation of the government and that is the most condition why government frowns at the issue of tax evasion and uses its authority to enforce compliance. But in spite of the frown by the government of Nigeria, there have not been adequate and sincere efforts towards enforcing the tax evaders on the need for them to pay their tax instead, they concentrated on the revenue from oil sector,while overlooking the taxes on agriculture which is supposed to yield revenue to the country as a whole.amp;lt;/pamp;gt;amp;lt;pamp;gt;Arowomole and Oluwalayode 2006:39 define tax evasion as a deliberate act on the part of the tax payer to reduce their tax liability through illegal means or an attempt not to pay tax due. While tax avoidance is defined as a legal way by which a taxpayer reduces his or her tax liabilities. Tax evasion is considered as a criminal offence.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;1.2 STATEMENT OF THE PROBLEMamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;The researcher has observed that tax evasion has become rampant in Akwa Ibom state, individuals and firm manover or try to evade paying tax based on their perceptions of tax.amp;lt;/pamp;gt;amp;lt;pamp;gt;The researcher has through this investigation observed that most people formulate their tax in order to underpay tax while some companies and individuals as well smuggle goods into the country in order to evade tax payment.amp;lt;/pamp;gt;amp;lt;pamp;gt;Most people see tax paying as government exploiting them while some try to bribe government officials in order that they may evade tax payment. It has been observed to that most people fail to register their company or goods in order to equally avoid tax payment. This is as a result of ignorance or an attempt to cheat the government.amp;lt;/pamp;gt;amp;lt;pamp;gt;Finally, it has been observed by the researcher that as tax payment is one of the ways government generate revenues, tax evasion would only trigger off lack of revenue for development and tax evasion is detrimental to the government. Hence, the decision of the researcher is to investigate the stated problem, the reason why individuals and firms indulge in tax evasion and to offer suggestion for solving the problem.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;1.3 OBJECTIVES OF THE STUDYamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;i. To investigate the perception of tax payers to the payment of tax on ethical reasons.amp;lt;/pamp;gt;amp;lt;pamp;gt;ii. To identify specific key areas that tax payer link to tax evasion.amp;lt;/pamp;gt;amp;lt;pamp;gt;iii. To examine the effect of perceived corruption in government on tax evasion.amp;lt;/pamp;gt;amp;lt;pamp;gt;iv. To state the seriousness of tax evasion according to the Nigerian constitution.amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;amp;lt;strongamp;gt;1.4 RESEARCH QUESTIONSamp;lt;/strongamp;gt;amp;lt;/pamp;gt;amp;lt;pamp;gt;i. Is tax evasion ethically justifiableamp;lt;/pamp;gt;amp;lt;pamp;gt;ii. What are the reasons for tax evasionamp;lt;/pamp;gt;amp;lt;pamp;gt;iii. What is the attitude of tax payer when government is perceived to be corruptamp;lt;/pamp;gt;