PLUCK THE FRUIT, BUT NURTURE THE TREE: A SURVEY OF THE EFFECT OF GOVERNMENT PERFORMANCE ON TAX MORALE AMONG NIGERIANS

Abstract

Empirical studies revealed the limitations of rational economic theories in accurately predicting compliance level, the puzzle on reasons why people pay taxes therefore still remain unsolved. Efforts of recent studies now move away from examining reasons behind evasion to assessing reason why people actually pay taxes. Noteworthy achievement in this direction is the identification of tax morale as fundamental factor behind reasons for tax compliance. Literature in the last few decades had being examining factors that influence this identified tax morale. Factors considered to be influencing tax morale include perception of government’s institutions performance of including tax authorities. But most studies used only micro data to examine this complex puzzle. This paper examined impact of government performance on tax morale in Nigeria, a sub-Sahara African country adopting macro data from Afrobarometer survey Rounds 1 to 7 collected between 1999 and 2017. The study also examined the moderating role of citizens’ perception of the “prevailing economic condition” in a country on the effect on tax morale. The study was based on the Fiscal Exchange Theory. The results established that perception of government performance, especially in the area of creating more jobs and prevailing economic condition in the country had positive influence on tax morale. The study recommends that governments in Nigeria, as the pluck the fruits, should ensure creation of more jobs for its citizenry and provide conducive economic condition sustainable enough to nurture the trees that provide the fruits to ensure sustainable provision of the fruits.