1.1   Background of the Study                                       
1.2   Statement of the Problem                                        
1.3   Objectives of the Study                                            
1.4   Research Questions                                                 
1.5   Research Hypotheses                                               

  • Significance of the Study 6

1.7   Scope of the Study                                                   
1.8   Limitation of the Study                                             
1.9   Definition of Terms and Accronyms                          
2.1     Tax Culture in Nigeria                                             
2.1.1 Tax Revenue Structure and Income Tax Performance
          in Nigeria                                                              
2.1.2 Ethnic Diversity and Tax Compliance                
2.1.3 Ethics                                                                    
2.2 Economic Development in Nigeria                               
2.3 Tax Culture and Economic Development in Nigeria
2.3.1 Empirical Studies                                                    
2.3.2 Functions of Good Tax System Administration         
2.3.3 Principles of Taxation                                      
2.3.4  Characteristics of Nigerian Tax System                   
2.3.5 Utilization of Taxation as an Instrument of
        Fiscal Policy                                                           
2.3.6 The Role of Taxation on Economic and
        Social Development Sustainability                               
2.3.7 Government Revenue Generation                             
3.1   Introduction                                                            
3.2   Design of the Study                                                 
3.3   Area of the Study                                                    
3.4   Population of the Study                                           
3.5   Sample Size and Sampling Techniques                      
3.6   Sources of Data                                                       
3.7   Method of Data Collection                                    
3.8   Method of Data Analysis                                            
Nigeria as a nation has the vision of becoming one among the world’s 20 largest economies in the year 2020; this obviously is the brain behind the priority attention the present administration headed by president Muhamadu Buhari, is directing at infrastructural development which is essential for economic growth.
The term culture of taxation appears only rarely in social science literature, although as argued here, it plays an important role in tax system. The meaning of culture of taxation is still debatable and not well organized conceptually. However it is closely rated to other tax evasion, tax compliance and tax morale.
 Although total tax revenue need to be increased in order to fund the public provision of goods and services, government in many countries are faced with the same problem – a low level of tax revenue especially income tax revenue. It is hypothesized that the culture of taxation has a direct effect on total in come tax revenue as it involves the compliant behavior of tax payers. Income taxes both personal and corporate are major sources of revenue for many national and second tier governments in the world; especially developing countries. The problem of insufficient tax revenue will occur naturally when tax authorities cannot collect tax revenues from taxable payers. Therefore previous studies of taxation mainly focus on the nature of tax compliance. This study will examine and emphasize the two principal players in any tax system, which include the tax payer and the tax collectors. To accomplish the goals of this study, the culture of taxation will be explained in multiple concepts.

A developed economy is one with the ingredient to stimulate investment and create wealth, this by implication offers an atmosphere that is business friendly and has the potentials for the actualization of the vision 2020.The desired outcome requires a lot of money to put the economy in a position that stimulates investment, therefore, tax policies need to attract potential investors, and the revenue from tax should be sufficient enough to meet the infrastructural expenditures of the government(Worlu, 2012).
Apere (2003) notes that taxation is a microeconomic and fiscal policy instrument; it involves the transfer of resources from the private to the public sector for the accomplishment of economic and social goals. It is an instrument the government uses to measure, access and control the informal sector that dominate developing economies of the world (Wambai and Hanga, 2013).

This research contends that taxation is an instrument of economic development. Towards this end, this study examines taxation as a tool for economic development using Federal Inland Revenue Service.

The developments and growth of any society is tied to the ability of the government to provide basic infrastructure. This perhaps explains why government show great concern for a medium through which funds can be made available to achieve their set goals for the society. Government needs money to execute their social obligations which include provision of infrastructure and social services.

Meeting the needs of the society calls for huge funds. That brings us to the concept of tax culture. How does these individuals respond to tax issues? Are they tax conscious? How exactly do they see taxation?
Taxation could be taken to be one of the most potent fiscal instrument which reduce private consumption; increases investment and income inequalities. It enhances the transfer of resources to the government for needed economic development. It is often said that a country yearning for development is required to collect tax revenue for an amount greater than ten percent to fifteen percent. However, this can be looked at through tax culture. These percentages could be workable in an area where there is a positive tax culture than areas where the people have a negative tax culture.

A country’s revenue generation primarily depends on its capacity to tax more in both economic and administrative terms. It is also a fact that developing countries receive a very low amount of revenue from taxation because these countries face a lot of institutional problems. One of these is the poor administration of tax system.

With the recent dwindling in oil prices in the global market, revenue derived from oil has been very low, thus, a shift to tax revenue. However, literature indicated that tax culture was one of the most neglected areas in tax education. Furthermore, previous studies on the relationship between tax culture and economic development has produced mixed result. At the organizational level, culture is an attribute of the organization, typically defined as values or attitude (Majken 1995). Hall and Hall (1990) called culture “a program for behaviour”. In this view, the study proposes to assess the culture of taxation on economic development.


  1. i) To examine the trend of economic development in Nigeria
  2. ii) To examine the culture of taxation in Nigeria

iii)     To find out the relationship between tax culture and economic development

  1. iv) To make possible recommendations based on the findings of this research work.


  1. i) To what extent does tax culture affect tax revenue?
  2. ii) To what extent does tax culture affect economic development?

iii)     What is the impact of negative tax culture on economic development in Nigeria?

  1. iv) How has positive tax culture enhanced economic development?
  2. v) What is the trend of economic development in Nigeria?

Hypothesis 1:
Ho: The Nigerian tax culture does not enhance economic development.
Hypothesis 2:
H0:   Positive tax culture and economic development in Nigeria, a reality in transit.


The essence of this research work is to examine tax culture, and taxation as a tool for economic development of Nigeria. Thus, this study will at a wide-range be of benefit to the local, state and federal governments. It will also be of help to students in the field of taxation, as it will highlight the importance of taxation in the society.

This study would also be of benefit to employers and employees of Federal Inland Revenue Service Port Harcourt, who has been experiencing incorporation of tax payers by paying their taxes regularly. Also, the public, private sectors, individuals, business owners etc, will find it necessary by encouraging them to comply by paying their taxes.
It would also be of immense benefits to students of higher learning who may wish to carry out research on the similar topic, or major in taxation. This is because the department of taxation has been established in some universities in the federation. For example, Nasarawa state university. This will also help the Rivers State University of Science and Technology to look into the affairs of students.
The study concerns about tax culture and economic development in Nigeria with particular focus on Rivers State, referencing Federal Inland Revenue Service, Port Harcourt.

The limitations to be encountered in the course of this study include the following:
The limitations anticipated to be encountered by the researcher was that public officers fear to divulge information which to them may be detrimental to their work. Another limitation to the study is the outright inability of respondents to complete and return the questionnaire in time. Also, traffic congestion in Port Harcourt is one of the limitations expected of the study. Challenges of meeting up the respondents in their offices due to traffic and the activities of the Nyesom Wike’s operation zero pot-hole contractors.
Finally, the non co-operation of some staff attitude in the board to make information available for me.

  • FIRS: Federal Inland Revenue Service
  • Taxation: This is the process of levying and collection of tax from taxable persons (Soyode & Kayola 2006).
  • Tax: This is a compulsory payment imposed on the income, profit, property, goods and services, or transactions of individuals or corporate bodies by the government for its sustenance and for which there is no guaranteed compensatory benefit (B.D. KIABEL)
  • Tax Evasion: This is the deliberate and willful practice of not disclosing full taxable income so as to pay less tax or it is a contravention of the tax laws whereby a taxable person neglect to pay the tax due or reduces tax liability by making fraudulent or untrue claims on the income tax form (Soyode & Kayola 2006).
  • Tax Avoidance: Tax avoidance has been defined as the arrangement of tax payers’ affairs using the tax shelters in the laws, and avoiding tax traps in the laws, so as to pay less tax than he or she would otherwise pay (Soyode & Kayola 2006).
  • Tax avoidance arises in a situation where the tax payer arranges his financial affairs in a way that would make him pay the least possible amount of tax without infringing the legal rules. In short, it is a term used to denote those various devices which have been adopted with the aim of saving tax and thus sheltering the tax payer’s income from greater liability which would have been otherwise incurred. It is a lawful trick or manipulation to evade the payment of tax.(BD KIABEL)
  • Economic Development: Economic development is the sustained, concerted actions of the policy makers and communities that promote the standard of living and economic health of a specific area (Sheffrin, 2003). Clement (2013), also defined economic development as the quantitative and qualitative changes in the economy to enhance the living standard of the people.
  • Development: Development is the process of economic and social transformation that is based on complex and cultural environmental factors and their interactions.
  • Tax Culture: This can be said to be the way people respond to tax issues in an area. It can be said to be approaches and understanding of the citizenry in the area of taxation. Culture is a way of doing things. So tax culture is a way of responding to tax issues.
  • Tax Compliance: Degree to which a tax payer complies or fails to comply with the tax rules of his country.

A problem of tax administration in many countries is that governments cannot collect all the taxes that are owed to them under the statutes. It is argued here that one primary reason for this is the “culture of taxation”. The primary objective of this chapter is to synthesize the concept of the culture of taxation and the approaches used to study it. Previous literature in the area of tax compliance, tax evasion, tax administration and tax reforms are examined from the viewpoint of both taxpayers and tax collectors. The results based on this literature show that differences in the culture of taxation bring about different tax collection outcomes.

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