TAX KNOWLEDGE, TAX ATTITUDE, AND PERCEPTION OF TAX FAIRNESS AS PREDICTORS OF TAX COMPLIANCE AMONG INCOME EARNERS IN LAGOS STATE

ABSTRACT

This study examined tax knowledge, tax attitude, and perception of tax fairness as predictors of tax compliance among income earners in Lagos state. A total of three hundred working class adults were selected purposively from Lagos state to participate in the study.

Result from the study indicated positive relationship between tax attitude and tax compliance (r = 0.71, p<.05). This implies that participants who had positive attitude towards tax also had high scores on tax compliance, tax perception and tax compliance (r = 0.63, p<.05). This implies that participants who had positive perception towards tax also had high scores on tax compliance, and significant positive relationship between tax knowledge and tax compliance (r = 0.47, p<.05). This implies that participants who scored high in tax knowledge reported high scores on tax compliance. Also, tax attitude significantly predicts tax compliance, β = 0.71, t (286) = 12.62, p<0.05. Tax attitude explained 48% of variance in tax compliance scores, R2 = 0.48, F (1,286) = 159.23, pp<0.05. Tax perception explained 26% of variance in tax compliance scores, R2 = 0.26, F (1,186) = 283.39, pp<0.05. Tax knowledge explained 43% of variance in tax compliance scores, R2 = 0.43, F (1,286) = 410.80, p<0.05.

Findings from this study suggests that feelings of unfairness and liability from tax need to be addressed before effective tax compliance can be realized.

Keywords: tax knowledge, tax attitude, tax compliance, perceived tax fairness

TABLE OF CONTENTS

Title page..................................................................................................  i

Table of contents....................................................................................          ii

List of tables.............................................................................................        iv

List of figures..............................................................................................      v

Abstract........................................................................................................     ix

CHAPTER ONE: TAX KNOWLEDGE, TAX ATTITUDE, AND PERCEPTION OF TAX FAIRNESS AS PREDICTORS OF TAX COMPLIANCE AMONG INCOME EARNERS IN LAGOS STATE

                                                 INTRODUCTION

1.1:    Background to the study........................................................................ 2

1.2:    Statement of the problem....................................................................... 5

1.3:    Objectives of the study........................................................................... 6

1.4:    Significance of the study........................................................................ 6

1.5:    Definition of terms..............................................................................    7

1.6:    Scope of study.......................................................................................  8

1.7:    Literature review.................................................................................... 8

          Tax attitude and tax compliance............................................................ 8

          Perception of tax fairness and tax compliance.....................................  9

          Tax knowledge and tax compliance....................................................   12

1.7.1: Theoretical framework.........................................................................   15

          The Slippery Slope Framework...........................................................   15

1.7.2: Other relevant theories..........................................................................  18

          Prospect theory.....................................................................................  18

          Theory of planned behaviour................................................................  19

1.7.3: Empirical review.................................................................................... 20

1.8:    Research questions................................................................................. 24

1.9     Research hypotheses.............................................................................. 25

CHAPTER TWO: TAX KNOWLEDGE, TAX ATTITUDE, AND PERCEPTION OF TAX FAIRNESS AS PREDICTORS OF TAX COMPLIANCE AMONG INCOME EARNERS IN LAGOS STATE

                                                    METHODS

2.1:    Setting.................................................................................................    26

2.2:    Participants...........................................................................................  26

2.3:    Design................................................................................................     26

2.4:    Instruments........................................................................................     26

          Tax Compliance Questionnaire..........................................................    26

          Tax Attitude Questionnaire........................................................…….   27

          Perception of Tax Fairness Questionnaire.................................   ……  27

          Tax Knowledge Questionnaire.................................................... ……  27

2.5:    Procedure.................................................................................     …..    28

2.6:    Data analysis.............................................................................    …..    28

CHAPTER THREE:  TAX KNOWLEDGE, TAX ATTITUDE, AND PERCEPTION OF TAX FAIRNESS AS PREDICTORS OF TAX COMPLIANCE AMONG INCOME EARNERS IN LAGOS STATE   

                                                         RESULTS

CHAPTER FOUR: TAX KNOWLEDGE, TAX ATTITUDE, AND PERCEPTION OF TAX FAIRNESS AS PREDICTORS OF TAX COMPLIANCE AMONG INCOME EARNERS IN LAGOS STATE

                                                         DISCUSSION

CHAPTER FIVE: TAX KNOWLEDGE, TAX ATTITUDE, AND PERCEPTION OF TAX FAIRNESS AS PREDICTORS OF TAX COMPLIANCE AMONG INCOME EARNERS IN LAGOS STATE

                                                         CONCLUSION

          Summary of findings.................................................................   …..    37

5.1:    Implication of the findings........................................................   ……  37

5.2:    Suggestions for future studies....................................................  …..    38

5.3:    Recommendations....................................................................... …..    38

REFERENCES

APPENDIX

LIST OF TABLES

Table 1:       Table of Mean and standard deviation of variables

Table 3.1a:  Pearson r correlation between tax attitude and tax compliance

Table 3.1b: Regression analysis for predictive relationship between tax attitude and tax   compliance

Table 3.2a:  Pearson r correlation between tax perception and tax compliance

Table 3.2b: Regression analysis for predictive relationship between perception of fairness and tax compliance

Table 3.3a:  Pearson r correlation between tax knowledge and tax compliance

Table 3.3b: Regression analysis for predictive relationship between tax knowledge and tax compliance

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