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The Challenges Affecting Tax Collection in Nigerian Informal Economy: Case Study of Anambra State

Osemeke, N, Nzekwu, D and Okere, RO The Challenges Affecting Tax Collection in Nigerian Informal Economy: Case Study of Anambra State. Journal of Accounting and Taxation. ISSN 2141-6664 (Accepted)

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Abstract

The Federal and State Governments might not be able to provide infrastructural development for its citizens if the citizens do not pay tax. Successive government officers and tax administrators in Nigeria have come up with different programs on how to increase tax collection. Each of these programs have proved unsuccessful due to lack of accountability, poor awareness and publicity, and poor implementation. Recently, Anambra state took the unusually step of developing a digital (online) business registration to capture taxpayers in the Informal Economy (IE). This digital registration called, Anambra Social Service Identity Number (ANSSID) have witnessed massive success. Despite the increase in number of business registration, businesses and employees in the IE are finding it difficult to pay tax in Anambra State. By using semi-structured interviews and documentary analysis, this study identified the reason why employees and traders in the IE in Anambra State are not willing to pay tax. In total, 35 business owners, managers, accountants, and employees from different industries were interviewed in Anambra State. The reason for using Anambra state is that in the past few years, the state government has been looking for strategic ways to increase revenue in the informal economy, including tax reforms with the introduction of Anambra State Social Service Identity (ANSSID) number which the state has adopted as part of its strategies to pull all taxable adult into the tax-net. This research contributes and offers guidance to policy makers on how to improve tax revenue in the state. This study found that lack of provision of amenities and infrastructural development are among the reasons why many traders and employees do not pay tax in Anambra State, Nigeria, as they have to bear the burden for the provision of such amenities themselves. Lack of accountability, embezzlement, poor accounting records, deficit of empowerment programs and absence of awareness are the key reasons why people and businesses in IE do not pay tax. Recommendations were made to help policy makers improve their tax revenue.

Item Type: Article
Uncontrolled Keywords: Informal Economy (IE); Taxation, Tax Evasion, Tax Avoidance, ANSSID, Nigeria
Subjects: H Social Sciences > HG Finance
Divisions: Business & Management (new Sep 19)
Publisher: Academic Journals
Date Deposited: 15 Jun 2020 13:30
Last Modified: 15 Jun 2020 13:30
URI: http://researchonline.ljmu.ac.uk/id/eprint/13097

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