1.0 Introduction
1.1 Background of Study
The role of taxation in the economic development of any country cannot be overemphasized. It is the primary means through which governments generate revenue to finance public goods and services, including infrastructure, education, healthcare, and national security. In Nigeria, tax revenue contributes significantly to national income, especially in the wake of fluctuating oil prices and the need for economic diversification. However, tax collection in Nigeria has historically been plagued by issues such as corruption, lack of transparency, tax evasion, poor record-keeping, and an inadequate database of taxpayers (Okoye & Ezejiofor, 2014).
E-taxation as defined by Olaoye (2021) refers to the use of electronic platforms and digital technologies in the administration and collection of taxes. These systems include online registration of taxpayers, electronic filing of tax returns, e-payment platforms, and digital issuance of tax clearance certificates (Olaoye, 2021). Taxation is considered to be a means of generating revenue by government for the purpose of providing essential amenities for her citizens (Okauru, 2014).
Taxation globally, is a function of reciprocity (Okauru, 2014). While the government is responsible for the empowerment of the citizens through the provision of jobs, infrastructure and other development projects, and in return, citizens are usually expected to perform their own obligations, in which the principal of it is payment of taxes (Okauru, 2014). Revenue generated from citizens’ taxes are usually recycled by the government in the area of provision of basic amenities such as pipe borne water, road network, electricity, schools, and the likes (Okauru, 2014).
The reality on ground in Nigeria is that governments at all levels have to put more efforts by embarking on an aggressive tax drive, when we consider the dwindling revenue profile resulting from the fall in oil prices. Therefore, Nigerians have to come to terms with the present reality. Taxes can be in various forms, ranging from personal direct tax, indirect tax, income tax, value added tax and companies income tax, to mention but a few. In order to bridge the gap in terms of revenue accruals, there is the need for government to embark on aggressive taxation which is the most recognized and plausible means of generating revenue for social services across the globe. The Vanguard of December 15th, 2015 indicates that revenue accruable from Value Added Tax (VAT) from March to June 2015 came to about N376 billion, but this figure doubled between July and December.
The reason for this can be traced to the Federal Government’s effort towards diversification of revenue sources in the country. With compulsory tax laws and enforcement, there is no doubt that Nigeria can stand the test of the uncertainties in the international oil market. This implies that there will be availability of more revenue for the government to cater for the needs of the Nigerian citizens. This is the most suitable time for Nigerians to welcome the tax system with open arms. Through this, Nigerians can be involved in the contributory social contract by paying their taxes regularly knowing that the government on its part would observe its obligation by not looting or misappropriating taxpayers’ money.
It is no longer news that Nigeria has finally lost its position as the main supplier of oil to the United States of America and therefore, needs to embrace revenue diversification which can be achieved through taxation as the alternative means of revenue generation in order to withstand the dwindling revenue from oil. However, there is the need to harmonize the tax system and ensure collaboration between government tax agencies and professional tax institutes and consultants. The reliability of the institutional framework for tax processing and enforcement must not be questionable to ensure sustainable development through taxation.
1.2 Statement of Problems
Investigation revealed that e-taxation is introduced as a strategic solution to address longstanding challenges in the Nigerian tax system. It is expected to reduce human error and interference, improve transparency, minimize tax evasion, and increase compliance through the automation of tax processes. Nevertheless, the implementation of e-taxation in Nigeria is still confronted with several challenges that limit its effectiveness. Issues such as poor internet infrastructure, low digital literacy among taxpayers, resistance to change, and inadequate training for tax officials hinder the smooth operation of e-tax platforms (Okoye & Ezejiofor, 2014).
Furthermore, many taxpayers are not fully aware of how to navigate the electronic systems, resulting in confusion, delays, or outright avoidance of tax responsibilities. In some cases, technical glitches and lack of prompt support from tax authorities further discourage compliance. As a result, the anticipated increase in revenue generation through e-taxation is not fully realized, raising concerns about the true effectiveness of the system (Olaoye, 2021). Therefore, there is a pressing need to critically assess the actual effect of e-taxation on government revenue in Nigeria..
1.3 Aim and Objectives of Study
The aim of this study is to examine the effect of e-taxation on government revenue in Nigeria. The specific objectives of this study are:
- To assess the relationship between e-taxation and government revenue generation in Nigeria.
- To determine the extent to which e-taxation improves tax compliance among taxpayers.
- To evaluate the challenges affecting the effective implementation of e-taxation in Nigeria.
- To examine the impact of e-taxation on the efficiency and transparency of tax administration.
- To suggest policy recommendations for improving the effectiveness of e-taxation systems in Nigeria.
1.4 Research Questions
Based on the stated objectives, the following research questions guide this research study:
- What is the relationship between e-taxation and government revenue generation in Nigeria?
- To what extent does e-taxation improve tax compliance among Nigerian taxpayers?
- What are the major challenges affecting the effective implementation of e-taxation in Nigeria?
- How does e-taxation influence the efficiency and transparency of tax administration in Nigeria?
- What policy measures can be adopted to enhance the effectiveness of e-taxation systems in Nigeria?
1.5 Significance of Study
The results from this study will educate the stakeholders vested with the management of Nigeria’s economy and the general public on how huge revenue capable of replacing oil revenue can be generated through taxation and its effect on national development.
Furthermore, the findings from this study will also educate the government of Nigeria and the general public on the effectiveness of the institutional framework saddled with the responsibility of collection and enforcement of tax duties.
Lastly, this research will be a contribution to the body of literature in the area economy, accounting and public administration thereby constituting the empirical literature for future research in the subject area.
1.6 Scope of Study
This study will cover the process of e-taxation in Nigeria. It will as well cover the activities of the tax collection and enforcement officers.
1.7 Limitations of the Study
Several limitations were encountered during the course of this study, which may have influenced the results and conclusions.
- Delay from Respondents: Many participants experienced time constraints or hesitated to commit to the study due to their busy schedules. This delay limited the volume of data that could be gathered within the planned timeframe.
- Financial Constraints: Due to budget limitations, there was insufficient funding to expand the research to a larger sample size or to include more varied geographic locations, which might have provided a broader perspective.
- Response Bias: The study will involve surveys and interviews with cooperative managers and members. Response bias may occur if respondents provide socially desirable answers or if there is reluctance to disclose negative financial information due to privacy concerns or fear of repercussions.
- Time Constraints: The study will be conducted within a limited time frame, which may restrict the depth of analysis and the ability to track long-term trends in working capital management. The research may not fully capture the seasonal fluctuations or long-term changes in cooperative performance.
1.8 Definition of Terms
E-Taxation: E-taxation refers to the use of electronic systems and digital platforms for the administration, collection, and management of taxes. It involves online filing, payment, and processing of tax returns, which aims to simplify tax compliance and improve efficiency (Mensah, 2019). in the Nigerian context, e-taxation seeks to reduce manual errors, increase transparency, and minimize tax evasion.
Government Revenue: Government revenue is the income collected by the government from various sources, primarily taxes, fees, and levies, which is used to fund public services and development projects (Oladele, 2018). Tax revenue forms the largest portion of government income and is critical for sustaining national growth.
Tax Compliance: Tax compliance is the willingness and act of taxpayers to accurately report their income, calculate their tax liabilities, and make timely payments as required by law (Adewale & Bello, 2020). Higher compliance rates often result from effective tax systems and administration.
Tax Administration: Tax administration refers to the processes and activities involved in enforcing tax laws, collecting taxes, and managing taxpayer information. It includes registration, assessment, collection, and enforcement procedures handled by tax authorities (Chukwu, 2017).
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