CHAPTER TWO

2.0 REVIEW OF RELATED LITERATURE

2.1Introduction

This chapter reviews various concepts as it relates to the effect of taxation on revenue

generation and theories that inform economic development and their macroeconomic effects,

seeks to locate the place of our focus subject. A critical review of empirical studies is undertaken

and an effort to evaluate contributions is made and pertinent knowledge gaps identified.

2.2 Conceptual Review

2.2.1 Taxation

Taxation is seen as a burden which every citizen must bear to sustain his or her government

because the government has certain functions to perform for the benefits of those it governs. A

précised definition of taxation by Farayola (2017) is that taxation is one of the sources of income

for government, such income as used to finance or run public utilities and perform other social

responsibilities. Ochiogu (2014) defines tax as a levy imposed by the government against the

income, profit or wealth of the individuals and corporate organizations.

According to Adams (2011) taxation is the most important source of revenue for modern

governments, typically accounting for ninety percent or more of their income. Taxation is seen

by Aguolu (2014), as a compulsory levy by the government through its agencies on the income,

consumption and capital of its subjects. These levies are made on personal income, such as

salaries, business profits, interests, dividends, discounts and royalties. It is also levied against

company’s profits petroleum profits, capital gains and capital transfer. Whereas, Ojo (2018)

stresses that, taxation is a concept and the science of imposing tax on citizens. According to him,

tax is itself a compulsory levy which is required to be paid by every citizen. It is generally
considered as a civic duty. The imposition of taxation is expected to yield income which should

be utilized in the provision of amenities, both social and security and creates conditions for the

economic well being of the society.

Okon (2017) states that income tax can be regarded as a tool of fiscal policy used by

government all over the world to influence positively or negatively particular type of economic

activities in order to achieve desired objectives. The primary economic goals of developing

countries are to increase the rate of economic growth and hence per capita income, which leads

to a higher standard of living.

Progressive tax rate can be employed to achieve equitable distribution of resources. Government

can also increase or decrease the rates of tax, increase or decrease the rate of capital allowances

(given in lieu of depreciation) to encourage or discourage certain industries (e.g. in the area of

agriculture, manufacturing or construction) or may give tax holidays to pioneer companies.

Income tax therefore can be used as an of social change if employed as a creative force in

economic planning and development.

Taxation like most topics or subject matter in management sciences is difficult to give a

universal definition acceptable to everyone. Despite this fact however, some literature on

taxation have attempted to define it in such a way that it will at least give insight or a general

picture of what it is all about. The international Encyclopedia of social sciences defines taxation

as “A general concept or device used by government to extract money or other valuable things

from people and organization by the use of law. Che-Azmi & Kamarulzaman (2014) Defined tax

as a compulsory levy imposed on individuals and organizations by government. He concluded

that tax is a good source of revenue to government, thereby bring about economic growth

Udabah (2012) sees tax as a levy necessary to meet the cost of services and
infrastructural development desired by the community which should be provided by the

government. Primarily, he argued that taxation was initially introduced to raise revenue to meet

government expenditure. From the definitions above among several of its kind, it could clearly

be seen that taxation is therefore, one among other means of revenue generation of any

government to meet the desires of the citizens. The purpose of taxation as stated by the French

law is for the provision of the armed forces and administrative expenditures. Miller and Oats

(2006) maintain “taxation is required to finance public expenditure “however there are other

sources of revenue generation for government these includes but not limited to Fines and

Charges, Foreign aides and grants, Loans etc.

Taxation is seen as a burden which every citizen must bear to sustain his or her

government because the government has certain functions to perform for the benefits of those it

governs. A précised definition of taxation by Farayola (2017) is that taxation is one of the

sources of income for government, such income as used to finance or run public utilities and

perform other social responsibilities. Ochiogu (2014) defines tax as a levy imposed by the

government against the income, profit or wealth of the individuals and corporate organizations.

According to Adams (2011) taxation is the most important source of revenue for modern

governments, typically accounting for ninety percent or more of their income. Taxation is seen

by Aguolu (2014), as a compulsory levy by the government through its agencies on the income,

consumption and capital of its subjects. These levies are made on personal income, such as

salaries, business profits, interests, dividends, discounts and royalties. It is also levied against

company’s profits petroleum profits, capital gains and capital transfer. Whereas, Ojo (2018)

stresses that, taxation is a concept and the science of imposing tax on citizens. According to him,

tax is itself a compulsory levy which is required to be paid by every citizen. It is generally
considered as a civic duty. The imposition of taxation is expected to yield income which should

be utilized in the provision of amenities, both social and security and creates conditions for the

economic well-being of the society.

2.2.1.1 Objectives of Taxation

Although the tax structure in the various developing countries differs widely, the

objectives of taxation in these countries are virtually the same. Cutt (1969) therefore, states that a

brief discussion on the objectives of taxation as outlined below would be a gainful exercise.

(A). Rising of Revenue: The classical function of a tax system is the raising of the revenue

required to meet government expenditure. This income is required to meet the expenditure which

are either the provision of goods and services which members of the public cannot provide such

as defense, law and order to the provision of goods and services which the federal and state

governments feel are better provided by itself such as health services and education.

(B) Wealth Redistribution: In modern times, great emphasis has come to be placed on the

objective of redistribution of wealth. This has two quite distinct forms. The first is the doctrine

that taxation should be based on ability to pay and is summarized by the saying that “the greatest

burdens should be borne by the broadest backs.” The second form presupposes that the present

distribution is unjust and concludes that this should therefore be undone. This second principle

sees confiscation as a legitimate objective of taxation.

(C) Economic Price Stability: It has been said that the most fundamental reason a government

has for taxing its citizens is to provide a reasonable degree of price stability within the nation

(Summerfield, et al, 1980). Most spending by the public and private sectors without taxes

generates high demand, which is inflationary. In such a situation, the basic function of taxation is

to reduce private expenditure in order to allow government to spend without causing inflation.
Thus, taxation is basically a deflationary measure. On the other hand, when aggregate demand is

lower than the deserved level, government has two options which are to increase government

spending with increasing taxes or to reduce taxes while leaving government spending stable.

(D) Economic Growth and Development: The overall control or management of the economy

rests on the central government and taxation plays an important role in this direction. In addition

to maintaining reasonable price stability, governments are determined to promote the near-full

employment of all the resources of the country (including human resources i.e. labour) and

ensure a satisfactory rate of economic growth. Economic growth and development programmes

are geared towards raising the standard of living of the masses of a country through the

improvement of their economic and social conditions.

According to Soyode and Kajola (2006) the responsibilities or objectives of government

using taxation are as follows:-

(a) Revenue Generation: The primary objective of a modern tax system is generation of

revenue to help the government to finance ever-increasing public sector expenditure.

(b) Provision of Merit Goods: An important objective of tax system is the promotion of social,

economic and good governance through provision of merit goods. Examples of merit goods are

health and education. These must not be left entirely to private hands though, private

participation should be encouraged. Private enterprises will push the cost of providing education

and health services beyond the reach of common people if left entirely in their hands.

(c) Provision of Public Goods: Revenue generated from tax can be used to provide commonly

consumed goods and services for which an individual cannot be levied the cost of the goods or a

service consumed is one of the functions of government. Examples of public goods include:-

(i) Internal security through maintenance of law and order by police and other security agencies.
(ii) External security through defense against external aggression by Army, Navy and Air Forces.

(iii) Provision of street lights and roads.

(d) Discouraging consumption of demerit goods: Tax can be used to discourage consumption

of demerit or harmful goods like alcohol and cigarette. This is done to reduce external costs to

the society. These external costs include health risks and pollution.

2.2.2 Tax Reforms

Taxation has been defined as a compulsory levy imposed on the citizens of a country by

the government, in order to generate revenue that will be used in general administration

(Anyanwu, 2017). Ogundele (2019) defined taxation as the process of or machinery by which

communities of group of persons are made to contribute in some agreed quantum and method for

the purpose of administration and development of the society. Tax is dynamic, so reforms are

necessary to effect the required changes in the national economy (Ola, 2011). Tax reform is

considered an ongoing process which policy makers and tax administrators continually adopt in

the tax systems to reflect changing economies, social and political circumstances in the economy

(Azubuike, 2019).

Tax reform is a way of changing the way taxes are collected and managed by the

government. It is an attempt to correct weaknesses in the existing tax system, which may bring

about introduction of a new tax rate, a new legal clause, a new assessment system to enhance its

efficiency. Tax reform measures are undertaken to strengthen modern taxes and drastically

reduce the complexity and lack of transparency of the system (Oriakhi & Rolle, 2014; Odusola,

2006; Anyanwu, 2017). Furthermore, tax reforms are designed to reduce the burden of taxation

of all people by the government, make the tax system more progressive and less regressive and
simplify the tax system, by making it more accountable and understandable.

2.2.3 Company Income Tax (CIT)

Section 93 (1) of the Companies Income Tax Act CAP 60 Laws of the Federation of

Nigeria 2010 defined a company as ―any company or corporation other than a corporation sole,

established by or under any law in force in Nigeria or elsewhere‖. The Corporate Affairs

Commission (CAC) is responsible for the registration of limited liability companies in Nigeria. A

registered company is expected to end with the word Limited (Ltd) or Public Company (Plc).

The companies income tax is a subset of direct taxes because the incidence of payment and the

burden of the tax are borne by the companies and not transferable to third parties. The Federal

Inland Revenue Service (FIRS) under the supervision of the Federal Board of Inland Revenue

(FBIR) is the relevant tax authority saddled with the responsibility of assessing and collection of

companies‘income tax among others.

2.2.4 Petroleum Profit Tax (PPT)

Petroleum profit tax involves the charging of tax on the incomes accruing from petroleum

operations (Nwezeaku, 2015). Nigerian law by virtue of the Petroleum Profits Tax Act 1990

requires all companies engaged in the extraction and transportation of petroleum to pay tax

(Buba, 2017). Petroleum profits tax is charged, assessed and payable upon the profits of each

accounting period of any company engaged in petroleum operations during any such accounting

period, usually one year (January to December) (Anyanwu, 1993). Petroleum profit tax is a tax

applicable to upstream operations in the oil industry. It is particularly related to rents, royalties,

margins and profit sharing elements associated with oil mining, prospecting and exploration

leases.

Adegbie (2010) noted that the taxable income of a petroleum company comprises
proceeds from the sale of oil and related substances used by the company in its own refineries

plus any other income of the company incidental to and arising from its petroleum operations. It

is the most important tax in Nigeria in terms of its share of total revenue contributing 95 and 70

percent of foreign exchange earnings and government revenue, respectively (Odusola, 2016).

Nwadighoha (2017) also stated that the taxation of petroleum profit started in 1959 with the

enactment of the Petroleum Profit Tax Act 1959 which was meant to have a retrospective

effective date of 1st January 1958. This Act serves as a foundation for the present Petroleum

Profit Tax Act, 2004; which was further amended in 2007.

2.2.5 Value Added Tax

An important landmark in tax reform in Nigeria was the adoption of the value-added tax

(VAT) in January through the VAT Act No. 102 of 1993 but its implementation actually begs in

January 1994. Since its introduction, 15 of the 42 sections of the Act have been amended. VAT

was originally imposed on 17 categories of goods and 24 service categories. Such items as basic

foods, medical and pharmaceutical products, books, newspapers and magazines, house rent,

commercial vehicles and spare parts and services rendered by community and people ‘s banks,

however, were VAT- free. The revenue generated was to be shared 20:80 between the federal

and state government: currently it is shared 15:50:35 among the federal/state/local levels. The

state‘s allocation was to be earmarked as 30 per cent for the state of origin, 30 per cent for

consumption/destination and 40 per cent for equality of the state.

2.2.6 Features of the Nigerian Tax System

Somorin (2011) stated the features of the Nigerian tax system as follows:-

(i) Simplicity, certainty and clarity: Tax payers should understand and trust the tax system and
this can only be achieved if Nigerian tax policy keeps all taxes simple, creates certainty through

considerable restrictions certainty through considerable restrictions on the need for discretionary

is therefore imperative that the Nigerian tax system should be simple (easy to understand by all),

judgments and produces clarity by educating the public on the application of relevant tax laws. It

certain (its laws and administration must be consistent) and clear (stakeholders must understand

the basis of its imposition).

(ii) Low Cost of Administration:- A key feature of a good tax system is that the cost of

administration must be relatively low when compared to the benefits derived from its imposition.

There must therefore be a proper cost- benefit analysis before the imposition of any taxes and the

entire machinery of Tax Administration in Nigeria should be efficient and cost effective.

(iii) Fairness:- Nigeria’s tax system should be fair and as such observe the objective of

horizontal and vertical equity. Horizontal equity ensures equal treatment of equal individuals.

The Nigerian tax system should therefore seek to avoid discrimination against economically

similar entities. Vertical equity on the other hand addresses the issue of fairness among different

income of fairness among different income categories. In this regard, the Nigerian tax system

shall recognize the ability to pay principle, in that individuals should be taxed according to their

ability to bear the tax burden.

(iv) Flexibility:- Taxes in Nigeria should be flexible enough to respond to changing

circumstances. Prevailing circumstances should also be considered before the introduction of

new taxes or the review of existing ones.

(v) Economic Efficiency:- The Nigerian tax system shall at all times strive to minimize the

negative impact of taxes on economic efficiency by ensuring that the marginal tax rates do not

distort marginal propensity to save and invest.

2.2.7 Taxation as a tool for Wealth Creation and Employment

Somorin (2011) stated that taxation is recognized as a very important tool for National

Development and growth in most societies. Taxation can play a vital role in the creation of

wealth and employment in the Nigerian economy in the following ways:-

1. Stimulating growth in the economy, by increased trade and economic activities: In this

regard, tax revenues should be used to provide basis infrastructure such as power, roads,

transportation and other infrastructure which would facilitate trade and other economic activities.

2. Stimulating domestic and foreign investment: It is necessary to mention that where the tax

system creates a competitive edge for investments in the economy, local investments would be

retained in the country while also attracting foreign investments. Increased investment would

generate employment and provide wealth in the hands of individuals.

3. Revenue generated from taxes can also be applied directly to identify sectors of the

Nigerian economy to stimulate such sectors: Somorin (2011) emphasized that for this

statement to apply, the sectors must be those which have potential for creating employment,

developing the economy and creating wealth for the greater benefit of citizens and government

of this country.

4. Revenue earned from taxes can be used to develop effective regulatory systems,

strengthen financial and economic structures and address market imperfections and other

distortions in the economic sector: Taxes realized from specific sectors of the economy can be

channeled back to those sectors to encourage their continued growth and development.

5. Redistribution of income: Tax revenue realized from high income earners is used to provide

public infrastructure and utilities to the lowest income earners.

2.3 Theoretical Review

2.3.1 Ibn Khaldun’s theory of taxation

This study is anchored on the Ibn Khaldun’s theory of taxation. The hallmark of Ibn Khaldun’s

theory of taxation is to lower as much as possible the amounts of individual imposts levied upon

persons capable of undertaking cultural enterprises. In this manner, such persons will be

psychologically disposed to undertake them, because they can be confident of making a profit

from them. Thus, He advocates for decreasing the burden of taxation on businessmen and

producers, in order to encourage enterprise by ensuring greater profits to entrepreneur and

revenue to the government. In practice, he found that at the initial stage, the government relies on

low taxes, in keeping with Islamic law. As a result, enterprises increase in number and size and

thus permit tax base, tax revenue, and governmental surplus to grow.

This theory is explained from two-folds, that is, the arithmetic and economic effects. The

arithmetic effect states that if tax rates are lowered the tax revenue will be lowered by the

amount of the decrease in the rate. The reverse is the case for an increase in tax rates (Ishlahi,

2016). Conversely, the economic effect recognizes the positive impact of lower tax rate on work,

output and employment, thereby providing incentives to increase these activities. Whereas rising

tax rate has the opposite economic effect by penalizing participation in the taxed activities. Islahi

(2016), further stated that a very high tax rate has negative economic effect which dominates

positive arithmetic effect, thereby decreasing tax revenue.

The Khaldun’s theory of taxation is also faced with criticisms one of which is that, not all

tax-rates cut results in increased tax revenues. Revenue responses to a tax rate change will

depend upon the tax system in place, the time period being considered, the ease of movement

into underground activities, the level of tax rates already in place, the prevalence of legal and
accounting-driven tax loopholes, and the proclivities of the productive factors. If the existing tax

rate is too high - in the ‘prohibitive range’ - then a tax-rate cut would result in increased tax

revenues. The economic effect of the tax cut would outweigh the arithmetic effect of the tax cut

(Laffer, 2014). On the other hand, it is also very obvious that at a very high rate when people are

prohibited from reaping much of what they sow, they will sow more sparingly. Thus, when

marginal tax rates rise, some people, those with working spouses for example, will opt out of the

labor force. Others will decide to take more vacation time, retire earlier, or forgo overtime

opportunities while others will decide to forgo promising but risky business opportunities. These

reductions in productive effort shrink the effective supply of resources thereby retarding output.

High marginal tax rates also encourage tax shelter investments and other forms of tax avoidance

(Gwartney, 2016). Critics of the supply-side notion disagree with the notion that tax cuts can

lead to higher tax revenues.

This study holds that tax rate cuts especially in developing nations will negatively affect

the revenue generation base of the country but in turn, it will encourage business ventures to

spring out thereby positively affecting the economy. This will go a long way of increasing tax

payers’ ability to pay taxes levied on them. This study is hinged on the Ibn Khalduns theory

because tax administrators need to pay attention to tax cuts and possible consequences when

making tax policies as tax payers prefer lesser taxes while government requires more revenue.

Therefore, a good tax administration will be able to formulate tax policies that will be beneficial

to both the tax payers and government.

2.4 Empirical Review

Theobald (2018) examines the impacts of tax administration on government revenue in

Tanzania-case of Dares Salaam region using questionnaires administered to 85 targeted

respondents to access the required information. Findings of this study revealed that, Good tax

design, Effective tax policy and laws, Tax administrative structure, Tax collection methods,

Proper use of computerized system of maintaining taxpayer Register, Outsourcing revenue

collections to private tax collectors, Internal and external capacity building, Intensive

coordination with other entities and Proper maintenance of taxpayer’s records are the main

factors that enhance effective tax administration in Tanzania. This research was carried out in

Tanzania, while the current study aims at buttressing the Nigerian perspective as regards tax

administration and revenue generation.

Chijioke, Leonard, Bossco & Henry (2018), evaluate the impact of E-Taxation on

Nigeria’s revenue and economic growth. The study made use of secondary data sourced from

Federal Inland Revenue Service, and Central Bank of Nigeria Statistical and Economic Reports

on quarterly basis from second quarter 2013 to fourth quarter 2016. Findings revealed that

Federally Collected Revenue and Tax-to-GDP ratio significantly decreased after e-taxation was

implemented. Also, Tax Revenue decreased after the implementation but the mean difference

was not statistically significant. This research focuses only on e-tax system an uprising tax

reform in Nigeria. The current study seeks to incorporate other viable reforms amidst e-taxation

in Nigeria.

Soetan (2017), examines the effect of tax administration on tax revenue generation in

Nigeria. Survey research design was employed and structured questionnaire was developed and

used to collect data for this study. One hundred and twenty-six (126) respondents participated in

the study. Collected data were processed with the help of SPSS tool and Descriptive statistics

and simple regression statistical techniques were used to analyze the data. The study found that

tax administration does not have significant effect on tax revenue generation in Nigeria. This
study covered the whole of Nigeria with a relatively small sample size. The current study

addresses this by focusing on Benue state with a much bigger sample size.

Animasaun (2016), investigates the relationship between tax administration and revenue

generation from the perspective of Ogun State internal revenue service. The study employed a

survey research design and data were obtained using questionnaire administered to 70 staff of the

Ogun State Internal Revenue Service. The collected data were analysed by both descriptive and

inferential statistics. The result revealed that, in Ogun state, tax administration did not

significantly relate with the amount of revenue generated. This research was based on the

perspective of Ogun State Internal Revenue Service.

Ogbonna & Appah (2016), examine the effect of tax administration and revenue on

economic growth of Nigeria. Data was collected from primary and secondary sources. The

secondary sources were from scholarly books and journals while the primary source involved a

well-structured questionnaire. Data collected were analyzed using relevant regression analysis.

The results revealed that there is a significant relationship between Personal income tax revenue

(PITR) and per capita income, Company income Tax Revenue and Gross Domestic product of

Nigeria, VAT revenue and PCI of Nigeria, Petroleum Profit Tax revenue and GDP of Nigeria

and tax administration and Gross domestic product of Nigeria.

Asaolu, Dopemu & Monday (2015), assess the impact of tax reforms on revenue

generation in Lagos State of Nigeria using Time Series quarterly data between the period of 1999

and 2012, obtained from the records of Tax Payer Statistics and the Revenue Status Report of

Lagos State Internal Revenue Service (LIRS). Data collected were analyzed using ordinary least

square regression techniques (OLS). Findings indicate that there was a long run relationship

between the tax reforms and revenue generated in Lagos State; thus, the tax reforms had positive
and significant effect on the revenue structure of the State. The study employed time series

analysis and focused its scope in Lagos state.

Oriakhi & Ahuru (2014), ascertained the impact of tax reforms on tax revenue generation

in Nigeria. The study employed annual time series data spanning the years (1981-2011). The

various income taxes were used as a proxy for tax reforms. Findings revealed that tax reform by

improving the tax system and reducing tax burden enhances the ability of the government to

generate more revenue.

Ifere & Eko (2014) investigated efficiency and effectiveness in the administration of tax

in Nigeria, using Cross River State as a case-study. The methodology to achieve this objective

was a qualitative technique using structured questionnaires to survey the three senatorial districts

in the state; the central limit theory was adopted as an analytical technique. Result shows a

significant degree of inefficiency in the administration of taxes.

Abiola & Asiweh (2012), examined the impact of tax administration on government

revenue in a developing economy using Nigeria as a case study. Data were obtained from 93

usable responses culled from an online survey program. The study found that increasing tax

revenue is a function of effective enforcement strategy which is the pure responsibility of tax

administration. The study also found that Nigeria lack enforcement machineries which include

among other things, adequate manpower, computers and effective postal and communication

system. The researcher made use of Nigeria as a case study with a relatively small sample.

Therefore, findings obtained may not be adequately generalized empirically. The current study

focuses on Benue state alone to give room for more participation within the population.

Enahoro & Olabisi (2012), examined the overall effectiveness of tax administration in

relation to assessment, collection and remittance of tax in Lagos State, Nigeria. Data were
obtained from a survey questionnaire administered to 130 civil servants directly connected with

tax administration in the five Local government areas of Lagos State (Somulu, Mushin, Ikeja,

Kosofe & Surulere). The study finding reveals that the tax administration in Lagos state is not

totally efficient. Hence, tax administration affects the revenue generated by the government. The

study also found that there is a significant relationship between tax administration, tax policies

and tax laws.

Lai (2018) examined the effect of e-filling on revenue generation in Malaysia; it revealed

the extent to which tax revenue generation has contributed towards the economy’s revenue and

Gross Domestic Product and also the effect of tax evasion and tax avoidance on revenue

generation in Malaysia. The study employed both primary and secondary sources of data. Using

a survey research design, both descriptive and regression analysis were carried out on the data.

Findings from the study revealed that taxation has a significant contribution on revenue

generation, taxation has a significant contribution on Gross Domestic Product (GDP) and tax

evasion and tax avoidance have a significant effect on revenue generation in Malaysia.

Amabali (2019) studied the antecedents of paperless income tax filing by young

professionals in India using Regression analysis. The antecedents of young Indian professionals

depended on the perceived ease of the tax system, personal innovativeness in information

technology, relative advantage, performance of filing service, and compatibility

Pippin & Tosun (2014) examined electronic tax filing in the United State of America The

study summarizes and analyses the demographic, socio-economic, and geographic factors

affecting electronic tax filing (e-filing) in the United States for the years 1999, and 2004–2007

and the growth in e-filing between 1999 and 2007. Secondary data sourced from the IRS

Statistics of Income (“SOI”) Division and additional demographic and geographic information
from the Bureau of Economic Analysis (BEA), the Bureau of Labor Statistics (BLS) and the

census bureau were used; Analyses was carried out using regression, the rates of e-filling are

noticed to be lower in rural communities with low population and with a lower share of females,

Surprisingly, educational attainment is negatively correlated with e-filing rate and growth in e-

filing.

Nasir (2015) examined implementing electronic tax fillings and payments in Malaysia;

the main objective was to point out the benefits of maintaining a good e-tax system as opposed to

a manual system. The study made use of secondary data from Malaysian Inland Revenue report

from 2004 to 2011 using trend analysis to highlight the increase in tax returns since the adoption

of an e-tax system in 2004. For the first two years, the number of taxpayers using the e –filling

system remained far below expectation at about 5% and the tax authorities were still tackling the

challenges posed by the new system such as timely and costly adaptation of the system,

uncertainty and security problems, lack of technological exposure in the country etc. all of which

had little or no impact on tax returns. 2006 to 2011 brought an increase in the users of the system

from the disappointing 4% to an Encouraging 34% and37% in 2012, over the same period tax

returns increased from 14.5% of 52GDP to 15.3%. It also showed how compliance was increased

and fewer hours used in collecting taxes. The conclusion of the study was that Electronic systems

for filling and paying taxes, if implemented well and used by most taxpayers, benefit both tax

payer and tax authorities and guarantees a better standard of living for all citizens.

Allahverd, Alagoz, & Ortakapoz (2017) examined the effect of e-taxation system on tax

revenue and cost in Turkey, the study used secondary data gotten from the Turkish revenue

authority, the data were examined in two groups which are pre-electronic tax period of 1993-

2014 and post-electronic tax period of 2005-2016. Mann-Whitney U Test was used to analyze
the data. The research also provided information on the electronic transformation of the tax

system and the Turkish Tax System. According to the empirical result of the research, the

transition to the electronic tax system positively affected the tax revenues and reduced the cost

per tax.

Barati & Bakhshayesh (2015) examined electronic tax system and the challenges facing

kermansah province tax payers in Iran, the researcher made used of primary data gotten from

questionnaires administered to resident of kermansah province, analyses were carried out using

Spearman correlation coefficient, variance analysis, superiority indexes, the agent exploring

analysis, structural equations model, in which high sensitivity is used to check their compliance

and review. Results show that: technical and infrastructural variables (95/0), social influence

(90/0), the expected effort (51/0), legal issues (40/0), expected performance (32/0), information

access (18/0) and perceived risk (11/0) are factors of importance and more influence on the

affecting factors for the adoption of electronic tax, respectively.