THE DETERMINANTS OF TAX PAYERS ATTITUDE IN SOME SELECTED STATES (NIGERIA)

CHAPTER ONE: INTRODUCTION

1.1 Background of Study

Taxpayer attitude is widely recognised as one of the most critical determinants of tax compliance and revenue mobilisation in any tax system, particularly in developing economies where voluntary compliance is low and enforcement capacity is limited. The attitude of taxpayers toward taxation—encompassing their beliefs, perceptions, feelings, and behavioural intentions regarding tax payment—shapes whether individuals and businesses willingly comply with their tax obligations, seek opportunities for avoidance, or engage in outright evasion. Understanding the determinants of taxpayer attitude is therefore essential for tax authorities seeking to improve compliance, increase revenue, and build a tax culture that supports sustainable public finance. In Nigeria, where the tax-to-Gross Domestic Product (GDP) ratio remains among the lowest in the world (typically 6-8% compared to an African average of approximately 16% and an OECD average of over 30%), understanding what shapes taxpayer attitudes has become a policy priority (FIRS, 2020; World Bank, 2019; Okauru, 2010).

The concept of taxpayer attitude has been extensively studied in the tax compliance literature, drawing on psychology, sociology, economics, and behavioural economics. Attitude refers to a psychological tendency expressed by evaluating a particular entity with some degree of favour or disfavour. In the tax context, taxpayer attitude encompasses beliefs about the fairness of the tax system (distributive justice), beliefs about how tax revenues are used (fiscal exchange), beliefs about the probability of detection and punishment (deterrence), trust in tax authorities and government institutions (institutional trust), and social norms regarding tax compliance (what others do and what others think one should do). These attitudinal dimensions interact to shape the behavioural intention to comply or evade, which in turn affects actual compliance behaviour (Ajzen, 1991; Kirchler, 2007; Alm, 2012).

The theoretical foundation for understanding taxpayer attitude draws from multiple disciplines. Economic deterrence theory, rooted in the work of Allingham and Sandmo (1972), posits that taxpayers comply because they fear detection and punishment. The theory predicts that attitude toward taxation will be more favourable when the probability of audit and the severity of penalties are perceived to be high. However, empirical evidence has shown that deterrence factors explain only a modest portion of compliance behaviour, leading to the development of behavioural extensions. Fiscal exchange theory emphasises the reciprocal relationship between tax payment and public service delivery: taxpayers who perceive that they receive valuable public services in return for their taxes are more likely to have favourable attitudes toward taxation. Social norms theory emphasises the role of what others do (descriptive norms) and what others think one should do (injunctive norms) in shaping individual attitudes. Procedural justice theory emphasises that taxpayers who perceive that tax authorities treat them fairly, respectfully, and transparently are more likely to have favourable attitudes (Allingham and Sandmo, 1972; Kirchler, 2007; Feld and Frey, 2007).

The concept of tax morale—the intrinsic motivation to pay taxes, based on moral obligations and values rather than fear of punishment—has emerged as a key determinant of taxpayer attitude and compliance behaviour. Tax morale is influenced by individual characteristics (age, gender, education, income, religiosity), social factors (trust in government, perceptions of corruption, social capital), and institutional factors (quality of governance, effectiveness of public services, fairness of the tax system). Cross-national studies have consistently found that tax morale is higher in countries with better governance, lower corruption, and higher-quality public services. In Nigeria, tax morale is generally low, reflecting widespread perceptions of government corruption, poor service delivery, and the sense that tax revenues are not being used for public benefit. Understanding the determinants of tax morale in Nigeria is essential for designing interventions to improve taxpayer attitude (Torgler, 2007; Luttmer and Singhal, 2014; Alm and Torgler, 2011).

The Nigerian tax system has undergone significant reforms over the past two decades, yet taxpayer attitudes remain a significant challenge. The establishment of the Federal Inland Revenue Service (FIRS) as a semi-autonomous revenue authority, the introduction of the Tax Identification Number (TIN), the implementation of electronic tax filing and payment systems, and the passage of the National Tax Policy have all aimed to improve tax administration and compliance. However, taxpayer surveys consistently reveal negative attitudes: perceptions that the tax system is unfair, that the rich and powerful do not pay their fair share, that tax revenues are wasted or stolen, and that tax officials are corrupt and unhelpful. These negative attitudes translate into low voluntary compliance, a large tax gap, and heavy reliance on withholding mechanisms (PAYE, VAT) that capture revenue without requiring voluntary taxpayer action (FIRS, 2020; Okauru, 2010; Okonjo-Iweala, 2012).

The selection of selected states in Nigeria for this study is strategic for capturing variation in taxpayer attitudes across different geographic, economic, and institutional contexts. Nigeria’s 36 states vary substantially in their economic structures (oil-producing vs non-oil-producing, agricultural vs industrial vs service-based), levels of development, quality of governance, perceptions of corruption, and effectiveness of public service delivery. State-level taxes (personal income tax on self-employed individuals, road taxes, land use charges, etc.) are administered by State Boards of Internal Revenue (SBIRs), which vary in their administrative capacity, professionalism, and relationship with taxpayers. Taxpayer attitudes toward state taxes may differ from attitudes toward federal taxes (companies income tax, VAT, customs duties), because the fiscal exchange at the state level (what taxpayers receive from state government in return for state taxes) may be more or less visible than at the federal level. By studying taxpayer attitudes across multiple states, this study can identify state-level determinants while controlling for individual-level factors (Ariwodola, 2003; Nwadialor, 2005; Okauru, 2010).

The demographic and socio-economic characteristics of taxpayers are important determinants of attitude that have been extensively studied in the literature. Age has been found to have a positive relationship with tax morale in many studies, with older taxpayers exhibiting more favourable attitudes toward taxation, possibly due to greater socialisation into compliance norms or greater experience with the tax system. Gender has been studied extensively, with most studies finding that women exhibit higher tax morale and more positive attitudes than men, though the reasons for this difference are debated (greater risk aversion, different socialisation, different relationship to government services). Education has an ambiguous effect: more educated taxpayers may better understand the rationale for taxation but may also be better able to identify and exploit loopholes. Income has been found to have a negative relationship with tax morale in some studies (higher-income individuals have more opportunities for evasion and may resent paying a larger share), but positive in others (higher-income individuals benefit more from public services). Marital status, employment status, occupation, and religiosity have also been found to affect taxpayer attitude (Torgler, 2007; Richardson, 2006; Alm and Torgler, 2011).

Trust in government and perceptions of corruption are among the most powerful determinants of taxpayer attitude in developing economies. When taxpayers believe that government officials are corrupt, that tax revenues are stolen or wasted, and that the rich and powerful receive preferential treatment, they are much less willing to pay taxes voluntarily. The relationship between corruption perception and tax morale is bidirectional: corruption reduces tax morale, and low tax morale may enable further corruption (as governments under pressure for revenue may resort to more corrupt practices). In Nigeria, corruption perceptions are among the highest in the world (Transparency International consistently ranks Nigeria among the most corrupt countries), and this perception is a major barrier to improving taxpayer attitude. Rebuilding trust in government and reducing corruption are essential for improving taxpayer attitude, but these are long-term challenges that extend beyond tax administration (Transparency International, 2020; Okonjo-Iweala, 2012; Usman, 2016).

The quality and visibility of public services provided by government have a direct effect on taxpayer attitude through the fiscal exchange mechanism. When taxpayers can see tangible benefits from their tax payments—better roads, functioning schools, accessible healthcare, reliable electricity, public safety—they are more willing to pay taxes. When public services are poor and invisible, taxpayers perceive a poor return on their tax payments and resist paying. In Nigeria, the quality of public services varies substantially across states and across service types. Some states have made visible investments in infrastructure and social services that may improve taxpayer attitude. Other states have poor service delivery despite collecting substantial revenues (particularly oil-producing states with high revenues from federal allocations). Understanding the relationship between service delivery and taxpayer attitude across Nigerian states is essential for policy (Okauru, 2010; Usman, 2016; World Bank, 2019).

The role of tax administration factors in shaping taxpayer attitude cannot be overstated. Taxpayers’ interactions with tax authorities—whether they are treated with respect and fairness (procedural justice), whether they receive assistance when needed (taxpayer services), whether the tax system is simple and easy to navigate (compliance costs), and whether enforcement is perceived as fair (not targeting only small taxpayers while protecting the wealthy and connected)—all shape attitude. Negative experiences with tax officials (bribery, harassment, arbitrary assessments) create lasting negative attitudes that reduce compliance. Positive experiences (helpful taxpayer service, fair treatment, transparent processes) can build trust and improve attitudes. The quality of State Boards of Internal Revenue (SBIRs) varies substantially across Nigeria, with some states having more professional, well-trained staff, better use of technology, and more taxpayer-friendly procedures than others (Ariwodola, 2003; Nwadialor, 2005; Okauru, 2010).

The complexity of the tax system and the cost of compliance affect taxpayer attitude. When the tax system is complex—multiple taxes, different filing requirements, different due dates, complex forms, ambiguous rules—taxpayers become frustrated and may develop negative attitudes. The cost of compliance (time spent understanding obligations, preparing returns, making payments, responding to inquiries) is a burden on taxpayers. In Nigeria, the tax system has been simplified in some respects (e.g., the introduction of the TIN, electronic filing) but remains complex in others (e.g., different state taxes, different local government levies). Reducing complexity and lowering compliance costs are strategies for improving taxpayer attitude that are within the control of tax authorities (FIRS, 2020; Okauru, 2010; Nwadialor, 2005).

1.2 Statement of Problems

Despite the critical importance of taxpayer attitude for voluntary compliance and revenue mobilisation, the determinants of taxpayer attitude in Nigeria are not well understood, and tax authorities lack empirical evidence to guide interventions aimed at improving taxpayer attitudes. The Nigerian tax system faces persistent challenges: low tax-to-GDP ratio, large tax gap, widespread evasion, and public resistance to taxation. These challenges are rooted in negative taxpayer attitudes, yet the specific factors that shape these attitudes—whether demographic (age, gender, education), economic (income, employment status), social (trust in government, perceptions of corruption, tax morale), institutional (tax administration quality, procedural justice, service delivery), or contextual (state of residence, state economic conditions)—have not been systematically studied across multiple Nigerian states. The absence of rigorous empirical evidence on the determinants of taxpayer attitude constitutes the central problem addressed by this study (FIRS, 2020; Okauru, 2010; Usman, 2016; Ariwodola, 2003).

The first critical problem concerns the limited understanding of how demographic and socio-economic factors affect taxpayer attitude in Nigeria. While international studies have found relationships between age, gender, education, income, and tax morale, these relationships may differ in the Nigerian context due to cultural, economic, and institutional differences. For example, the relationship between education and tax morale may be different in Nigeria (where educated individuals may have more negative attitudes due to better understanding of governance failures) than in developed economies. The relationship between income and tax morale may be different in Nigeria (where high-income individuals may have more opportunities for evasion and may resent the unequal distribution of tax burdens) than in more equal societies. Without Nigeria-specific empirical evidence, interventions cannot be targeted to the demographic and socio-economic groups most in need of attitude improvement (Ariwodola, 2003; Nwadialor, 2005; Usman, 2016).

The second critical problem concerns the role of trust in government and perceptions of corruption in shaping taxpayer attitude in Nigeria. Nigeria has very high levels of perceived corruption, and trust in government institutions is low. These factors are likely powerful determinants of taxpayer attitude, but the magnitude of their effects has not been quantified in the Nigerian context. Do perceptions of corruption reduce tax morale more for younger taxpayers than older taxpayers? Does trust in the tax authority (as distinct from trust in government generally) have a larger effect on attitude than trust in the political system? Does the effect of corruption perception differ across states with different corruption levels? Without answers to these questions, anti-corruption efforts cannot be prioritised based on their potential impact on taxpayer attitude (Transparency International, 2020; Usman, 2016; Okauru, 2010).

The third critical problem concerns the fiscal exchange mechanism in Nigeria: the relationship between perceived quality of public services and taxpayer attitude. Taxpayers who see tangible benefits from their tax payments are more willing to pay. However, the attribution problem is substantial: taxpayers may not connect specific services to specific tax payments because both federal and state governments provide services, and funding comes from multiple sources (oil revenues, federal allocations, state taxes, local government revenues). The visibility of service delivery varies: road construction is visible; improvements in school quality may be less visible to taxpayers without children; corruption in service delivery may be visible even when services are delivered. Understanding how service delivery perceptions affect taxpayer attitude in the Nigerian federal system is essential for policy but has not been adequately studied (World Bank, 2019; Okauru, 2010; Usman, 2016).

The fourth critical problem concerns the effect of tax administration factors on taxpayer attitude in Nigeria. Taxpayers’ interactions with State Boards of Internal Revenue (SBIRs) shape their attitudes: whether they are treated fairly, whether the process is efficient, whether assistance is available, whether enforcement is perceived as fair. The quality of SBIRs varies substantially across Nigerian states, creating natural variation that can be exploited to study the effect of tax administration on attitude. However, no systematic study has compared taxpayer attitudes across states with different SBIR quality while controlling for individual-level factors. The problem is that without such comparative analysis, it is difficult to isolate the effect of tax administration from other factors and to identify best practices that could be adopted by other states (Ariwodola, 2003; Nwadialor, 2005; Okauru, 2010).

The fifth critical problem concerns the generalisability of existing studies on taxpayer attitude in Nigeria. Most existing studies have focused on a single state (often Lagos, Kano, or the Federal Capital Territory) or a single taxpayer segment (often employees subject to PAYE, who have different attitudes than self-employed persons). The findings from these limited studies may not generalise to other states or other taxpayer segments. This study addresses this problem by including multiple states that vary in economic structure, governance quality, and tax administration capacity, and by including multiple taxpayer segments (employees, self-employed, professionals, business owners). The findings will be more generalisable and will provide a more complete picture of the determinants of taxpayer attitude in Nigeria (Ariwodola, 2003; Nwadialor, 2005; Usman, 2016).

1.3 Aim of the Study

The specific aim of this research work is to empirically examine the determinants of taxpayer attitude in selected states of Nigeria, with a particular focus on identifying the demographic, socio-economic, social-psychological, institutional, and contextual factors that shape taxpayer attitudes toward taxation, and to develop recommendations for tax authorities to improve taxpayer attitudes and enhance voluntary compliance.

1.4 Objectives of the Study

1. To examine the effect of demographic factors (age, gender, education level, marital status) on taxpayer attitude toward taxation in selected Nigerian states.

2. To analyse the effect of socio-economic factors (income level, employment status, occupation) on taxpayer attitude toward taxation in selected Nigerian states.

3. To evaluate the effect of social-psychological factors (trust in government, perceptions of corruption, tax morale, social norms) on taxpayer attitude toward taxation in selected Nigerian states.

4. To assess the effect of institutional factors (perceived fairness of the tax system, perceived quality of public services, perceived effectiveness of tax administration, procedural justice) on taxpayer attitude toward taxation in selected Nigerian states.

5. To examine the variation in taxpayer attitude across selected Nigerian states and identify state-level factors (economic structure, governance quality, tax administration capacity) that explain this variation.

1.5 Research Questions

1. How do demographic factors (age, gender, education level, marital status) affect taxpayer attitude toward taxation in selected Nigerian states?

2. How do socio-economic factors (income level, employment status, occupation) affect taxpayer attitude toward taxation in selected Nigerian states?

3. How do social-psychological factors (trust in government, perceptions of corruption, tax morale, social norms) affect taxpayer attitude toward taxation in selected Nigerian states?

4. How do institutional factors (perceived fairness of the tax system, perceived quality of public services, perceived effectiveness of tax administration, procedural justice) affect taxpayer attitude toward taxation in selected Nigerian states?

5. To what extent does taxpayer attitude vary across selected Nigerian states, and what state-level factors explain this variation?

1.6 Research Hypotheses

Hypothesis 1

H0₁: Demographic factors (age, gender, education, marital status) have no significant effect on taxpayer attitude toward taxation in selected Nigerian states.

H1₁: Demographic factors (age, gender, education, marital status) have a significant effect on taxpayer attitude toward taxation in selected Nigerian states.

Hypothesis 2

H0₂: Socio-economic factors (income, employment status, occupation) have no significant effect on taxpayer attitude toward taxation in selected Nigerian states.

H1₂: Socio-economic factors (income, employment status, occupation) have a significant effect on taxpayer attitude toward taxation in selected Nigerian states.

Hypothesis 3

H0₃: Social-psychological factors (trust in government, corruption perception, tax morale, social norms) have no significant effect on taxpayer attitude toward taxation in selected Nigerian states.

H1₃: Social-psychological factors (trust in government, corruption perception, tax morale, social norms) have a significant effect on taxpayer attitude toward taxation in selected Nigerian states.

Hypothesis 4

H0₄: Institutional factors (perceived fairness, service quality, tax administration effectiveness, procedural justice) have no significant effect on taxpayer attitude toward taxation in selected Nigerian states.

H1₄: Institutional factors (perceived fairness, service quality, tax administration effectiveness, procedural justice) have a significant effect on taxpayer attitude toward taxation in selected Nigerian states.

Hypothesis 5

H0₅: There is no significant variation in taxpayer attitude across selected Nigerian states after controlling for individual-level factors.

H1₅: There is significant variation in taxpayer attitude across selected Nigerian states after controlling for individual-level factors.

1.7 Justification of the Study

This study is justified by the critical importance of improving tax compliance and revenue mobilisation in Nigeria. Nigeria’s low tax-to-GDP ratio constrains the government’s ability to provide public services, invest in infrastructure, and reduce dependence on oil revenues. Improving taxpayer attitude is a necessary condition for increasing voluntary compliance and reducing the tax gap. However, tax authorities lack empirical evidence on what drives taxpayer attitude in the Nigerian context. Without evidence, interventions may be misdirected (targeting factors that have little effect on attitude) or ineffective (not addressing the root causes of negative attitudes). This study provides the evidence needed to design evidence-based interventions to improve taxpayer attitude, enhance compliance, and increase revenue. The study is further justified by the limited existing research on taxpayer attitude in Nigeria, particularly research that includes multiple states and multiple taxpayer segments. Most existing studies are limited to single states or single taxpayer segments, and the findings may not generalise. This study addresses these gaps by providing a comprehensive, multi-state analysis that captures the diversity of the Nigerian context (FIRS, 2020; Okauru, 2010; Usman, 2016; Ariwodola, 2003).

1.8 Significance of the Study

This study makes significant contributions to multiple stakeholder groups with interests in tax policy, tax administration, and revenue mobilisation in Nigeria. For the Federal Inland Revenue Service (FIRS) and State Boards of Internal Revenue (SBIRs), the study provides empirical evidence on the determinants of taxpayer attitude, enabling evidence-based design of taxpayer education programmes, service improvements, and enforcement strategies. For the Ministry of Finance and the Joint Tax Board, the study provides insights into how state-level factors affect taxpayer attitude, informing fiscal policy coordination and the allocation of resources for tax administration improvement. For the National Assembly and State Houses of Assembly, the study provides evidence to inform tax legislation, oversight of tax authorities, and the evaluation of tax policy effectiveness. For academic researchers in public finance, tax economics, and behavioural economics, the study contributes to the empirical literature on taxpayer attitude in developing economies, testing and extending theories developed primarily in Western contexts. For international development partners (IMF, World Bank, bilateral donors), the study provides evidence to inform technical assistance programmes and policy advice on tax administration reform in Nigeria. For taxpayers and civil society organisations, the study provides insights into the factors that shape taxpayer attitudes, promoting dialogue between tax authorities and taxpayers (Okauru, 2010; FIRS, 2020; Usman, 2016; World Bank, 2019).

1.9 Scope of the Study

The scope of this study is delimited to an examination of the determinants of taxpayer attitude in selected states of Nigeria. The study focuses specifically on individual taxpayers (employees, self-employed persons, professionals, small business owners) who are subject to personal income tax (PIT) and state taxes. The study does not include corporate taxpayers (companies subject to Companies Income Tax) or VAT-registered businesses (unless they are also individual taxpayers). The study includes three to five selected states that vary in economic structure (oil-producing vs non-oil-producing, agricultural vs industrial vs service-based), governance quality, and tax administration capacity. The study does not include all 36 states and the FCT due to resource and time constraints, but the selected states are chosen to represent the diversity of Nigerian states. The study uses a survey methodology to collect primary data on taxpayer attitudes and their determinants. The study does not include analysis of actual tax compliance behaviour (as distinct from attitude), though attitude is a strong predictor of behaviour. The study is cross-sectional (measuring attitude at a single point in time) and does not track changes in attitude over time. The study does not include analysis of tax authority administrative data (e.g., audit records, compliance statistics) except as context for interpreting survey findings.

1.10 Definition of Terms

Taxpayer Attitude: A psychological tendency expressed by evaluating taxation, the tax system, and tax authorities with some degree of favour or disfavour, encompassing beliefs, perceptions, feelings, and behavioural intentions regarding tax compliance (Ajzen, 1991; Kirchler, 2007).

Tax Morale: The intrinsic motivation to pay taxes, based on moral obligations, values, and beliefs about the legitimacy of the tax system, independent of the fear of detection and punishment (Torgler, 2007; Luttmer and Singhal, 2014).

Tax Compliance: The willingness of taxpayers to act in accordance with tax laws, including registering for tax, filing accurate returns, paying taxes due on time, and cooperating with tax authorities (Alm, 2012).

Tax Evasion: The illegal non-payment or under-payment of taxes, typically through concealment of income, overstatement of deductions, or failure to register or file returns (Allingham and Sandmo, 1972).

Fiscal Exchange: The reciprocal relationship between tax payment and public service delivery; taxpayers who perceive that they receive valuable public services in return for their taxes are more willing to comply (Feld and Frey, 2007).

Procedural Justice: The perceived fairness of the processes by which tax authorities interact with taxpayers, including respectful treatment, transparency, impartiality, and the opportunity to be heard (Kirchler, 2007; Feld and Frey, 2007).

Distributive Justice: The perceived fairness of the distribution of tax burdens, including whether taxpayers with similar ability pay similar amounts (horizontal equity) and whether those with greater ability pay more (vertical equity) (Kirchler, 2007).

Social Norms: The unwritten rules of behaviour that are considered acceptable in a group or society; in the tax context, descriptive norms (beliefs about what others do) and injunctive norms (beliefs about what others think one should do) affect compliance (Alm, 2012).

Trust in Government: The confidence that government institutions will act in the best interests of citizens, including using tax revenues efficiently and effectively, and not engaging in corruption or abuse of power (Usman, 2016; Torgler, 2007).

CHAPTER TWO: LITERATURE REVIEW

2.1 Theoretical Review

The theoretical foundation for examining the determinants of taxpayer attitude in selected states of Nigeria draws from multiple theoretical perspectives in economics, psychology, sociology, and public administration. This section critically reviews the principal theories informing understanding of taxpayer attitude and compliance behaviour, including economic deterrence theory, fiscal exchange theory, social norms theory, procedural justice theory, the slippery slope framework, and the theory of planned behaviour.

2.1.1 Economic Deterrence Theory

Economic deterrence theory, developed by Allingham and Sandmo (1972) building on the earlier work of Becker (1968), provides the foundational economic framework for understanding taxpayer compliance behaviour. The theory models the taxpayer’s decision to comply or evade as a rational choice under uncertainty. The taxpayer chooses how much income to declare, weighing the benefits of evasion (tax saved) against the expected costs (probability of detection multiplied by penalty). The theory predicts that taxpayers will comply if the expected utility of compliance exceeds the expected utility of evasion. The key policy implications are that compliance can be increased by raising the probability of detection (audit rates) or raising the penalty for evasion (fines, interest, prosecution). The theory assumes that taxpayers are rational, self-interested, and risk-averse (Allingham and Sandmo, 1972; Becker, 1968; Sandmo, 2005).

Economic deterrence theory predicts that taxpayer attitude toward taxation will be shaped by perceptions of detection probability and penalty severity. Taxpayers who believe that the probability of audit is high and that penalties for evasion are severe will have more favourable attitudes toward compliance (they will perceive that evasion is not worth the risk). Taxpayers who believe that detection probability is low and penalties are lenient will have less favourable attitudes (they may view evasion as a rational choice). The theory implies that tax authorities can improve taxpayer attitudes by communicating effectively about enforcement activities, conducting visible audits, and imposing meaningful penalties. However, empirical evidence has shown that deterrence factors explain only a modest portion of compliance behaviour; many taxpayers comply even when detection probability is low, and many evade even when detection probability is high. This gap between theory and evidence led to the development of behavioural extensions (Alm, 2012; Kirchler, 2007; Torgler, 2007).

In the Nigerian context, economic deterrence theory has important implications. The actual probability of detection in Nigeria is low, with limited audit coverage and weak enforcement. Penalties are on the books but are rarely imposed or collected. According to economic deterrence theory, taxpayer attitudes in Nigeria should be negative (favouring evasion) because the expected cost of evasion is low. However, many Nigerian taxpayers comply (through PAYE withholding, which does not require voluntary action), while many others evade (particularly self-employed persons). The theory helps explain why evasion is prevalent among self-employed persons (who face a lower probability of detection than employees whose tax is withheld at source). However, the theory does not explain why some taxpayers comply voluntarily even when enforcement is weak, suggesting that non-deterrence factors are also important (Ariwodola, 2003; Okauru, 2010; Usman, 2016).

The application of economic deterrence theory to taxpayer attitude in Nigerian states must consider the variation in enforcement capacity across states. Some State Boards of Internal Revenue (SBIRs) have more resources for audits and enforcement than others. Taxpayers in states with stronger enforcement capacity may perceive higher detection probability and may have more favourable attitudes. Taxpayers in states with weaker enforcement may perceive lower detection probability and may have less favourable attitudes. This study will examine whether state-level enforcement capacity affects taxpayer attitude, controlling for individual-level factors (Okauru, 2010; Ariwodola, 2003; Nwadialor, 2005).

2.1.2 Fiscal Exchange Theory

Fiscal exchange theory, rooted in the benefit theory of taxation (Wicksell, 1896; Lindahl, 1919), emphasises the reciprocal relationship between tax payment and public service delivery. The theory posits that taxpayers are more willing to comply when they perceive that they receive valuable public services in return for their tax payments. The fiscal exchange is a psychological contract between the state and its citizens: citizens pay taxes, and in exchange, the state provides public goods and services (security, infrastructure, education, health, etc.). When the exchange is perceived as fair (taxes paid are commensurate with benefits received), taxpayers have favourable attitudes and comply voluntarily. When the exchange is perceived as unfair (taxes paid exceed benefits received, or benefits are not visible), taxpayers have negative attitudes and may resist compliance (Wicksell, 1896; Lindahl, 1919; Musgrave and Musgrave, 2004).

Fiscal exchange theory has important implications for taxpayer attitude in Nigeria. Many Nigerian taxpayers perceive that they receive poor value for their tax payments. Public services (roads, schools, healthcare, water supply, electricity, security) are often inadequate, and corruption is perceived to be widespread. Taxpayers may believe that their tax payments are wasted or stolen, rather than used to provide public benefits. This perception creates negative attitudes toward taxation and reduces compliance. The theory predicts that taxpayer attitudes will be more favourable in states where public service delivery is more effective and visible, and less favourable in states where service delivery is poor. The theory also predicts that attitudes will be more favourable for services that are directly attributable to taxation and less favourable for services whose funding source is unclear (Okauru, 2010; Usman, 2016; World Bank, 2019).

The concept of the fiscal exchange is complicated in Nigeria’s federal system by the multiple levels of government and multiple funding sources. Federal taxes (companies income tax, VAT, customs duties, petroleum profits tax) fund federal services (defence, federal roads, federal universities, etc.) and are also shared with states and local governments through the Federation Account allocation. State taxes (personal income tax on self-employed persons, road taxes, land use charge, etc.) fund state services (state roads, primary and secondary education, state health facilities, etc.). Local government taxes fund local services. Taxpayers may not clearly attribute specific services to specific taxes, making the fiscal exchange less transparent. The theory suggests that making the fiscal exchange more transparent (e.g., through taxpayer education about how tax revenues are used) could improve attitudes (Okauru, 2010; Nwadialor, 2005; World Bank, 2019).

The application of fiscal exchange theory to Nigerian states suggests that state-level variation in service delivery quality may explain variation in taxpayer attitude. States that have made visible investments in infrastructure (roads, water supply, markets) and social services (schools, health facilities) may have more favourable taxpayer attitudes. States where service delivery is poor despite collecting substantial revenues (particularly oil-producing states with high federal allocations) may have less favourable attitudes, as taxpayers perceive that revenues are wasted. This study will examine the relationship between perceived service delivery quality and taxpayer attitude across selected states (Usman, 2016; Okauru, 2010; World Bank, 2019).

2.1.3 Social Norms Theory

Social norms theory, developed by Elster (1989), Cialdini and Trost (1998), and others, provides a sociological and psychological framework for understanding how the behaviour and expectations of others shape individual attitudes and actions. The theory distinguishes between descriptive norms (beliefs about what others actually do) and injunctive norms (beliefs about what others think one should do). Descriptive norms influence behaviour through social learning and conformity: if most people evade taxes, an individual may conclude that evasion is acceptable or even expected. Injunctive norms influence behaviour through social sanctions: if evasion is stigmatised and evaders are shamed or punished socially, individuals are less likely to evade. Social norms can support compliance (if compliance is the norm) or undermine compliance (if evasion is the norm) (Elster, 1989; Cialdini and Trost, 1998; Bicchieri, 2006).

Social norms theory has important implications for taxpayer attitude in Nigeria. If taxpayers believe that evasion is widespread (descriptive norm), they may feel that compliance is unfair (“why should I pay when everyone else is evading?”) and may be more likely to evade themselves. If taxpayers believe that evasion is accepted or expected by others (injunctive norm), they may face social pressure to evade. Conversely, if taxpayers believe that compliance is widespread and that evasion is stigmatised, they may be more likely to comply. The theory suggests that tax authorities can improve attitudes by communicating that most people comply (correcting misperceptions about the prevalence of evasion) and by mobilising social sanctions against evaders (e.g., publicising convictions, naming and shaming) (Alm, 2012; Kirchler, 2007; Torgler, 2007).

In the Nigerian context, perceptions of tax evasion prevalence are likely high, given media coverage of tax scandals, political corruption, and the visible evasion of taxes by wealthy and powerful individuals. These perceptions create a descriptive norm that may undermine compliance. However, there is also evidence of social sanctions against evasion in some communities (e.g., community leaders encouraging tax payment for local development). The strength of social norms varies across communities, states, and cultural groups in Nigeria. Understanding this variation is important for designing targeted interventions (Usman, 2016; Okauru, 2010; Ariwodola, 2003).

Social norms theory also explains the role of tax morale as an internalised social norm. Tax morale refers to the intrinsic motivation to pay taxes, based on internalised values and beliefs about the legitimacy of the tax system and the importance of contributing to the common good. Tax morale is shaped by socialisation (learning from parents, schools, community), by observations of others’ behaviour, and by experiences with government and tax authorities. High tax morale leads to favourable taxpayer attitudes and voluntary compliance, even in the absence of enforcement. Low tax morale leads to negative attitudes and evasion. Cross-national studies have found that tax morale is higher in countries with better governance, lower corruption, and stronger social capital (Torgler, 2007; Luttmer and Singhal, 2014; Alm and Torgler, 2011).

2.1.4 Procedural Justice Theory

Procedural justice theory, developed by Thibaut and Walker (1975) and extended by Tyler (1990, 2006), provides a framework for understanding how the fairness of processes and procedures affects individuals’ attitudes toward authorities and institutions. In the tax context, procedural justice refers to the perceived fairness of the processes by which tax authorities interact with taxpayers, including: respectful treatment (whether taxpayers are treated with dignity and respect), transparency (whether the process is open and understandable), impartiality (whether decisions are made without bias or favouritism), voice (whether taxpayers have the opportunity to express their views and be heard), and trustworthiness (whether tax authorities are perceived as honest and competent) (Thibaut and Walker, 1975; Tyler, 1990, 2006; Feld and Frey, 2007).

Procedural justice theory predicts that taxpayers who perceive that they are treated fairly by tax authorities will have more favourable attitudes toward taxation and will be more likely to comply voluntarily, even if the outcome of the process (e.g., the amount of tax assessed) is unfavourable. Conversely, taxpayers who perceive that they are treated unfairly (e.g., harassed, disrespected, arbitrarily assessed) will have negative attitudes and may resist compliance, even if the outcome is favourable. The theory suggests that tax authorities can improve taxpayer attitudes by improving the quality of taxpayer service, training staff in respectful communication, implementing transparent procedures, and establishing mechanisms for taxpayer feedback and complaints (Feld and Frey, 2007; Kirchler, 2007; Tyler, 2006).

In the Nigerian context, procedural justice is a significant concern. Many taxpayers report negative experiences with tax officials: demands for bribes, arbitrary assessments, disrespectful treatment, lack of transparency, and no avenue for complaint or redress. These negative experiences create lasting negative attitudes toward the tax system and reduce compliance. However, the quality of procedural justice varies across states and across tax authorities. Some State Boards of Internal Revenue (SBIRs) have invested in taxpayer education and service improvement, creating more positive taxpayer experiences. Variation in procedural justice across states provides an opportunity to study its effect on taxpayer attitude (Okauru, 2010; Ariwodola, 2003; Usman, 2016).

Procedural justice theory also addresses the concept of the “psychological tax contract”—the implicit agreement between the state and its citizens regarding the reciprocal obligations of tax payment and service provision. When tax authorities treat taxpayers fairly and respectfully, the psychological tax contract is strengthened, and taxpayers are more willing to comply. When tax authorities treat taxpayers unfairly, the psychological tax contract is breached, and taxpayers may feel justified in evading. The theory suggests that tax authorities should view taxpayers as clients or partners, not as adversaries, and should design processes that build trust and cooperation (Feld and Frey, 2007; Kirchler, 2007).

2.1.5 Slippery Slope Framework

The slippery slope framework, developed by Kirchler, Hoelzl, and Wahl (2008), integrates economic deterrence, social norms, and procedural justice into a comprehensive model of tax compliance. The framework posits that two factors determine taxpayer compliance: trust in tax authorities and the power of tax authorities (enforcement capacity). Trust and power interact to produce different compliance climates. When trust is high and power is low, a “service” climate exists, characterised by voluntary cooperation. When trust is low and power is high, an “enforcement” climate exists, characterised by coerced compliance (taxpayers comply only because they fear detection and punishment). When both trust and power are high, a “synergistic” climate exists, with both voluntary and coerced compliance. When both are low, a climate of anarchy exists, with widespread evasion (Kirchler, Hoelzl, and Wahl, 2008; Kirchler, 2007; Wahl, Kastlunger, and Kirchler, 2010).

The slippery slope framework has important implications for taxpayer attitude in Nigeria. Trust in tax authorities in Nigeria is generally low, due to perceptions of corruption, unfair treatment, and poor service delivery. Power (enforcement capacity) is also limited, with low audit coverage and weak sanctions. According to the framework, the Nigerian tax climate is characterised by low trust and low power—a climate of anarchy where evasion is widespread and taxpayer attitudes are negative. The framework suggests that improving taxpayer attitudes requires increasing either trust or power. Increasing power (more audits, higher penalties) can coerce compliance but may not improve attitudes (taxpayers may comply because they fear detection, not because they have favourable attitudes). Increasing trust (through procedural justice, transparency, improved services, and visible use of tax revenues for public benefit) can improve attitudes and generate voluntary compliance. The framework suggests that trust-building strategies are more sustainable and more likely to produce positive attitudes (Kirchler et al., 2008; Wahl et al., 2010).

The slippery slope framework also addresses variation across taxpayer segments and contexts. For employees subject to PAYE withholding, power (enforcement through employer withholding) is high, but trust may be variable. For self-employed persons subject to direct assessment, power is low (limited audit coverage, weak enforcement), and trust is also low, making this segment particularly problematic. The framework suggests that different strategies may be needed for different taxpayer segments: trust-building for employee taxpayers who are already compliant (to maintain positive attitudes) and a combination of trust-building and power increases for self-employed taxpayers who are currently non-compliant (Kirchler et al., 2008; Okauru, 2010; Ariwodola, 2003).

2.1.6 Theory of Planned Behaviour

The theory of planned behaviour (TPB), developed by Ajzen (1991), provides a psychological framework for understanding the relationship between attitudes, intentions, and behaviour. The theory posits that behaviour is determined by behavioural intention, which is in turn determined by three factors: attitude toward the behaviour (the individual’s positive or negative evaluation of performing the behaviour), subjective norms (perceived social pressure to perform or not perform the behaviour), and perceived behavioural control (perceived ease or difficulty of performing the behaviour, reflecting past experience and anticipated obstacles). In the tax context, TPB predicts that the intention to comply with tax laws is determined by the taxpayer’s attitude toward compliance (e.g., “paying taxes is my civic duty”), subjective norms (e.g., “most people I respect pay their taxes”), and perceived behavioural control (e.g., “I am able to accurately report my income and calculate my tax”) (Ajzen, 1991; Ajzen, 2011; Bobek, Hageman, and Kelliher, 2013).

TPB has been extensively applied to tax compliance research. Studies have found that attitude toward compliance is a significant predictor of compliance intention, and compliance intention predicts actual compliance behaviour (though imperfectly). Subjective norms are also significant, particularly in collectivist cultures where social pressure is more influential. Perceived behavioural control is significant, especially for self-employed taxpayers who face more complex compliance tasks than employees subject to PAYE. TPB suggests that tax authorities can improve compliance by influencing attitudes (through taxpayer education and communication), subjective norms (through social norm messaging), and perceived behavioural control (through simplification of tax processes and taxpayer assistance) (Bobek et al., 2013; Loo, 2006; Trivedi, Shehata, and Lynn, 2003).

In the Nigerian context, TPB provides a framework for understanding how taxpayer attitudes (the focus of this study) relate to compliance behaviour. Attitude is a determinant of intention, which is a determinant of behaviour. However, the relationship is not deterministic; there is a gap between attitude and behaviour. Taxpayers with favourable attitudes may still not comply if they face obstacles (low perceived behavioural control) or if they perceive that others are not complying (subjective norms). Conversely, taxpayers with unfavourable attitudes may still comply if enforcement is strong (high power). TPB reminds us that attitudes are important but not sufficient for compliance; both attitudes and external factors matter (Ajzen, 1991; Bobek et al., 2013).

The application of TPB to taxpayer attitude in Nigerian states must consider cultural and contextual factors. Nigeria is a collectivist society, where subjective norms (what others think and do) may be more influential than individual attitudes. Perceived behavioural control may be low for many taxpayers due to the complexity of the tax system, lack of access to assistance, and fear of corrupt officials. Understanding these factors is essential for designing effective interventions (Usman, 2016; Okauru, 2010; Ariwodola, 2003).

2.2 Conceptual Framework

The conceptual framework for this study specifies the relationship between independent variables (determinants of taxpayer attitude) and the dependent variable (taxpayer attitude) in selected states of Nigeria. The framework identifies multiple categories of determinants: demographic, socio-economic, social-psychological, and institutional.

2.2.1 Independent Variables: Determinants of Taxpayer Attitude

The first category of independent variables is demographic factors. Age is expected to have a positive relationship with favourable taxpayer attitude (older taxpayers more favourable). Gender: female taxpayers are expected to have more favourable attitudes (lower propensity to evade). Education: the effect is ambiguous (more education may increase understanding of taxation but also increase ability to exploit loopholes). Marital status: married taxpayers may have more favourable attitudes (greater social integration, more stake in community). These demographic variables are measured through survey questions and treated as control variables in the analysis (Torgler, 2007; Richardson, 2006; Alm and Torgler, 2011).

The second category of independent variables is socio-economic factors. Income level: the effect is ambiguous (higher income may increase ability to pay but also increase opportunities for evasion and resentment of tax burden). Employment status: employees subject to PAYE are expected to have different attitudes than self-employed persons subject to direct assessment. Occupation: professionals may have different attitudes than traders or artisans. These socio-economic variables are measured through survey questions and treated as independent variables of interest (Kirchler, 2007; Alm, 2012; Usman, 2016).

The third category of independent variables is social-psychological factors. Trust in government is expected to have a positive relationship with favourable attitude. Perception of corruption is expected to have a negative relationship (higher corruption perception, less favourable attitude). Tax morale (intrinsic motivation to pay taxes) is expected to have a positive relationship. Social norms (beliefs about what others do and what others think one should do) are expected to influence attitude. These social-psychological variables are measured using Likert-scale survey questions (Feld and Frey, 2007; Torgler, 2007; Luttmer and Singhal, 2014).

The fourth category of independent variables is institutional factors. Perceived fairness of the tax system (distributive justice) is expected to have a positive relationship with favourable attitude. Perceived quality of public services (fiscal exchange) is expected to have a positive relationship. Perceived effectiveness of tax administration (ability to detect evasion, enforce compliance) is expected to have a positive relationship. Procedural justice (fair treatment by tax authorities) is expected to have a positive relationship. These institutional factors are measured using Likert-scale survey questions (Okauru, 2010; Nwadialor, 2005; Ariwodola, 2003).

2.2.2 Dependent Variable: Taxpayer Attitude

The dependent variable is taxpayer attitude toward taxation, measured as a multi-dimensional construct encompassing beliefs (e.g., “taxation is necessary for government to provide services”), feelings (e.g., “I feel angry when I think about paying taxes”), and behavioural intentions (e.g., “I intend to fully declare my income on my tax return”). Attitude is measured using a composite scale (e.g., 5-point Likert scale with multiple items), and a continuous attitude score is computed for each respondent. Higher scores indicate more favourable attitudes (positive evaluations of taxation), lower scores indicate less favourable attitudes (negative evaluations) (Ajzen, 1991; Kirchler, 2007).

2.2.3 Control Variables

The analysis controls for several variables that may affect the relationship between determinants and taxpayer attitude. State of residence is a key control variable, as taxpayer attitudes may vary across states due to differences in governance quality, service delivery, and tax administration. Taxpayer segment (employee vs self-employed) is controlled because the two segments may have different attitudes due to different compliance mechanisms (PAYE withholding vs direct assessment). Length of residence in the state may affect attitudes (longer-term residents may have more developed attitudes). Interaction with tax authorities (whether the taxpayer has personally interacted with the SBIR) may affect attitudes (Okauru, 2010; Usman, 2016).

2.2.4 Representation of the Conceptual Framework

The conceptual framework can be represented as follows:

Independent Variables (Determinants)

Demographic Factors

• Age
• Gender
• Education level
• Marital status

Socio-Economic Factors

• Income level
• Employment status
• Occupation

Social-Psychological Factors

• Trust in government
• Perception of corruption
• Tax morale
• Social norms

Institutional Factors

• Perceived fairness of tax system
• Perceived quality of public services
• Perceived tax administration effectiveness
• Procedural justice

Control Variables

• State of residence
• Taxpayer segment
• Length of residence
• Interaction with tax authorities

Dependent Variable

• Taxpayer attitude (beliefs, feelings, behavioural intentions)

The framework guides the empirical investigation of the determinants of taxpayer attitude in selected states of Nigeria, directing attention to specific categories of determinants and their hypothesised relationships with taxpayer attitude.

2.3 Summary of Literature Review in Tabular Format

Author(s) and Year	Strengths of the Study	Weaknesses of the Study	Limitations of the Study	Gaps Identified
Allingham and Sandmo (1972)	Developed economic deterrence model; foundational for tax compliance research; testable predictions	Assumes rational, self-interested actors; limited attention to social, psychological factors	Theoretical model with extensive empirical testing in developed economies	Application to Nigerian context limited; variation in detection probability and penalties across Nigerian states not examined
Ajzen (1991)	Developed theory of planned behaviour; links attitudes, intentions, behaviour; widely validated	Assumes rational, deliberative processing; may not capture habitual or emotional behaviour	Theoretical framework with extensive empirical testing in psychology; tax applications more limited	Application to Nigerian taxpayer behaviour limited; measurement of TPB constructs in Nigerian context not validated
Kirchler et al. (2008)	Developed slippery slope framework; integrates trust and power; practical guidance for tax authorities	Relatively recent; less empirical testing than older theories; power and trust measurement challenges	Framework with empirical testing primarily in European contexts	Application to Nigerian tax climate not tested; trust and power levels across Nigerian states not measured
Torgler (2007)	Comprehensive cross-country analysis of tax morale; identifies determinants; large sample	Cross-country analysis may mask within-country variation; Nigeria included but not focus	Secondary data analysis; limited depth on any single country	Nigeria-specific analysis not provided; within-Nigeria variation in tax morale not examined
Feld and Frey (2007)	Developed procedural justice application to tax compliance; emphasises psychological tax contract	Empirical testing primarily in European contexts; generalisability to developing economies uncertain	Theoretical and empirical development in European contexts	Application to Nigerian procedural justice not tested; variation in SBIR treatment across Nigerian states not examined
Okauru (2010)	Comprehensive collection of papers on Nigerian tax administration; insider perspectives	Primarily policy-oriented; limited empirical analysis of taxpayer attitudes	Edited volume with multiple authors; limited primary data	Empirical analysis of taxpayer attitudes in Nigeria not provided; determinants of attitude not systematically examined
Ariwodola (2003)	Examined personal income tax administration in Nigeria; identified practical challenges	Generalised across states; limited state-specific data; now somewhat dated	Cross-sectional survey with limited sample; may not capture state-specific variations	State-level analysis of taxpayer attitudes not provided; determinants of attitude across states not compared
Usman (2016)	Examined trust in government and tax compliance in Nigeria; one of few Nigerian empirical studies	Limited sample (single state); generalisability uncertain	Single-state study with limited generalisability	Multi-state analysis of trust and attitude not provided; state-level variation in trust effects not examined
Alm and Torgler (2011)	Cross-country analysis of tax morale and ethics; Nigeria included in sample	Cross-country analysis may mask within-country variation; Nigeria not focus	Secondary data analysis with limited Nigeria-specific depth	Nigeria-specific analysis of tax morale determinants not provided; within-Nigeria variation not examined
World Bank (2019)	Nigeria economic update with tax policy and administration analysis; includes comparative data	Primarily economic and policy focus; limited taxpayer attitude analysis	Policy report with limited primary data on taxpayer attitudes	Attitude determinants not analysed; policy recommendations not empirically grounded in attitude research
Richardson (2006)	Cross-country meta-analysis of tax evasion determinants; identifies significant factors	Cross-country analysis with limited country-specific findings; Nigeria not focus	Meta-analysis with limited country-level specificity	Nigeria-specific determinants not identified; within-Nigeria variation not examined
Luttmer and Singhal (2014)	Comprehensive review of tax morale literature; identifies key determinants and mechanisms	Review paper rather than empirical study; limited Nigeria-specific content	Theoretical synthesis with limited empirical application to Nigeria	Application to Nigerian tax morale not provided; Nigeria-specific tax morale determinants not identified