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Effect of Tax Administration on Tax Revenue of States in African Countries:

Evidence from Nigeria

Article  in  International Journal of Business, Economics and Management · September 2020

DOI: 10.18488/journal.62.2020.76.401.410

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International Journal of Business, Economics and Management
2020 Vol. 7, No. 6, pp. 401-410.
ISSN(e): 2312-0916
ISSN(p): 2312-5772
DOI: 10.18488/journal.62.2020.76.401.410
© 2020 Conscientia Beam. All Rights Reserved.

EFFECT OF TAX ADMINISTRATION ON TAX REVENUE OF STATES IN AFRICAN

COUNTRIES: EVIDENCE FROM NIGERIA

Terungwa Azende1 Department of Accounting, Faculty of Management Science, Benue State

1,2

University, Makurdi, Nigeria.

Amos Iorcher
Ganyam2+
(+ Corresponding author)

ABSTRACT
Article History This study assessed the effect of tax administration on tax revenue of states in African
Received: 2 July 2020 countries with specific reference to Nigeria. The extent of improvement in tax revenue
Revised: 6 August 2020
Accepted: 8 September 2020 generated by states in Nigeria due to the change in tax administration motivated this
Published: 25 September 2020 study. Data were obtained from the Nigerian National Bureau of Statistics (NBS) and
analyzed using the descriptive statistics and paired samples t-test statistics. Findings
Keywords revealed a significant mean difference in pay-as-you-earn (PAYE) and road taxes (RT)
Tax before and during the tax administration of 2015 by Nigerian states. Findings also
Taxation revealed an insignificant mean difference in direct assessment (DA) and miscellaneous
Tax administration
Pay-as-you-earn taxes (MT) before and during the tax administration of 2015 by Nigerian states. The
Direct assessment study concluded that the change in tax administration only witnessed selective
Road taxes
Miscellaneous taxes.
improvement on tax revenue generated by the states and recommended that the state
boards of internal revenue should consistently carry out tax awareness programs in
JEL Classification: their various states so as to enlighten the self-employed persons and informal business
H27. owners on the need and benefits of tax payment.

Contribution/Originality: This study contributes to the existing literature by uniquely comparing and
assessing tax revenue in different periods of tax administration propelled by a change in government. It focuses on
the direct effect of tax administration on tax revenue of states in Nigeria.

1. INTRODUCTION
Africa is undoubtedly endowed with numerous natural income generating resources. Most prominent are gold,
iron, cobalt, uranium, copper, silver, petroleum, cocoa beans, diamond, sugar and salt. Majority of the African
countries are gifted with one or more of these notable resources. These resources are mainly tailored towards
generating income, vital for development of the countries’ economy. However, despite the availability of these
resources, the state of economy of many countries on the African continent still remains deplorable. GPF (2020)
submits that Africa as a continent endowed with immense natural and human resources alongside great cultural,
ecological and economic diversity, remains underdeveloped. It is believed that military dictatorship, corruption,
terrorism, poverty, among other things are liable for the current state of Africa’s economy. However, one major
reason ignored by many is the unavailability of the needed funds to spearhead economic developmental projects in
the countries.

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 International Journal of Business, Economics and Management, 2020, 7(6): 401-410

Income generated from the abundant resources owned by African countries is controlled by the influences of
demand and supply. Therefore, prices may increase to favor the countries or may decline to their detriment.
Moreover, many African countries do not have the capacity to explore and process these resources; therefore they
depend on other developed nations. Nigeria for instance is endowed with oil and gas-related commodities, and with
about decades of exploration, the oil and gas sector still contributes significantly to the total revenue of the
government (EITI, 2020). Yet, there are no functional refineries to refine the explored crude oil, so the country
rather exports crude oil and imports the finished products.
Since the revenue generated from the endowment of natural resources may not be sufficient enough for the
needed economic development, other internal sources of revenue such as taxation has been greatly relied upon.
Taxation, an obligatory levy on the income, consumption and production of goods and services in agreement with
an appropriate law, stands to be a major internal source of revenue available to the government of any nation
(Arnold & Mclntyre, 2002). The revenue accruing from taxes are used by the government to fuel economic
development projects which are not limited to provision of social amenities, infrastructures, roads, among others.
One unique phenomenon about this is that, government uses taxes to provide these developmental projects, which
in turn attracts more tax revenue. Adequate social amenities and infrastructure lead to more business ventures,
which yield more revenue to the government.
Generally, taxes are levied by government on income, consumption and production of goods and services in its
country. However to effectively achieve the goal of taxation, these taxes ought to be properly administered. Tax
administration revolves around processes that include the management, conduct, direction, and regulation of the
execution and application of the necessary tax revenue statutes, laws and conventions (Ganyam, Ivungu, & Anongo,
2019). Tax administration plays an important role in tax revenue of any country. It is capable of improving the
entire tax system by increasing tax revenue and mitigating against tax evasion and tax avoidance.
In Nigeria, tax administration encompassing reforms and mechanisms of tax collection goes along with the
government desire for more revenue. Therefore each government that comes to power seeks to revamps the tax
system to strengthen its operation. They bring reforms and modifications to the tax system in order to obtain
improved tax revenue in the country at both federal, state and local levels. It could be witnessed that during the
change of government in Benue state in 2015, the new tax administration made some reforms such as widening of
tax bracket, lessening of one-time tax payment, e-tax payment, among other things, geared towards improving the
tax revenue in the state (Ganyam et al., 2019). This is also notable in other states in the country such as Gombe,
Nassarawa, Ogun, among others (Animasaun, 2016; Soetan, 2017; Stephen, 2018).
Despite the varieties of taxes at the jurisdiction of states in Nigeria, development in most states is deplorable.
The state government collect taxes such as pay-as-you-earn (PAYE), direct assessment, road taxes and other forms
of taxes which may be sufficient enough to boost its needed revenue for development (National Bureau of Statistics,
2019). However the state of economy in most states today suggests that government at the state levels are not
generating enough revenue to spearhead economic development projects. Therefore, taxes which constitute a
greater proportion of internally generated revenue to states may be poorly administered.
Consequently, there are several studies that have examined tax administration and revenue generation in
Nigeria. However, most of the works made used of primary sources of data and predominantly questionnaires.
Those that employed secondary sources of data used only taxes at the jurisdiction of the federal government. There
has been limited evidences from secondary sources of data as regards tax administration and taxes collected at state
levels such as pay-as-you-earn (PAYE), direct tax assessment, road taxes and miscellaneous taxes. This study
therefore attempts to contribute to existing works by examining the effect of tax administration on tax revenue in
states of Nigeria, taking a cue from the change in tax administration in the year 2015 (effective year for a
nationwide change in government). This study will be of benefit to tax authorities and governments in Nigeria and
beyond, as it provides logical conclusions and recommendations that will improve the level of tax administration at

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the various levels of government. This study covers a period spanning from 2012 to 2018 and heavily relies on data
obtained from the Nigerian National Bureau of Statistics (NBS).

1.1. Objectives
i. To examine whether there is a significant mean difference in PAYE before and during the tax
administration of 2015 by states in Nigeria.
ii. To ascertain whether there is a significant mean difference in direct tax assessment before and during the
tax administration of 2015 by states in Nigeria.
iii. To determine whether there is a significant mean difference in road taxes before and during the tax
administration of 2015 by states in Nigeria.
iv. To examine whether there is a significant mean difference in miscellaneous taxes before and during the tax
administration of 2015 by states in Nigeria.

1.2. Hypotheses
The following null hypotheses are formulated to guide the study:
Ho1: There is no significant mean difference in PAYE before and during the tax administration of 2015 by states in Nigeria.
Ho2: There is no significant mean difference in direct tax assessment before and during the tax administration of 2015 by
states in Nigeria.
Ho3: There is no significant mean difference in road taxes before and during the tax administration of 2015 by states in
Nigeria.
Ho4: There is no significant mean difference in miscellaneous taxes before and during the tax administration of 2015 by states
in Nigeria.

2. REVIEW OF RELATED LITERATURE

2.1. Theoretical Foundation
This study is fastened on the benefit theory of Lindahl (1919). According to the benefit theory, the share of an
individual’s taxes paid for goods and services provided by the government should be equal to the share of benefits
received. Lindahl (1919) argued that such a tax payment arrangement will not only be just and fair, but that it will
also lead to increased levels of government provisions (Encyclopædia Britannica, 1960). The benefit theory is of the
view that taxes should be levied by the states on individuals according to the benefits they receive. Hence, the more
the benefit a person receives from the activities of the state, the more such a person should pay to the government.
This theory has also faced criticisms by several scholars. Generally, it is argued that if this theory is upheld, the
principle of tax as a compulsory contribution made by individuals to meet the expenses of the government and
provision of general benefit will be violated. Scholars also perceive that most of government spending are usually
for the benefit of all its citizens and therefore, it may be difficult to determine the benefit enjoyed by a particular
individual at any given point in time. Another strong argument is that applying this principle will mean that the
poor will pay more taxes since they stand to benefit more services from the state, and this may subsequently violate
the principle of justice (Economics Concepts, 2020).
Notwithstanding, the essence of taxation is to generate revenue and as such, allowing individual to be taxed
based on what the state provide will lead to more revenue. Government will spend less to prevent tax avoidance,
evasion and other tax malpractices. One predominant factor about this theory is that it encourages the government
to carry out economic developmental projects. When the populace believe they are benefiting from the government,
they are more willing to comply with taxes. Government provide general services for its populace such as security,
roads, health, education, electricity, among other things. It is unarguable especially in developing economies that
majority of the services provided by government are enjoyed by virtually all its citizens and not just the poor.

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 International Journal of Business, Economics and Management, 2020, 7(6): 401-410

This study is fastened on the benefit theory because every tax system is designed to encourage tax payment by
individuals of the state. Therefore, a tax administration that design and reforms the tax system such that
individuals are taxed based on benefit they receive from the government will no doubt motivate tax payers to pay
their taxes and by implication more tax revenue for the government.

2.2. Conceptual Framework

Tax administration involves the implementation and execution of tax laws, statutes, principles and conventions
in any given nation. Tax administration may encompass the identification and registration of taxpayers, processing
of tax returns and third-party information, examination of the completeness and correctness of tax returns,
assessment of tax obligations, tax collection and provision of services to taxpayers (Animasaun, 2016). In the words
of Afuberoh and Okoye (2014) tax administration involves the process of assessing and collecting taxes from
taxable individuals and companies by authorities in such a way that correct amount is collected efficiently and
effectively with minimum tax avoidance or tax evasion. The essence of tax administration is to ensure that
government generate more revenue from taxes therefore, all principles, strategies and methods adopted by any
government to plan, collect, account, control and co-ordinate the collection of taxes is what constitute tax
administration.
The tax authorities are saddled with the responsibility of managing the entire tax systems at all levels of the
country. In Nigeria, the Federal Inland Revenue Service (FIRS) manages the tax system at the federal government
level, while the State Board of Internal Revenue Service manages the tax systems in the various states, whereas the
Local Government Revenue Committees (LGRC) focuses on tax management at the various local governments in
the states (Kiabel & Nwokah, 2009; Okauru, 2012). The FIRS in Nigeria has the jurisdiction to collect company
income tax, withholding tax on companies, petroleum profit tax, value added tax, education tax, and capital gains
tax, stamp duties for corporate entities, and personal income tax for armed forces personnel. The state Boards of
internal revenue on the other hand have jurisdiction to collect personal income tax including PAYE and direct
assessment; Withholding tax, capital gains tax, and stamp duties for individual; Road taxes; Pools betting, lotteries,
gaming and casino taxes; Business premises registration and renewal levy; Right of occupancy fees in state capitals;
and Development levy on all taxable individuals. Whereas, the LGRC have the jurisdiction to collect taxes on shops
and kiosks rates; tenement rates; on and off liquor license; slaughter slab fees; marriage, birth and death registration
fees; naming of street registration fee (excluding state capitals); right of occupancy fees (excluding state capitals);
and market/motor park fees, excluding market that are built by the state (Dike, 2014; Nchege, Aduku, Idika, &
Nwonsu, 2019).
The major taxes collected by states in Nigeria are categorized into pay-as-you-earn (PAYE), direct assessment,
road taxes and others. PAYE is a form of personal income tax in which taxes are directly deducted from the wages
and salaries of employees operating within the formal sector of the state. The deduction of PAYE is the
responsibility of employers in Nigeria. They are to deduct appropriately PAYE from their employees’ earnings and
remit to the respective state board of internal revenue service. Direct assessment on the other hand relates to a form
of personal income tax employed for the assessment of tax for self-employed individuals. In the form of tax, a new-
tax payer can assess him/herself, and pay the calculated amount. Informal businesses operating within the state are
also liable for direct assessment as imposed by the state authorities. This is however depending on the size of their
activities. Road taxes include daily levies paid by commercial road transporters operating within the states. While
miscellaneous or other taxes (MT), are various taxes such as levies on market traders, land registration and other
land related fees, development levies on individuals, pool betting/lottery/gaming fees, and stamp duties on
individuals, among others levied and managed by the states boards of internal revenue (National Bureau of
Statistics, 2019).

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2.3. Review of Empirical Works

The relationship between tax administration and tax revenue has attracted several scholars. While some of the
scholars found a significant relationship between tax administration and tax revenue, some found no significant
relationship existing between them. Ganyam et al. (2019) focused on the effect of tax administration on revenue
generation in Nigeria. They however based their study in Benue state and obtained data from questionnaires. Data
were analyzed using frequency, percentages and mean responses, while the test of hypotheses was done using the t-
test statistics. They found that electronic tax payment, widened tax bracket and lessening of one-time payment,
which were all strategies of a new tax administration, will significantly improve the revenue generation in Benue
state. Ogbonna and Appah (2016) investigated the effect of tax administration and revenue on economic growth of
Nigeria. The researchers obtained data from questionnaires and analyzed the data using regression analysis. They
found that there is a significant relationship between Personal income tax revenue (PITR) and per capita income,
and tax administration and Gross domestic product of Nigeria. In the same vein, Enahoro and Olabisi (2012)
ascertained the overall effectiveness of tax administration in relation to assessment, collection and remittance of tax
in Lagos State, Nigeria. To carry out the study, data were obtained through questionnaires and analyzed using
frequencies and simple percentages. Results from the study revealed that the tax administration in Lagos state is
not totally efficient and there is a significant relationship between tax administration, tax policies and tax laws.
Similarly, Abiola and Asiweh (2012) examined how the Nigeria tax administration can reduce tax evasion and
generate revenue. Questionnaires were employed by the researchers for data collection and analyzed using
descriptive statistics. The study found that increase in revenue is a core responsibility of tax administration capable
of improving revenue generation.
In contrast, Stephen (2018) ascertained the effect of tax administration on revenue generation in Gombe state.
Data were obtained through questionnaires and analyzed using frequencies and percentages. Hypotheses were
tested using the Spearman’s rank correlation, Person correlation and linear regression. The researcher found that
tax administration in the state is not efficient and effective, and that revenue generated in the state during the
period of the study is low due to low level of enlightenment of tax payers, incidents of tax evasion and tax
avoidance. Soetan (2017) also analyzed the effect of tax administration on tax revenue generation in Nigeria. The
researcher obtained data using questionnaires, and analyzed the data using descriptive statistics and regression
statistical techniques. Findings from the study revealed that tax administration does not have significant effect on
tax revenue generation in Nigeria. Similarly, Animasaun (2016) analyzed the relationship between tax
administration and revenue generation in Ogun State. The researcher employed questionnaire to collect data for the
study, while descriptive statistics and inferential statistics were used to analyze the results. Findings revealed that
tax administration has no significant relationship with revenue generation.
From the forgone, it is predominantly noticed that majority of the researchers who examined the effect of tax
administration on revenue generation in Nigeria made use of questionnaires as their major source of data. Since
questionnaires are based on the perception of individuals, it may be the reason for the inconsistency of findings
witnessed by the researchers. Also, some of the researchers focused on individual states in the country and
generalized their findings. This may however be inappropriate since each state has its own tax administration
system that may differ from the other. It is against this setting that this study intends to examine the effect of tax
administration on tax revenue of states in Nigeria, using secondary data as its major source of data.

3. METHODOLOGY
The descriptive ex-post facto research design is adopted for the study and this is because it has gained credence
in studies that examine the effect of past factors on present happenings (Akpa, 2011). Data relating to the study
were obtained from the Nigerian Bureau of Statistics (NBS) Annual Reports from 2012 to 2014 (before change in
tax administration by the states), and from 2016 to 2018 (during the new tax administration by the states). 2015,

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 International Journal of Business, Economics and Management, 2020, 7(6): 401-410

which was when virtually all government administrations changed in the states served as the base year. Data were
collected on PAYE, direct assessment (DA), road taxes (RT) and miscellaneous taxes (MT) for the said periods
from all 36 states in Nigeria. Descriptive statistics was employed to provide a statistical summary of the study
variables while paired samples t-test statistics was used to test the study’s hypotheses at 5% level of significance.

4. RESULTS AND DISCUSSION

Table-1. Summary statistics of the study variables.
Variable Obs Mean Std. Dev. Min Max
PAYEa 108 7.56 23.7 0 172
PAYEb 108 13.6 35.4 0 239
DAa 108 2.21 7.71 0 68.3
DAb 108 0.861 2.23 0 16.1
RTa 108 0.307 0.738 0 4.58
RTb 108 0.552 1.44 0 9.54
MTa 108 3.75 11.4 0 109
MTb 108 3.52 9.28 0 62.2
Note:
a: Old tax administration.
b: New tax administration.

Table 1 presents the descriptive statistics of the study variable in relation to mean, standard deviation,
minimum and maximum values. The number of observation consistently stood at 108, indicating that data were
obtain for 3 years each from the 36 states in Nigeria. Pay-as-you-earn (PAYE) during the period before the change
in tax administration as presented in Table 1 revealed a mean, standard deviation, minimum and maximum values
of 7.56, 23.7, 0 and 172 respectively. This indicates that during the period, the average value of PAYE collected by
the states is estimated at N7.56 Billion with variation across the states amounting to N23.7 Billion. While some of
the states did not report PAYE collection, the maximum value of PAYE collected during the period before change
in tax administration stood at N172 Billion. However, during the change in tax administration the average value of
PAYE collected stood at about N13.6 Billion with variations across states valued at about N35.4 Billion. Some of
the states did not report PAYE during the period, whereas the highest value of PAYE recorded stood at about N239
Billion. Before the 2015 change in tax administration, the average value of direct assessment (DA) collected by the
states during the period under review stood at N2.21 Billion with fluctuations across states amounting to N7.71
Billion.
This is higher, compared to the period of change in tax administration, where DA recorded an average value of
N861 Million with fluctuations to the tune of N2.23 Billion. Similar, in both periods, some of the states did not
report the value of direct assessment tax collected. However, the maximum value of DA received before change in
tax administration stood at N68.3 Billion while during the change in tax administration, the maximum DA recorded
stood at N16.1 Billion. Road taxes (RT) recorded an average value of N307 Million with variations across the states
to the tune of N708 Million during the period before change in tax administration. This is lower than what was
reported during the change in tax administration. During the said period, the average value of RT collected by the
states stood at N552 Million with variations amounting to N1.44 Billion. During both periods, some of the states
did not disclose the total road taxes collected. However, the maximum value of RT collected before the change in
tax administration stood at N4.58 Billion, while the maximum value of RT during the new administration stood at
N9.54 Billion. Miscellaneous taxes (MT) remarkably witnessed a higher value before the change in tax
administration than during the period of change. The average value of MT before change in tax administration
stood at N3.75 Billion with fluctuations amounting to N11.4 Billion, while during the period of change, the average
value of MT stood at N3.52 Billion with fluctuations to the tune of N 9.28 Billion. During both periods some of
the states did not report the total value of miscellaneous taxes collected. Nevertheless, the maximum values of MT
during the periods stood at N109 Billion and N62.2 Billion respectively.

4.1. Test of Hypothesis One

From Table 2, the mean difference of PAYE before and during the change in tax administration stood at (N 6
Billion) with a standard error of N2.37 Billion and a standard deviation of N24.6 Billion. This indicates an increase
in the value of PAYE during the change in tax administration. The t-statistics stood at 2.5314 with a P-value of
0.0128, which indicates that there is a significant difference in PAYE before and during the tax administration of
2015. Therefore the null hypothesis is rejected and the study concludes that there is a significant mean difference in
PAYE before and during the tax administration of 2015 by states in Nigeria.

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Table-2. Mean difference of PAYE before and during the tax administration of 2015 by states in Nigeria.
Variable Obs Mean Std. Err. Std. Dev.
PAYEa 108 7.56 2.28 23.70
PAYEb 108 13.60 3.41 35.40
Diff 108 -6.00 2.37 24.60
t=-2.5314
df=107
p-value=0.0128
Note:
a: Old tax administration.
b: New tax administration.

4.2. Test of Hypothesis Two

Table-3. Mean difference of DA before and during the tax administration of 2015 by states in Nigeria.
Variable Obs Mean Std. Err. Std. Dev.
DAa 108 2.21 0.74 7.71
DAb 108 0.86 0.22 2.23
Diff 108 1.35 0.76 7.89
t=1.7792
df=107
p-value=0.0780
Note:
a: old tax administration.
b: new tax administration.

Results from Table 3 Reveal a mean difference of DA before and during the change in tax administration of
N1.35 Billion, with a standard error of N76 Million and a standard deviation of N7.89 Billion. This indicates a
decrease in the value of direct assessment during the change in tax administration. The t-statistics stood at 1.7792
with a P-value of 0.0780, which indicates that there is no significant difference in DA before and during the tax
administration of 2015. Therefore the null hypothesis is accepted and the study concludes that there is no
significant mean difference in DA before and during the tax administration of 2015 by states in Nigeria.

4.3. Test of Hypothesis Three

Table-4. Mean difference of RT before and during the tax administration of 2015 by states in Nigeria.
Variable Obs Mean Std. Err. Std. Dev.
RTa 108 0.31 0.07 0.74
RTb 108 0.55 0.14 1.44
Diff 108 -0.25 0.11 1.10
t=-2.3159
Df=107
p-value=0.0225
Note:
a: old tax administration.
b: new tax administration.

From Table 4, the mean difference of RT before and during the change in tax administration stood at (N25
Million), with a standard error of N11 Million and a standard deviation of N1.1 Billion. This indicates an increase
in the value of RT during the change in tax administration. The t-statistics stood at 2.3159 with a P-value of
0.0225, which indicates that there is a significant difference in RT before and during the tax administration of 2015.
Therefore the null hypothesis is rejected and the study concludes that there is a significant mean difference in RT
before and during the tax administration of 2015 by states in Nigeria.

4.4. Test of Hypothesis Four

From Table 5, the mean difference of MT before and during the change in tax administration stood at N23
Million, with a standard error of N84 Million and a standard deviation of N8.71Billion. This indicates a decrease in
the value of MT during the change in tax administration. The t-statistics stood at 0.2787 with a P-value of
0.07810, which indicates that there is an insignificant difference in MT before and during the tax administration of
2015. Therefore the null hypothesis is accepted and the study concludes that there is no significant mean difference
in MT before and during the tax administration of 2015 by states in Nigeria.

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Table-5. Mean difference of MT before and during the tax administration of 2015 by states in Nigeria.
Variable Obs Mean Std. Err. Std. Dev.
MTa 108 3.75 1.09 11.40
MTb 108 3.52 0.89 9.28
diff 108 0.23 0.84 8.71
t=0.2787
Df=107
p-value=0.07810
Note:
a: old tax administration.
b: new tax administration.

4.5. Discussion
Findings from the study revealed that there is a significant mean difference in PAYE before and during the tax
administration of 2015 by states in Nigeria. Both public and private formal sector employer is required to deduct
PAYE and remit to the tax authorities. Therefore, an increase the number of workforce (formal sector) of every
state will lead to an increase in PAYE. This coincides with the benefit theory because as government provides an
enabling environment for the populace to work and do business, more taxes will be generated for the government.
The change in tax administration may have witnessed an increase in PAYE because of a more vigorous tax
administration that carry out routine tax audit to ensure that employers deduct and remit PAYE correctly. This
conforms to the findings of Ganyam et al. (2019); Abiola and Asiweh (2012) and Enahoro and Olabisi (2012) who
found significant relationships between tax administration and revenue generation.
Contrary to the increase witnessed in PAYE, findings from the study revealed that there is no significant mean
difference in direct assessment before and during the tax administration of 2015 by states in Nigeria. Tax collection
from the informal sector has always been a major problem for tax administrators.
This may be attributed to the fact that a private businessman for instance would not declare his state of
business freely for the tax authorities to assess and tax accordingly. This is still attributed to the benefit theory
because, most of the persons that fall within this tax brackets are not moved to pay tax because they are not
benefiting to their expected necessities from the government. Therefore, they try as much as possible to avoid and
evade taxes.
The tax authorities also in this case may have failed to play their part in tracking and identifying those within
this tax bracket so as to offer professional counselling and guidance for tax assessment. This is similar to the
findings of Stephen (2018) who found that revenue generated in the state is low and fails to meet its specified
objectives due to low level of enlightenment of tax payers and high incidents of tax evasion and tax avoidance.
Findings from the study however reveled a significant mean difference in road taxes before and during the tax
administration of 2015 by states in Nigeria.
Due to the economic forces of demand and supply within the country, suppliers will always transport their
goods to a point where it is demanded. It is therefore the duty of tax administrators to find a more efficient manner
to collect more revenue from this form of tax. Applying the benefit theory to this will imply that, when the
government provide good roads, more transporters will play those destinations and this will amount to more
revenue. This also supports the findings of Ganyam et al. (2019); Abiola and Asiweh (2012) and Enahoro and
Olabisi (2012).
Finally, the study found that there is no significant mean difference in miscellaneous taxes before and during the
tax administration of 2015 by states in Nigeria.
This indicates that the current tax administration has not performed optimally in managing taxes from levies
on market traders, land registration and other land related fees, development levies on individuals, pool
betting/lottery/gaming fees, and stamp duties on individuals, among others. This has resulted to a decline in
miscellaneous taxes reported before their era. Poor tax administration begets poor revenue, and that the case of
Nigerian states under this tax jurisdiction. This however supports the findings of Soetan (2017) who found that tax
administration does not have significant effect on tax revenue generation in Nigeria.

5. CONCLUSION AND RECOMMENDATIONS

Taxes are the alternative major sources of revenue for all countries of the world. It is a system, where
individuals of a country contribute to the government for economic improvement. The importance of tax
administration to the actualization of the goal of taxation in any country cannot be over emphasized. This study
attempts to examine the effect of tax administration on tax revenue of states in African countries with specific
reference to Nigeria.
In line with the findings of the study, the study concludes that pay-as-you-earn and road taxes has significantly
improved during the change in tax administration in Nigeria in 2015, whereas direct assessment and miscellaneous
taxes witnessed no significant improvement. Therefore, the change in tax administration in Nigeria only witnessed
selective improvement on tax revenue generated by the states.

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 International Journal of Business, Economics and Management, 2020, 7(6): 401-410

In line with the findings of the study, we recommend that tax administrators in all states should perform
periodic tax audits on employers in formal public and private sector, so as to ensure that PAYE are remitted
correctly and appropriately. This is because some private employers may be either calculating PAYE wrongly, not
complying with the statute guiding PAYE or not deducting and remitting at all. It is the duty of tax administrators
to check if tax payers are complying and also proffer assistance and clarity on knotty issues that relates to taxes.
In addition, the state boards of internal revenue need to consistently carry out tax awareness programs in their
various states so as to enlighten the self-employed persons and informal business owners on the need and benefits
of tax payment. This will go a long way to curb incidences of tax avoidance, as the category of persons that avoid
taxes mostly come from this tax bracket. Government on its own part should utilize its revenue to improve the state
of its commercial roads. This is because bad road reduces the patronage of transporters, which further results to
low revenue from the road taxes. Government should also employ and train more tax workers so as to effectively
manage the several forms of taxes in the state. Taxes administered at the state levels in Nigeria are numerous and
if not carefully and properly managed, a lot of revenue would be lost. The employment and training of skillful tax
practitioners will therefore go a long way to account for these taxes effectively.

Funding: This study received no specific financial support.

Competing Interests: The authors declare that they have no competing interests.
Acknowledgement: Both authors contributed equally to the conception and design of the
study.

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