A public value perspective on tax administration in a developing country: A multistakeholder view of the Nigerian experience
Date
2023-01-30Embargo Date
2025-01-13
Author
Bassey, Edidiong Offiong
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Abstract
Tax administrations in developing countries have an increased role as revenue mobilisers to fund governments’ sustainable development goals and various other challenges. Nevertheless, they struggle with improving consent to taxation, with their legitimacy questioned by taxpayers in those countries.
Situated in the Nigerian tax context, where despite several tax administration reforms, the Tax-to-GDP ratio remains at 6%, this study’s central aim is to examine how to create or improve the legitimacy and efficiency of tax administration in a developing country. This aim is addressed through three key research questions focused on (i) trust, (ii) service delivery quality and (iii) Administrative Efficiency. While this study addresses tax administration in the Nigerian environment, it also considers the broader landscape of tax administration reforms in the transnational context, particularly the increasing influence of Multilateral Institutions.
This study develops a new theoretical framework to understand how to create or improve the legitimacy or efficiency in tax administration, drawing on combined core themes and theoretical constructs from relevant public value and tax literature. This framework provides an insightful explanatory lens through which the findings are interpreted. In line with a qualitative interpretive approach, this study is informed by face-to-face interviews conducted with multiple stakeholders in the Nigerian Tax system and by relevant publicly available documentation.
The study confirms the relevance of public value as an effective theoretical underpinning for how to create legitimacy for tax administrations, which applies to developing and developed countries. The findings also suggest the need for tax administrations in developing countries to focus on four significant reforms: (i) Strengthening trust in the tax system with a focus on improving perceptions of fairness, particularly in enforcement, (ii) A focus on reducing compliance costs to make it easy to pay taxes, particularly through technology, (iii) empowering taxpayers through regular engagements, particularly exploring the use of new institutional spaces such as social media and (iv) addressing institutional corruption with a focus on reducing perceived political interference.
In addition to the findings, this study contributes to knowledge through the development of a new theoretical framework for understanding how to create or improve legitimacy in tax administrations in developing countries and incorporating the concept of ‘Ownership and culture responsibility’ and ‘record keeping’ as distinct theoretical contributions in our understanding of tax administrations in developing countries.