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Archives of Business Research – Vol. 10, No. 4
Publication Date: April 25, 2022
DOI:10.14738/abr.104.12195. Adegbie, F. F., Enerson, J., & Olaoye, S. A. (2022). An Empirical Investigation into the Relationship between Electronic Tax
Management System and Tax Revenue Collection Efficiency in Selected States in South West, Nigeria. Archives of Business Research,
10(04). 93-109.
Services for Science and Education – United Kingdom
An Empirical Investigation into the Relationship between
Electronic Tax Management System and Tax Revenue Collection
Efficiency in Selected States in South West, Nigeria
ADEGBIE, Folajimi Festus
Department, Babcock University, Ilisan-Remo, Ogun state, Nigeria
ENERSON, Johnson
Department, Babcock University, Ilisan-Remo, Ogun state, Nigeria
OLAOYE, Samuel Adebayo
Department, Babcock University, Ilisan-Remo, Ogun state, Nigeria
ABSTRACT
Tax revenue generation in Nigeria has received contemporary discuss and debate
in accounting literature and this has aroused great concern for the attainment of
sustainable development. The attainment of revenue goals have been adduced to
the fact that many issues and challenges faced are multiplicity of taxes, non- availability of database, difficulty in keeping proper track records of tax payers or
defaulters, complexity in tax compliance and collection and non-payment of tax
refunds amongst others. The study investigated the effect of electronic tax
management system on tax revenue collection efficiency. The survey research
design was adopted for the study and total enumeration sampling technique was
adopted. A total of 2670 copies of structured questionnaires were distributed to
respondents across the three selected states to illicit responses while 2199 copies
were retrieved back which accounted for 82.4% response rate. Reliability ranged
between 0.7 and 0.9. Data were obtained through the use of a well-structured
questionnaire. Descriptive and inferential (multiple regression) statistics were
used for data analysis. The findings revealed that electronic tax management
system measured by Perceived ease of use, internet payment system, mobile
payment system and electronic billing machine had a significant impact on the
simplicity of filing tax return of tax payers (Adj R2 = 0.113, F-stat = 68.343, p <
0.005). The study concluded that electronic tax management system impacted tax
revenue collection efficiency. The study recommended that tax policy makers
should ensure that the electronic tax system is designed in such a way that it will
make the filing of tax return very simple and will motivate tax payers to pay their
taxes and skillful personnel should be made to be in charge of the tax management
system.
Keywords: Electronic Tax Management System, Simplicity of Filing Tax Returns, Tax
Revenue Collection Efficiency, Tax Revenue Generation
INTRODUCTION
The world all over is becoming automated and as such, there is need for improvement of tax
administration. The manual system of revenue collection has been faulted because it makes the
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Archives of Business Research (ABR) Vol. 10, Issue 4, April-2022
Services for Science and Education – United Kingdom
process cumbersome to have an audit trail of the efficiency of revenue collection received by
the Tax Authorities (Federal Inland Revenue Service (FIRS) and State Internal Revenue Services
(SIRS)). The unprecedented advancement in computer technology over the last 30 years has
resulted in computer taking over several roles that were once occupied by humans. Many
people, businesses, government parastatal and agencies of the government have since adopted
the use of computer systems and internet in their business transactions in order for them to
stay abreast of the competition and reduce the prevalent human drudgery.
In Nigeria, tax administration is confronted with complex multidimensional problems. Ola
(2001) explained that revenue collected from income tax of individual and entities tend to be
too low because of low tax literacy, poor relationship between tax authorities and taxpayers,
insufficient number of qualified and competent accountant amongst the staff of tax authorities.
The use of tax personnel who are untrained and also unqualified, lack required skills on how to
utilize information available for the assessment and calculating tax in a best suitable manner
(Ayodeji, 2014).
The dysfunction in collection system and tax administration, multifaceted statute and apathy of
taxpayers because of absence of utilities enjoyed in turn for their tax collected. The general
opinion of the taxpayers is that the rich and wealthy individuals in the country do not pay tax;
this has made the situation grave. Generally speaking, it is very hard to distinguish between tax
matters from financial issues since the problem was typically borne under a single consistent
caption. It is also viewed as a process of determining the legitimate position laborious and
difficult (Ola, 2001).
Ajayi and Yidiat (2021) opined that electronic tax filing have a great impact on revenue
generation. The potentials that are associated with this system are great and should be
harnessed to improve tax revenue generation. They submitted that for taxes to be generated to
finance some of the economic activities in the Nation that will bring about growth and
development, then a possible way to achieve this is by exploring the electronic tax filing system
which had not been given much attention to in the past.
The problem of tax administration as well as collection can be said to be as a result of; Poor
staffing system, dysfunctional legal framework (obsolete laws), absence of the necessary
infrastructure to enhanced revenue generation by tax collectors as well as administrators,
often fraught with leakages, manual nature of tax collection processes (Hassan, 2014). The
identified problems are responsible for low revenue generation to the country and it reduces
the government’s ability to provide infrastructure for the public. If these problems continue to
exists, the standard of living in the country will continue to decrease. Tax evasion will become
more prominent in the country and non-compliance from tax payers will reach a greater level.
Furthermore, misused of tax collected, bribery and corruption, incompetent tax personnel and
poor proper accounting record will increase noncompliance attitude and facilitate low tax
return to the government. The situation led to an act of tax evasion as well as tax avoidance
(Soyode & Kajola, 2006).
Electronic tax management system is the use of computer systems and networks in the process
of tax assessment, collection and administration. This systems allows tax payers to pay their
taxes through their banks’ online payment portals from the comfort of their homes or work
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Adegbie, F. F., Enerson, J., & Olaoye, S. A. (2022). An Empirical Investigation into the Relationship between Electronic Tax Management System and
Tax Revenue Collection Efficiency in Selected States in South West, Nigeria. Archives of Business Research, 10(04). 93-109.
URL: http://dx.doi.org/10.14738/abr.104.12195
environment since it is an online self-service system. This is a Federal Inland Revenue Service
(FIRS) initiative in collaboration with the Nigerian Inter-bank Settlement System (Abdallah,
2006) as also supported by Olaoye & Atilola (2019).
The IMF has long played a lead role in supporting developing countries’ efforts to improve their
revenue mobilization. Requirements for relieving poverty and improving infrastructure are
substantial: achieving the Millennium Development Goals, for instance, may require low income
countries to raise their tax-to-GDP ratios by around 4 percentage points. But the quality of
measures also matters: increasing revenue by further taxing readily compliant taxpayers can
worsen distortions and perceived inequities. Also, reducing reliance on trade taxes can bring
real structural gains that outweigh short-term revenue difficulties. More fundamentally still,
the centrality of taxation in the exercise of state power means that more efficient, fairer and
less corrupt tax systems can spearhead improvement in wider governance relations (Daniel,
Keen & McPherson, 2010).
E-taxation as it is referred to have come to replace the cumbersome, manual and error prone
offline system with an efficient, secure and an almost error-free online delivery system
(Amaefule, Okonya & Amaefule 2012 &Arya, 2012). The role of the electronic system is not only
about the ease of assessment, collection and administration but also to improve the efficiency
with which revenue is collected. The electronic tax management system has replaced the paper- based tax reporting systems and this promises many benefits but most importantly an
increased efficiency of revenue collection (Muwonge, 2011).
Despite all the benefits associated with electronic tax management system, there has been a
heightened concern over the proceeds from taxation not meeting the target placed by Federal
Inland Revenue Service (FIRS) and State Internal Revenue Services (SIRS) and thus the need to
investigate the effect of electronic tax management system on tax revenue collection efficiency
in south west, Nigeria.
From literature it was observed that the simplicity of filing tax returns was found to be
cumbersome and as a result tax payers find it difficult to file their tax returns as and when due.
Furthermore, tax evasion was also discovered to be on the increase because tax payers’ evaded
tax without proper sanctions melted on them which would serve as a deterrent to other erring
offenders. This was also highlighted by Obert et al. (2018) when they tried to address the
challenges affecting tax collection in the Nigerian Informal Economy and also submitted that it
was high time the electronic tax management system be explored. The level of tax compliance
that is the level at which tax payers comply with the existing tax laws was seen to be low. It was
discovered that voluntary compliance was extremely low and authorities had to enforce
compliance with some level of coercion to get to an appreciable level of compliance. The
bureaucracy in the administrative ease of tax revenue collection was found to be very difficult
as there are no properly laid down administrative processes for the collection of these taxes
(Emmanuel & Jaya, 2016).
However, the existence of technology has been instrumental in liberating people’s lives
including work and operations. The challenges that the tax system has battled are mostly due
to the nature of tax collection system. This brings about the need for a revolution in the system
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Adegbie, F. F., Enerson, J., & Olaoye, S. A. (2022). An Empirical Investigation into the Relationship between Electronic Tax Management System and
Tax Revenue Collection Efficiency in Selected States in South West, Nigeria. Archives of Business Research, 10(04). 93-109.
URL: http://dx.doi.org/10.14738/abr.104.12195
Empirical Review
In Tanzania, Kimathi, Zhang and Hu (2019) researched on the E-tax Filing and payment system
using variables such as system quality and perceived security, as well as decomposing
important variables like social influence and perceived behaviour control. This study integrates
Technology Acceptance Model (TAM) and Theory of Planned Behaviour (TPB) to explain the
factors motivating the acceptance of ETFPS in Tanzania. A quantitative method of data analysis
was employed. Empirical outcomes of the variables signified the influence of perceived
usefulness and perceived ease of use of ETFPS. Perceived usefulness and perceived ease of use
significantly influence the users’ attitude towards accepting ETFPS, which further affects their
behavioural intention. In the study perceived security, mass media influence, and external
facilitating condition have a significant impact on the users’ behavioural intention. Similar
study was conducted in Malaysia by Sritharan and Salawati, (2019), who examined the
moderating effect of tax knowledge on the relationship between individual factors and income
tax compliance in Malaysia using correlation analysis, multiple regression analysis and
hierarchical regression analysis and the study found that individual financial position, referral
group, political influence, religiosity and cultural influence have a positive effect on tax
compliance behaviour. Besides, tax knowledge has moderated the relationship between
individual factor and compliance.
Sarkar, (2019) reviewed the adoption of digital payment system with the aim of developing in
Delta Municipality the specific factors which have an impact on users’ payment choices and also
the discovery of a relation probably between those choices and those of sex, age, level of income
or level of education. The study found that show the general dominations of debit cards in all
ages and level of income, for each kind of transaction (natural or digital), confirming the raise
of plastic money in Greece after capital controls’ arrival. Speed, directness and convenience are
the characteristics which are necessary to be fulfilled by a means of payment, but also another
modern reason and necessity of plastic money is the new tax-free builder regime. Furthermore,
loyalty programs that cards provide most of the time are really tempting. A research conducted
in Spain by Liébana-Cabanillas, Molinillo and Japutra, (2021) explored the determinants of
intention to use peer to peer mobile payment. The research contributed to the body of
knowledge on technology by proposing a conceptual model based on the theory of reasoned
action, extended with additional mobile payment constructs identified in the study. The study,
however, revealed that usefulness, subjective norms, and personal innovativeness have a
particularly strong, direct influence on intention to use. The study of Serem, Robert and Phillip
(2017) used a quantitative method of analysis to investigate the effect of tax system simplicity
on tax compliance among rental income earners in Kenya using Eldoret central business district
by adopting an explanatory design, and found that level of income of the rental income earners
influenced their level of tax compliance.
METHODOLOGY
The study made use of both primary and secondary sources of data. Primary source of data
employed the survey research design. Primary data used in the study was sourced from
respondents that were selected from Lagos State Board of Internal Revenue Service, Oyo State
Board of Internal Revenue Service and Ogun State Board of Internal Revenue Service. The
secondary source of data was gotten from National Bureau of Statistics Bulletin and this data
was used to analyze the trend before and after introduction of electronic tax management
(2008 – 2020) for 13 years.