Rule of Law and Tax Evasion in Nigeria: Moderating Role of Public Trust in Government (Published)
Tax evasion problems impact on revenue generation by the government of Bayelsa State, Nigeria. This study explores empirically the moderating role of public trust in government on the relationship between rule of law and tax evasion in Bayelsa State, Nigeria. The specific objectives were to investigate the relationship between legal certainty and tax evasion in Bayelsa State, Nigeria; the relationship between equity before the law and tax evasion in Bayelsa State, Nigeria; the relationship between fairness and tax evasion in Bayelsa State, Nigeria and the moderating influence of public trust on the link between rule of law and tax evasion in Bayelsa State, Nigeria. The study anchored on the theories of economic deterrence and reasoned action and cross-sectional research design with data collected from primary and secondary sources. The Primary data comprised of structured questionnaires from a sample of 218 respondents (taxpayers) in Bayelsa State, Nigeria after validity and reliability tests while the data obtained from the respective taxpayers were analysed by using structural equation model. The finding indicated is a negative and significant link between legal certainty and tax evasion in Bayelsa State, Nigeria; a negative and significant link between equity before the law and tax evasion in Bayelsa State, Nigeria; a negative and significant link between tax fairness and tax evasion in Bayelsa State, Nigeria; and public trust in government negatively and significantly impact on the relationship between rule of law and tax evasion in Bayelsa State, Nigeria. From the findings of this study, we concluded that pubic trusts in government negatively and significantly impact on the relationship between rule of law and tax evasion in Bayelsa State, Nigeria. We recommended amongst others that public trust in government is observed to be a key driver of tax compliance and reduction in tax evasion, consequently the government needs to authentically fight against corruption and also ensure that the deployment of the country’s resources is transparent and there is accountability. When Nigerians have an optimistic perception of the government, citizens and taxpayers are more likely to comply with government rules in general and taxes in particular.
Keywords: Rule Of Law, Structural Equation Model, Tax Evasion, Tax Justice