Determinants of Implicit Tax in Kaduna State, Nigeria

ISSN: 2709-8575
Source: African Multidisciplinary Tax Journal, 2024 Issue 1

Abstract

This paper investigates the impact of the tax compliance rate and corruption perception on implicit tax in Kaduna State, Nigeria. Data was collected through questionnaires and analysed using Endogeneity, Breusch-Pagan-Godfrey heteroskedasticity and Variance Inflation Factor tests. A Two Stage Least Square Regression Model was used to analyse the data, involving 523 questionnaires. The study found that income levels, corruption perception and public confidence in government have a significant positive impact on implicit tax in the state, and the tax compliance rate has an insignificant negative impact on implicit tax in the state. The study concluded that corruption is the main factor affecting the ability of the Kaduna State government to provide adequate public services in the state, and corruption increases the level of implicit tax. The Kaduna State government should make fighting corruption a priority, as this will help the government to save more, and to provide more public goods and services in the state.