EVALUATING THE EFFECTIVENESS OF THE NEW TAXATION REFORM STRUCTURE IN REDUCING TAX EVASION AND INCREASING COMPLIANCE IN NIGERIA

Abstract

The historical limitation to the revenue ability of Nigeria has been tax evasion and inadequate voluntary tax compliance, which has resulted in poor fiscal sustainability and the provision of public goods by the state. Due to the ongoing deficit of revenues and the dynamism of the economic environment, the administration of President Bola Ahmed Tinubu has introduced a new tax system that is supposed to increase the tax base, tighten compliance, improve efficiency by digitizing, and increase compliance with taxes. This paper critically reviews the success of these new tax reforms in alleviating tax evasion and improving compliance in Nigeria. As part of the fiscal policy framework of the Tinubu administration, the paper will look at the legal, institutional and administrative aspects of the new taxation structure and how it has been designed and implemented in accordance with general tenets of good tax governance. The article questions the scope of reforms of deep-seated structural imbalances like informality, inability to enforce laws, mistrust in taxpayers, and coordination between the federal and state tax systems through doctrinal and policy analysis. This paper contends that, though the new taxation reform structure regime constitutes a wanted change in that the new regime constitutes a transition to a more modern and compliance-oriented tax administration, the long-term success of the new regime is dependent on institutional capacity, transparency and the legitimacy of the people. This article contributes significantly to modern tax scholarship in Nigeria by providing a context-sensitive assessment of ongoing reforms. It highlights the critical factors necessary to achieve sustainable improvements in tax compliance under the current administration.