Demographic Factors and Personal Income Tax Compliance in South-West States, Nigeria: Empirical Analysis

Abstract

Personal Income Tax (PIT) compliance is a critical issue to state governments and tax authorities because of the high rate of its non-compliance among individual taxpayers. This non-compliance attitude adversely affects the state sustainable development and economic performance. Many researches have been conducted on taxpayers’ compliance, but not many considered the influence of Demographic Factors (DF) on PIT Compliance Behaviour (CB) at the state level. This study examined the probable influence of DF on PIT CB in selected state in South-West, Nigeria. The study adopts survey research design and random sampling techniques. Six hundred copies of questionnaire were distributed, and this achieved 84.3% response rate. Descriptive and inferential statistics were adopted to analyze data at 5% significance level. The study shows that DF positively influenced PIT CB among individual taxpayers in the study states (AdjR2=0.033, F(4, 506)=5.342; P=0.000). There was evidence that employment status has significant relationships with individual PIT CB in the study states (ESβ= -0.314 t= -2.925, p=0.004). Hence, gender, age and educational level do not have significant relationships with individual PIT CB in the study states (GENβ=0.121, t=1.608, p=0.108, AGEβ=0.018, t=0.500, p=0.617, ELβ=0.089, t=1.758, p=0.079). The study concluded that demographic factors have significant influence on individual PIT CB in the study states. The study recommend that state governments should boost tax education, introduce taxpayment process and sound tax administration that will minimize demographic disparity and PIT non-compliance. Also, transparency and accountability should be exhibited on tax revenues to increase PIT compliance from the informal sector.