PERCEPTION OF TAX SYSTEM AND TAX MORALE

ABSTRACT

This study examined Tax system and tax morale. Five (5) research questions and Five hypothesis guided the study, aiming to assess the impact of tax compliance on tax morale within the SME sector, examine the influence of tax knowledge on tax morale among SMEs, investigate how tax attitudes shape tax morale within the SME sector, analyze the role of perceived tax fairness in determining tax morale among SMEs and explore the relationship between trust in the legal system and tax morale among SMEs. The population of the study consisted of 17,156 Small and Medium Scale Business in Benin City, Edo State, the simple random sampling technique was used to select 391 Small and Medium Scale Enterprise using the Raosoft online Sample size calculator. A structured questionnaire was used to retrieve data from the respondents, the number of questionnaire retrieved was 370, therefore the analyses was done based on the total number of returned questionnaire. The findings of the study were as follows; there is a significant positive relationship between tax compliance and tax morale among SMEs, there is a significant positive effect of tax knowledge on tax morale within the SME sector, tax attitudes significantly impact tax morale among SMEs, there is a significant positive relationship between perceived tax fairness and tax morale among SMEs and trust in the legal system significantly impacts tax morale within the SME. Based on the findings, several recommendations can be made to enhance tax morale and compliance within the SME sector: Government authorities should invest in comprehensive tax education campaigns targeted at SMEs to enhance their understanding of tax obligations and promote compliance behavior. Efforts should be made to address perceived loopholes and inequities within the tax system to foster a sense of fairness among SMEs. Implementing progressive tax policies and minimizing tax evasion by affluent individuals and corporations can contribute to improving tax morale.