IDEAS home Printed from https://ideas.repec.org/a/jfr/rwe111/v10y2019i3p127-135.html
   My bibliography  Save this article

Tax Evasion and Its Consequences on an Emerging Economy: Nigeria as a Focus

Author

Listed:
  • Cordelia Onyinyechi Omodero

Abstract

There is a universal understanding that tax evasion is a product of underground economy, however, the two economic scenarios have dissimilar influences on an economy. The effects of tax evasion and underground economy have been examined in this study, in order to establish a statistical evidence of the varying consequences of the two economic circumstances. The study employs secondary form of data ranging from 1991 to 2018 while using ordinary least squares multiple regression technique for the analysis. The findings reveal that tax evasion has a robust significant negative influence on economic growth while underground economy is having a strong and positive significant impact on economic growth of Nigeria. The two independent variables are found to be having very strong relationship with economic growth and are also determining 98.7% of the variation in the Nominal Gross Domestic Product. In the light of these findings, it is obvious that informal economy and tax evasion have become an integral part of Nigeria¡¯s economy doing both harm and good substantially. Therefore, the study recommends more effort on the part of the government to encourage good leadership, formulate policies that will enhance voluntary tax compliance and help the informal sector businesses that are legitimate to become officially registered with little or no cost.

Suggested Citation

  • Cordelia Onyinyechi Omodero, 2019. "Tax Evasion and Its Consequences on an Emerging Economy: Nigeria as a Focus," Research in World Economy, Research in World Economy, Sciedu Press, vol. 10(3), pages 127-135, December.
  • Handle: RePEc:jfr:rwe111:v:10:y:2019:i:3:p:127-135
    DOI: 10.5430/rwe.v10n3p127
    as

    Download full text from publisher

    File URL: http://www.sciedu.ca/journal/index.php/rwe/article/view/16352/10187
    Download Restriction: no

    File URL: http://www.sciedu.ca/journal/index.php/rwe/article/view/16352
    Download Restriction: no

    File URL: https://libkey.io/10.5430/rwe.v10n3p127?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Schneider Friedrich, 2010. "The Influence of Public Institutions on the Shadow Economy: An Empirical Investigation for OECD Countries," Review of Law & Economics, De Gruyter, vol. 6(3), pages 441-468, December.
    2. Cordelia Onyinyechi Omodero & Kabiru Isa Dandago, 2019. "Tax Revenue and Public Service Delivery: Evidence From Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(2), pages 82-91, April.
    3. Schneider,Friedrich & Enste,Dominik H., 2016. "The Shadow Economy," Cambridge Books, Cambridge University Press, number 9781316600894, October.
    4. Arnis Sauka & Friedrich Schneider & Colin C. Williams (ed.), 2016. "Entrepreneurship and the Shadow Economy," Books, Edward Elgar Publishing, number 16655.
    5. Muhammad Muazzam Mughal, 2012. "Reasons of Tax Avoidance and Tax Evasion: Reflections from Pakistan," Journal of Economics and Behavioral Studies, AMH International, vol. 4(4), pages 217-222.
    6. Kennedy Prince Modugu & Dr. Alade Sule Omoye, 2014. "An Appraisal of Personal Income Tax Evasion in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(1), pages 33-40, January.
    7. Kennedy Prince Modugu & Alade Sule Omoye, 2014. "An Appraisal of Personal Income Tax Evasion in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(1), pages 33-40.
    8. Shkendije Demalijaj Ukaj, 2014. "Tax Evasion and the Impact on Economic Growth Acta Universitatis Danubius. OEconomica," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 10(6), pages 18-32, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jean Damascene Mvunabandi & Bomi Nomala & Ferina Marimuthu, 2024. "The Effect of Tax Avoidance and Tax Evasion on the Performance of South African Economy," International Journal of Economics and Financial Issues, Econjournals, vol. 14(1), pages 52-63, January.
    2. Cordelia Onyinyechi Omodero, 2020. "Taxation Income, Graft and Informal Sector Operations in Nigeria in Relation to Other African Countries," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 163-172, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cordelia Onyinyechi Omodero, 2020. "Taxation Income, Graft and Informal Sector Operations in Nigeria in Relation to Other African Countries," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(2), pages 163-172, April.
    2. Schneider Friedrich & Buehn Andreas, 2017. "Shadow Economy: Estimation Methods, Problems, Results and Open questions," Open Economics, De Gruyter, vol. 1(1), pages 1-29, March.
    3. Khorana, Sangeeta & Caram, Santiago & Biagetti, Marco, 2021. "Vicious Circle or New Paradigm? Exploring the Impact of Shadow Economy on Labour Market in Latin America and Eurozone," GLO Discussion Paper Series 983, Global Labor Organization (GLO).
    4. Omodero Cordelia Onyinyechi, 2019. "The Consequences of Shadow Economy and Corruption on Tax Revenue Performance in Nigeria," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 29(3), pages 64-79, September.
    5. Cong Minh Huynh & Tan Loi Nguyen, 2020. "Fiscal policy and shadow economy in Asian developing countries: does corruption matter?," Empirical Economics, Springer, vol. 59(4), pages 1745-1761, October.
    6. Ligita Gasparėnienė & Rita Remeikienė & Colin C. Williams, 2022. "Unemployment and the Informal Economy," SpringerBriefs in Economics, Springer, number 978-3-030-96687-4, April.
    7. Luc Jacolin & Joseph Keneck Massil & Alphonse Noah, 2021. "Informal sector and mobile financial services in emerging and developing countries: Does financial innovation matter?," The World Economy, Wiley Blackwell, vol. 44(9), pages 2703-2737, September.
    8. Dagmara Nikulin & Ewa Lechman, 2021. "Introductory Words," SpringerBriefs in Economics, in: Shadow Economy in Poland, chapter 0, pages 1-10, Springer.
    9. Hassan, Mai & Schneider, Friedrich, 2016. "Size and Development of the Shadow Economies of 157 Countries Worldwide: Updated and New Measures from 1999 to 2013," IZA Discussion Papers 10281, Institute of Labor Economics (IZA).
    10. Omodero Cordelia Onyinyechi, 2019. "The Financial and Economic Implications of Underground Economy: The Nigerian Perspective," Academic Journal of Interdisciplinary Studies, Sciendo, vol. 8(2), pages 155-167, July.
    11. Friedrich SCHNEIDER, 2016. "Estimating the Size of the Shadow Economy: Methods, Problems and Open Questions," Turkish Economic Review, KSP Journals, vol. 3(2), pages 256-280, June.
    12. Goel, Rajeev K. & Saunoris, James W. & Schneider, Friedrich, 2019. "Drivers of the underground economy for over a century: A long term look for the United States," The Quarterly Review of Economics and Finance, Elsevier, vol. 71(C), pages 95-106.
    13. Rajeev K. Goel & James W. Saunoris & Friedrich Schneider, 2019. "Growth In The Shadows: Effect Of The Shadow Economy On U.S. Economic Growth Over More Than A Century," Contemporary Economic Policy, Western Economic Association International, vol. 37(1), pages 50-67, January.
    14. Pasovic Edin & Efendic Adnan S., 2018. "Informal Economy in Bosnia and Herzegovina – An Empirical Investigation," South East European Journal of Economics and Business, Sciendo, vol. 13(2), pages 112-125, December.
    15. Feige, Edgar L., 2015. "Reflections on the meaning and measurement of Unobserved Economies: What do we really know about the “Shadow Economy”?," MPRA Paper 68466, University Library of Munich, Germany.
    16. Aziz N. Berdiev & Rajeev K. Goel & James W. Saunoris, 2022. "Do disease epidemics force economic activity underground? International evidence," Contemporary Economic Policy, Western Economic Association International, vol. 40(2), pages 263-282, April.
    17. Alexander Libman & Janis N. Kluge, 2017. "Sticks or Carrots? Comparing Effectiveness of Government Shadow Economy Policies in Russia," Working Papers 364, Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies).
    18. Friedrich Schneider, 2014. "Outside the State - the Shadow Economy and Shadow Economy Labor Force," CESifo Working Paper Series 4829, CESifo.
    19. Colin C. Williams & Abbi Kedir, 2018. "Explaining Cross-National Variations In The Prevalence Of Informal Sector Entrepreneurship: Lessons From A Survey Of 142 Countries," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-22, March.
    20. Farzanegan, Mohammad Reza & Hassan, Mai & Badreldin, Ahmed Mohamed, 2020. "Economic liberalization in Egypt: A way to reduce the shadow economy?," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 307-327.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:rwe111:v:10:y:2019:i:3:p:127-135. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gina Perry (email available below). General contact details of provider: http://rwe.sciedupress.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.