Abstract

ICAN Journal of Accounting and Finance, The Institute of Chartered Accountants of Nigeria,2011 Volume 1 Number 3 pp.74-83 Tax evasion has contributed in no small measure to serious limitation in revenue generation by the Federal Government of Nigeria, and the impact on not meeting the sovereignty objectives cannot be overemphasized. The evil act perpetrated by corporate organizations and aided by the tax authorities due to very poor tax administration has led to a decline in the revenue available to the government of the Federation. The main objective of this work is to evaluate the impact of tax evasion on revenue generated by the Federal Government with a view to proffering solution to the menace. The research adopted the method of open survey with distribution of questionnaires to the staff of Federal Board of Inland Revenue Service, Accountants of quoted companies and tax consultants within Lagos and Ogun States. The Macro data of revenue generated by Federal Government from Federal Government tax portfolio was collected from Central Bank of Nigeria from 1981 to 2007.Data for Gross Domestic Product was also collected as the dependent variable to determine its correlation with the independent variables . Data were presented and analyzed using tables, and percentages. Four hypotheses were formulated and tested using Analysis of Variance (ANOVA) statistical tool for testing the results of survey. Multiple linear Regression was used to analyze the macro data. The results from the data analysis revealed that tax evasion has negative impact on federal government revenue generation, tax administration is very ineffective and inefficient, and some tax authorities are aiding the illicit act which has encouraged people to willingly reduce their tax liability through manipulation of income sources and expenditures. The study recommends among others public enlightenment campaign to educate the tax payers on the need to strictly comply with tax law,rules ans relevant regulations.