This study aims to evaluate the causes and effects of tax evasion and avoidance in Lagos state and proffering solution to the menace of these tax irregularities. The total number of one hundred and twenty seven (127) was used to analyze the opinion of eligible tax payers in Lagos state. The hypothesis were tested on the relationship between the tax evasion and tax avoidance and the administration of taxation by the government and the relationship between tax evasion and tax avoidance and the tax rate.
Statistical package for social science (SPSS) was employed in analyzing the questions in the questionnaire and chi-square was used to test the hypothesis . The study revealed tax administration in the country with particular reference to Lagos State is very inefficient and ineffective, and there is no adequate information on the tax payers in the state. Hence, some people can hide from their tax liabilities. It was also discovered that there is a significant relationship between tax evasion and tax avoidance and the revenue of government and the tax rate.
1.1 BACKGROUND OF THE STUDY
Prior to the second republic of Nigeria an average Nigerian earned less than five hundred Naira. The cost of living was at the lowest to the extent that most workers lived below their remuneration and able to save from the little disposable income without much ado.
It is worthy to note that, starting from the late 1970’s the general price level had skyrocketed beyond reasonable, imaginable and frightening degree. The Nigeria populace could not afford what used to be the minimum standard of living in the society, the economic and social needs of the people were on the increase and survival of the fittest becomes the order of the day throughout the rooks and crannies of Nigeria.
It is late glaring that there is a threat to our existence, continuity and hope as a single entity (country) of which urgent and correction measures must be put in place to revive our ailing economy from total collapse.
In total, the country is confronted with Unabating debt difficulties coupled with the domestic and external financial imbalance confronting them.
However the economy has remained in a deep slumber, macroeconomics indicates the economy is in dire need of rejuvenation and indeed radical reform. Also, tax administration need to be revamped while refund of taxes as well as duty drawback administration are inefficient.