The Impact of Government Accounting Practices on Tax Revenue Collection in Nigeria: A Case Study of Lagos State Internal Revenue Service
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Background of the Study
Efficient tax revenue collection is a cornerstone of sustainable development, providing governments with the resources needed to fund public goods and services. In Nigeria, government accounting practices significantly influence tax administration efficiency. Effective accounting ensures transparency, accountability, and trust, which are critical for fostering voluntary tax compliance (Ibrahim & Oladele, 2024).
Lagos State Internal Revenue Service (LIRS) is considered one of the most advanced tax authorities in Nigeria. Despite this, issues such as mismanagement of tax records, lack of integration between accounting systems, and delays in financial reporting persist (Adekunle et al., 2023). Moreover, the adoption of international public sector accounting standards (IPSAS) has not been fully optimized, leading to inefficiencies in tax revenue mobilization.
The link between accounting practices and tax revenue collection requires urgent attention. A robust accounting framework can help bridge the trust gap between taxpayers and government agencies, thus increasing compliance and revenue (Okonkwo & Chukwuma, 2025). By exploring the case of LIRS, this study aims to shed light on the practical implications of accounting practices on tax collection.
Statement of the Problem
Poor accounting practices have undermined the effectiveness of tax revenue collection in Nigeria. Challenges such as lack of transparency, inadequate financial reporting, and weak internal controls hinder the efficiency of tax administration. In Lagos State, despite being a leading economic hub, tax revenue collection has not reached its full potential due to these issues (Ogunleye & Yusuf, 2023).
Furthermore, the disconnect between government accounting systems and tax collection processes results in leakages and loss of revenue. While efforts have been made to modernize these systems, implementation gaps remain. Addressing these deficiencies is crucial for improving tax compliance and maximizing revenue generation in Lagos State.
Objectives of the Study
- To evaluate the impact of government accounting practices on tax revenue collection in Lagos State.
- To identify challenges in the integration of accounting systems with tax administration.
- To recommend improvements for enhancing tax revenue collection efficiency.
Research Questions
- What is the impact of government accounting practices on tax revenue collection in Lagos State?
- What challenges hinder the integration of accounting systems and tax administration?
- What strategies can improve tax revenue collection efficiency?
Research Hypotheses
- Government accounting practices significantly impact tax revenue collection.
- Integration challenges between accounting systems and tax processes hinder revenue efficiency.
- Enhanced accounting practices will improve tax compliance and revenue generation.
Scope and Limitations of the Study
The study focuses on LIRS, examining the relationship between accounting practices and tax revenue collection. It will analyze accounting policies, financial reporting standards, and administrative practices. Limitations include restricted access to sensitive financial data and potential bias in stakeholder responses.
Definitions of Terms
- Government Accounting Practices: Procedures and policies for recording, analyzing, and reporting financial transactions in public sector entities.
- Tax Revenue Collection: The process of collecting taxes from individuals and businesses by government agencies.
Integration: The alignment and coordination of accounting systems with tax administration processes.
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