RELIGIOSITY AND TAX MORALE IN NIGERIA

Copyright © Author(s) 2025. All Rights Reserved. Published by GLOBAL PUBLICATION HOUSE. | Int. Journal of Business Management Page 43 of 54 RELIGIOSITY AND TAX MORALE IN NIGERIA By: Mpimnee Lucky, Baridoo Friday and Micah Leyira C. Department of Accounting, Faculty of Management Sciences, University of Portharcourt, Choba, RiversState, Nigeria. Phone: 234 9054048686; 234 8033542244; 2348034441215 Email; mpimne[email protected]om; [email protected]; [email protected] Abstract This study investigates the influence of religiosity on tax morale in Nigeria. The study adopted a cross-sectional design, population was three hundred and eighty-four (384) individual tax payers across various regions in Nigeria. Data was collected through structured questionnaires administered to participants using Partial Least Squares Structural Equation Modelling (PLS-SEM) two hypotheses were tested. The results indicate that both religiosity measures; religious affiliation and religious commitment were found to significantly enhance tax morale, highlighting the importance of internalized moral and spiritual values in shaping tax behaviour. This study recommends that strategies to enhance tax morale should combine credible enforcement with faith-based civic education and institutional reform. Keywords: Religiosity, Tax morale, Religion affiliation, religious commitment How to cite: Lucky, M., Friday, B., & Leyira C., M. (2025). RELIGIOSITY AND TAX MORALE IN NIGERIA. GPH-International Journal of Business Management, 8(9), 43-54. https://doi.org/10.5281/Zenodo.17278776 INTRODUCTION: Luttmer and Singhal (2014) defined tax morale as a crucial factor that affects tax compliance behaviour. It is seen as a voluntary sense of responsibility that drives individuals to pay their taxes. Njilu (2023) also defined tax morale as individual’s willingness to remit taxes, in spite of the consequences of evading tax. Manuscript ID: #02110 10.5281/zenodo.17278776 Vol. 08 Issue 09 Sept - 2025 e-ISSN 3027-0537 p-ISSN 3027-0375 Lucky, M., Friday, B., & Leyira C., M. (2025). RELIGIOSITY AND TAX MORALE IN NIGERIA. GPH-International Journal of Business Management, 8(9), 43-54. https://doi.org/10.5281/Zenodo.17278776 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management Tax morale is a critical factor that influences taxpayers' willingness to comply with their tax obligations, as these obligations are viewed as a civic duty when tax morale is high (Balla, 2017). Taxpayers' are prone to fulfil their tax responsibilities more, when they see it as a contribution to their country's socio-economic development. It has been noted that tax compliance cannot be explained entirely by the level of enforcement (Graetz and Wilde,1985; Elffers,1991). Countries set the levels of audit and penalty so low that most individuals would evade taxes, if they were rational, because it is unlikely that cheaters will be caught and penalized. Nevertheless, a high degree of compliance is observed. Thus, researchers have started to analyze a variety of factors other than detection and punishment. Tax morale might be an important influencing factor for tax compliance, and is therefore central to this new research focus. Studies consistently show that religiosity generally has a significant positive impact on tax morale, which is the intrinsic motivation to pay taxes. This positive relationship is attributed to religion's emphasis on ethical values, trust, and social norms that promote honesty and compliance, even in the face of economic pressures. Religiosity acts as a moral compass, reinforcing an intrinsic desire to act justly and fulfil obligations, which translates into higher tax morale and improved tax compliance (Agbetunde, Akinrinola &,Anyahara,2020; Bennor,2006). Religious law can significantly drive and shape individuals’ attitudes and behavior. Christians and Muslims often consider the legal base before acting whether an action is encouraged or prohibited further. For instance, Islamic law is open to different interpretation according to the legal methodology employed. In order to determine if a person’s religiosity reduces tax evasion and raises tax morale, the research looks into the potential effects of religiosity and religion on these variables. Therefore, there are pertinent questions in this research. Could religiosity at least partially explain the tax morale behaviour? Could people with different religions have a higher level of tax morality in comparison with others? How important is people’s faith in fiscal morality, and is it captured within the research. The focus of the study is to find out the role that a belief in God (or gods) or other spiritual beliefs plays in determining the extent to which people fully meet their legal tax obligations in Nigeria. It is based on the assumption that a person’s religious beliefs are applied in their daily lives albeit to varying degrees. It is apparent that further theoretical and empirical contributions are now needed to bridge the numerous gaps in the current limited number of studies that have various deficiencies. The Objectives are as follow: The aim of this study is to examine the relationship between, religiosity and tax morale in Nigeria. The specific objectives are to; i. Investigate how religious affiliation influences tax morale in Nigeria ii. Evaluate the relationship that exists between religious commitment and tax morale in Nigeria. Page No. 44 RELIGIOSITY AND TAX MORALE IN NIGERIA Volume 8 Issue No 09 (2025) Access: https://gphjournal.org/index.php/bm Literature Review and Hypotheses development Religiosity and Tax morale In order to explain tax morale as one of the factors influencing tax compliance, it is crucial to understand the elements that shape tax morale. Even though it seems crucial, to date, the concept of tax morale remains open to interpretation (Pope & McKerchar, 2010). The term ―black box‖ has been used to illustrate how tax morale has been treated by most studies without a clear picture of the actual factors influencing tax morale being drawn (Feld & Frey, 2002). The complicated interaction between taxpayers and governments, known as the psychological tax contract, has been used to explain the elements that make up tax morale (Feld & Frey, 2007). In this contractual relationship, each contract partner has duties and rights in three ways. Firstly, the equitable fiscal exchange where prior studies. Feld & Frey (2006) and Torgler et al. (2008) suggest that taxpayers tend to comply with tax laws when taxpayers receive public services in return for the taxes they pay. This has a significant positive effect on tax morale. Secondly, the political procedures where taxpayers can actively participate in the process of governmental decision making. Many studies, Pommerehne, Hart & Frey (1994); Torgler (2005); Torgler and Schineider (2007) found that if taxpayers have direct democratic rights, tax morale improves significantly. Tax morale is also influenced substantially by trust in government and legal systems e.g. Frey (2003); Torgler (2003), and this trust can only be achieved if the government can fulfil their requirements (Hardin, 1998). Further, trusting other citizens and political leaders to stick to their social contract is found to be one of the contributing factors for taxpayers to pay taxes willingly (Scholz & Lubell, 1998). Finally, there is evidence from studies such as Feld and Frey (2002) and Torgler (2005) that tax authorities’ treatment of taxpayers has a significant effect on tax morale According to Anderson & Tollison,(1992), religion is seen in the literature as an essential determinant of social reinforcement, having the role of ―supernatural police‖. As per [Hull, Bold, Hell, (1994), religion contributes to producing social goods, especially where the central administration is too weak to administer personal property. Margolis (1997) examined the reasons behind the relationship between morality and religiosity, arguing that religiosity projects the faith about proper behaviour that can be divided into correct behaviour. Previous studies from Mohdali & Pope (2014); Benk et al., (2016) analyzed the effect of religiosity on tax compliance in Malaysia and Turkey, respectively. Both studies resulted that there a significant impact of religiosity on tax compliance. Both studies stated to differentiate the values from the religious and moral values of individuals, as the recommendation for the next researcher. Besides, Nazaruddin (2019) also studied the impact of religiosity towards tax compliance with patriotism as a mediator in Indonesia which resulted in religiosity performance or honoring rituals, as well as the secular meaning of what is fair and just. Other studies has proven that religion could act as an essential factor in reducing illegal behaviour, including (Hull, Bold, 1989). Another potential factor could be the sentiment of shame or guilt, as proved by (Grasmick, B.ursik, Cochran, 1991) Religious organizations Page No. 45 Lucky, M., Friday, B., & Leyira C., M. (2025). RELIGIOSITY AND TAX MORALE IN NIGERIA. GPH-International Journal of Business Management, 8(9), 43-54. https://doi.org/10.5281/Zenodo.17278776 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management provide moral constitutions for a society. Religion provides a certain level of enforcement to act in the lines of accepted rules and acts as a ―supernatural police‖ (Anderson & Tollison, 1992). Similar to habits, religiosity has the function to economize and simplify our actions. It makes our social life more predictable and provides a sense of security to counteract the anxiety associated with uncertainty (Heiner, 1983). Religiosity settles habits of thoughts common to all individuals. As a consequence, transaction and enforcement costs decrease. Several factors have been explored by Devos (2014) which divide the influence compliance factors into two categories, economic and non-economic factorsHe also suggested for the next researcher to explore another variable for mediating the connection of religiosity towards tax compliance. Thus, from the studies above, this research analyzes the indirect effect of tax morale as a mediating variable in the relationship among religiosity and taxpayer compliance. There are still other studies that analyzed the influence of religiosity and tax morale simultaneously (Pope & Mohdali, 2010; Pertiwi, 2017). The following hypotheses were formulated as follows: Ho1: Religious affiliation does not have any significant influence on tax morale in Nigeria. Ho2: Religious commitment has no significant relationship with tax morale in Nigeria. Methodology The study adopted a cross sectional research design. The study's population under consideration was three hundred and eighty-four (384) individual tax payers across various regions in Nigeria. The accessible population was limited to all self-assessed individual taxpayers, tax consultants and tax professionals, staff of both federal and state inland revenue services in Nigeria. The technique used for collecting the data was a self-developed questionnaire, containing items of diverse formats: multiple choice measured on the 5-point Likert scale, and open-ended questions. Respondents were chosen through the quota sampling method with regards to specific level of education, that is, those having at least secondary qualification. Moreover, sampling frame was divided into non-overlapping strata for example ethnicity, age, gender and employment. In line with the objective of the study, the primary data collected was analysed using the statistical package for social sciences (SPSS Version 25) and the Smart PLS V The SPSS was used for analysing the descriptive statistics and the preliminary analysis of the study, while Smart PLS was employed for the inferential statistics and testing the research hypotheses. In carrying out the reliability of the research instrument, the Cronbach’s Alpha was used. Cronbach's alpha (α) is an estimate of reliability, specifically the internal consistency, of a Page No. 46 RELIGIOSITY AND TAX MORALE IN NIGERIA Volume 8 Issue No 09 (2025) Access: https://gphjournal.org/index.php/bm test or scale. Cronbach's alpha seeks to measure how closely test items are related to one another and thus measuring the same construct. Model Specification Following the review of related literature by various scholars and authors on the subject matter, Religiosity and Tax morale in Nigeria, the researcher deems it necessary to express the relationship that exist between these variables in a mathematical model. Where: n = number of items, si2 = variance of the ith item, and sT2 = total score variance (Cronbach, 1951). Results and Discussions Data Presentations Frequency Percentage (%) Distributed Copies of Questionnaire 384 100% Retrieved Copies of Questionnaire 351 91.4% Invalid Copies of Questionnaire 23 6.5% Valid Copies of Questionnaire 328 85.4% Source: research output, 2025. The above table shows the number of instruments that was distributed and used for further analysis. Summary of Fornell-Larcker Criterion Discriminant Validity C P RA RC TA TM C 0.906 P 0.596 0.847 RA 0.64 0.636 0.867 RC 0.577 0.483 0.857 0.932 TA 0.601 0.769 0.739 0.598 0.865 TM 0.879 0.393 0.674 0.651 0.538 0.942 The Fornell-Larcker criterion table shows that each construct’s square root of Average Variance Extracted (AVE), the diagonal values is greater than its correlations with other Page No. 47 Lucky, M., Friday, B., & Leyira C., M. (2025). RELIGIOSITY AND TAX MORALE IN NIGERIA. GPH-International Journal of Business Management, 8(9), 43-54. https://doi.org/10.5281/Zenodo.17278776 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management constructs in the model, confirming discriminant validity. For example, the square root of AVE Religious Affiliations (0.640), Religious Commitment (0.577) and Tax Morale (0.879). Test of Hypothesis 1 Ho1: Religious affiliation does not have any significant influence on tax morale in Nigeria. The statistical output for the relationship between religious affiliation (RA) and tax morale (TM) shows a strong and statistically significant positive influence. The path coefficient of 0.689 indicates that individuals’ religious identity and belonging are strongly associated with their internal motivation to comply with tax obligations. This coefficient suggests that as the salience or influence of religious affiliation increases, so does the level of tax morale. The bootstrapped sample mean (0.693) closely reflects the original sample value, confirming the stability of this estimate. The standard deviation (0.121) is within an acceptable range, indicating low variation in the repeated samples. Moreover, the t-statistic of 5.706 substantially exceeds the critical value of 1.96 for statistical significance, while the p-value of 0.000 confirms that the relationship is not due to random chance. Based on these findings, Hypothesis Three (Ho₃) is rejected, meaning that religious affiliation significantly influences tax morale in Nigeria. This result may be interpreted within the framework of socio-cultural theories of tax compliance, which posit that values, norms, and institutional trust shaped by one’s social identity including religion can significantly impact civic behavior, including tax compliance. In a religiously pluralistic society like Nigeria, religious teachings, leaders, and community expectations may foster ethical behavior and civic responsibility, thus elevating tax morale. Religious affiliation may also act as a channel through which moral obligations are reinforced, especially when religious groups emphasize honesty, accountability, and the common good. This finding suggests that religious institutions may play a vital role in Page No. 48 RELIGIOSITY AND TAX MORALE IN NIGERIA Volume 8 Issue No 09 (2025) Access: https://gphjournal.org/index.php/bm shaping tax compliance attitudes and should be considered in designing culturally responsive tax education campaigns. Test of Hypothesis 2 Ho2: Religious commitment has no significant relationship with tax morale in Nigeria. Figure 2: Hypothesis 2 (Beta and p-value) Figure 2: Hypothesis 2 (Beta and t-value) The statistical result for the relationship between religious commitment (RC) and tax morale (TM) indicates a strong, positive, and statistically significant effect. The original sample path coefficient is 0.665, suggesting that individuals with a higher degree of religious devotion or commitment tend to exhibit a stronger internal motivation to comply with tax obligations. The bootstrapped sample mean (0.671) is very close to the original value, confirming the consistency of this estimate. This implies that as religious commitment deepens—reflected in consistent worship, ethical conduct, and adherence to moral teachings—tax morale among individuals tends to increase significantly. The standard deviation of 0.102 indicates low variability in the bootstrapped estimates, while the t-statistic of 6.521 far exceeds the 1.96 threshold required for significance at the 5% level. Additionally, the p-value of 0.000 confirms that the relationship is highly statistically significant. Consequently, Hypothesis 2 (Ho2) is rejected, providing empirical support that religious commitment has a significant and positive relationship with tax morale in the Nigerian context. This result is theoretically consistent with the moral and behavioral dimensions of religiosity, which suggest that individuals who are deeply committed to their faith are more likely to internalize ethical norms, including honesty, responsibility, and social duty—qualities that directly support tax compliance. In Nigeria, where religious values strongly influence personal behavior and social expectations, higher levels of religious commitment may translate into a stronger sense of civic obligation, including the responsibility to pay taxes. This finding points to the potential role of religious teachings and faith-based organizations in promoting ethical financial behavior and strengthening the moral fabric of tax compliance. Page No. 49 Lucky, M., Friday, B., & Leyira C., M. (2025). RELIGIOSITY AND TAX MORALE IN NIGERIA. GPH-International Journal of Business Management, 8(9), 43-54. https://doi.org/10.5281/Zenodo.17278776 © 2025 GLOBAL PUBLICATION HOUSE | International Journal of Business Management Conclusion Based on the finding, we concluded that both religious affiliation and religious commitment were found to be strong positive drivers of tax morale, confirming the role of internalized moral and ethical beliefs in shaping taxpayer behaviour Recommendation The following recommendations are made from the study. They include: (i) Government agencies, such as the Federal Ministry of Finance and National Orientation Agency should collaborate with religious organizations to integrate civic and ethical messages about tax compliance into sermons, religious education, and public events. Accordingly, Jesus was unequivocal in Mark 17:12, ―And Jesus answering said unto them, Render to Cæsar the things that are Cæsar's and to God the things that are God's. Literally, Give back, pay as being due. ―therefore yield ye to Cæsar,‖ It was not a question of a voluntary gift, but of a legal due. The head of the Emperor on the coin, the legend round it, and its circulation in the country, were undeniable proofs of the right of the actually existing government to levy the tax. It was manifestly the duty of the Jewish people to give to Caesar the tribute money which he demanded of them for the expenses of government, and especially of supporting an army to defend them from their enemies. And it was no less their duty to give their tribute to God, which he in his own right demanded of them as his creatures and faithful subjects. The rights of Caesar are one thing, and those of God are another; and there is nothing that need clash between them. State polity is not opposed to religion, nor religion to state. 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