Evaluating The Economic Impact Of Tax Avoidance And Evasion On Personal Income Tax Administration

Abstract

This study investigates the effects of tax avoidance and evasion on personal income tax administration, focusing on their impact on revenue generation, administrative efficiency, and compliance. Data were collected from 175 Federal Inland Revenue Service (FIRS) employees in Osun State using a survey design. Key findings revealed a significant positive correlation (r=0.506, p<0.05) between tax avoidance, evasion, and the challenges faced in tax administration. Regression analysis showed that 57.7% of the variability in personal income tax administration is explained by these practices (R² =0.577, F=118.76, p<0.05), emphasising that high tax rates encourage avoidance and evasion (B= 0.65, p<0.05). The study concludes that balanced tax policies, improved enforcement mechanisms, and taxpayer education are essential to curbing non-compliance and enhancing administrative efficiency.