Effect of Tax Evasion and Avoidance on Economic Development of Grassroots in Nigeria

Abstract

This study investigates the impact of tax evasion and avoidance on the economic development of grassroots communities in Nigeria. Taxation is a fundamental component of public finance and is instrumental in supporting socio-economic development. However, the extent to which tax evasion and avoidance affect the economic well-being of grassroots communities has received limited attention in the literature. The study adopted descriptive research method technique. The findings from this research reveal the multifaceted nature of this relationship. Tax evasion is shown to reduce government revenue, exacerbate income inequality, and undermine governance, all of which have adverse effects on the economic development of grassroots communities. Conversely, the impact of tax avoidance is more complex, as it can stimulate investments but also erode government revenue when practiced excessively. It was therefore, recommended the importance of addressing tax evasion and avoidance issues in Nigeria, especially concerning grassroots economic development. It emphasizes the need for more effective tax policies and enforcement mechanisms that promote compliance while encouraging legitimate investment.