Effects of settlement of taxation disputes through conciliation proceedings on voluntary tax compliance

Tax, as the government's primary source of income, is a compulsory contribution to state revenue, levied by the government on workers' income and business profits, through exercise of the powers of a state sovereign, for the purpose of financing public expenditures. Here, the government has to align its practices of collecting taxes from taxpayers with the principle of justice of taxation. It should avoid and condemn any dissimilar or non-uniform treatment of the taxpayers, or otherwise, it may inspire the thought in the latter's minds that the government unjustly levies an overcharge upon them. In addition, those taxpayers, who think that they are wrongfully overcharged with taxes may loose trust in their government. Subsequently, those taxpayers lacking trust in the government may develop an unfavourable stance against voluntary tax compliance. The conciliation proceedings, as provided for in the current version of the Tax Procedures Act, have been vigorously criticised for engendering inequalities between the taxpayers, disabling tax audits, diminishing the dissuasive power of tax penalties and thereby affecting adversely the voluntary tax compliance by the taxpayers. This study intends to bring about proposals for further configuring the process of reconciliation, in a manner that improves voluntary tax compliance. The study has adopted the use of surveying and interviews as its principal investigative technique, for convenience. Surveys were administered to a sample population of 401 individuals, representing Certified Public Accountants, Independent Auditors and Financial Consultants, and Independent Accountants, who attend the tax procedures involving the taxpayers and take part in conciliation proceedings. Interviews were made through interpersonal dialogues with 15 former tax inspectors who had attended conciliation proceedings before, representing the government. In this study, it was concluded that the conciliation proceedings constitute a discriminative process that engenders inequalities between taxpayers, hence diminishes the dissuasive power of tax penalties and adversely affects the tendency among the latter for voluntary tax compliance. At its conclusion part, the study reveals a number of solution proposals for ensuring voluntary tax compliance of the taxpayers, with precautions taken as and when necessary to prevent any potential abuse of this facility by the same.