CORRUPT TAX PRACTICES: A CATALYST FOR RISING COST OF TRADING AGRICULTURAL PRODUCTS AND AN INHIBITOR OF GOVERNMENT REVENUE GENERATION

Abstract

This study examines corrupt tax practices specifically unauthorized levies, bribery, and informal tax collections as catalysts for the rising cost of trading agricultural products and inhibitors of government revenue generation in Benue State, Nigeria. The objective is to investigate how illegal tax practices distort agricultural trade, increase traders’ operational costs, and weaken government capacity to mobilize internal revenue. The study was conducted in major agricultural markets and transport corridors across Benue State, including Katsina-Ala, Ukum, and Vandeikya Local Government Areas. Field findings reveal that traders and transporters face multiple illegal levies at over 130 checkpoints, imposed by security personnel, touts, and revenue officials. Market traders encounter up to twenty-nine unauthorized charges per transaction, many of which are not recognized by existing tax laws. These illegal collections inflate transaction costs by as much as 30–40%, reduce trader profitability, and discourage participation in the formal economy. Consequently, the government experiences significant revenue leakages and declining tax compliance due to loss of taxpayer trust. The study infers that corrupt tax practices not only distort market efficiency but also threaten the fiscal sustainability of Benue State and agricultural competitiveness. It recommends establishing a technology-driven tax harmonization system to eliminate multiple and illegal taxes, coupled with enhanced monitoring, enforcement, and public sensitization. The use of CCTV surveillance at checkpoints, prosecution of offenders, and automation of tax receipts are also proposed as effective strategies. Strengthening governance and accountability will restore public confidence, encourage voluntary tax compliance, and promote sustainable agricultural trade.