HIERARCHICAL EFFECTS OF PUBLIC HEALTH RESPONSES AND FISCAL POLICY MEASURES ON TAX MORALE OF ENTREPRENEURIAL FIRMS DURING THE COVID-19 PANDEMIC IN NIGERIA

The purpose of this paper is to examine the hierarchical effects of Public Health Responses (PHRs) and fiscal policy measures (FPMs) on the tax morale (TM) of entrepreneurial firms in Nigeria during the COVID-19 pandemic. The theoretical basis for the study is based on social contract theory (SCT) and fiscal exchange theory (FET), which oblige entrepreneurs to pay taxes to the state in return for public goods and social services. Using a cross-sectional survey design, we collected primary data from 177 professional managers of entrepreneurial firms in Nigeria using online questionnaires. The sampled firms were accessed with the support of the Lagos Chamber of Commerce. Data collected at a point in time reflecting respondents’ views on the impact of PHRs and FPMs on TM were analyzed using hierarchical regression analysis. Three estimates emerged from the hierarchical regression analyses. The first estimation suggests that the PHRs have a significant positive effect on the TM of entrepreneurial firms. The second estimate suggests that the FPMs do not have a significant positive effect on the TM of entrepreneurial firms. The third estimation found that the interactive effects of PHRs and FPMs do not have a significant positive effect on the TM of entrepreneurial firms. The study, although modest, contributes to the literature on the entrepreneurial behavior of firms and tax morals in a period of economic uncertainty. The study provides valuable insights and validates the social contract and fiscal exchange theories in the recessionary period.