Enforce environmental tax compliance model for the oil and gas industry

Abstract

Purpose It is basically known that the oil and gas industry contributes to various forms of pollution through air, acid rain and water, as well as different kinds of illnesses in humans and aquatic animals. Eventually, this adversely contributes to climate change owing to increases in emission levels in various stages of oil and gas operations ranging from extraction, refining, transportation and even consumption. Therefore, the purpose of this paper is to produce a simplistic model for compliance with environmental taxes in the oil and gas industry as an effort to curtail such adversities. This attempt is expected to set a new pace for heated debates towards the production of a robust environmental tax compliance model through further research. Specifically, it has examined the effect of extensive regulation and use of power in ensuring compliance with environmental taxation via enforcement mechanisms. Design/methodology/approach The study used a quantitative research design through a positivist paradigm. The population of the study was 115 respondents who were identified as tax experts in three different stakeholder groups (regulators, operators and enforcers) in the Nigerian oil and gas industry. Out of this population, 103 served as the final sample of the study. The data collected from these tax experts were analyzed through partial least squares structural equation modelling. Findings The results revealed that both extensive regulation and the use of power have high likelihoods of enhancing compliance with environmental taxes through enforcement actions by the relevant authorities within the oil and gas industry. Research limitations/implications The results implied the need for policymakers to deploy these enforcement mechanisms to enhance compliance with environmental taxes in the oil and gas industry, which will eventually reduce the environmental menace and ensure cleaner production. The paper also has highlighted the need for future researchers to expand this discussion through an elaborative approach either through disaggregating the variables studied here or integrating voluntary compliance mechanics into the model for further understanding of the drivers of environmental tax compliance. It also implied the need to utilize larger sample in other oil producing countries to improve generalization of results. Originality/value The work could be the pioneer in proposing and validating the enforced environmental tax compliance model in the oil and gas industry.

Global and regional externalities of the Ukrainian energy sector

“…Ukraine has an extremely low level of environmental taxation, which allows TPP owners to earn extra profits by deteriorating global ambient temperatures. As of January 1, 2019, the rate for emissions of 1 ton of CO 2 is only ₴10, which is €0.3, whereas it is estimated that at present 1 ton of CO 2 emissions causes damage in the global dimension of €30 (Mas’ud et al , 2020) and approximately at this level taxation of carbon emissions is set in the EU.…”

“…The issue of the importance of implementing environmental taxation coordinated with the energy business has been considered in a number of works. It was found that stable environmental taxation can have a positive effect on both the environment and economic development (Volchyn et al , 2013; Report Greenpeace, 2014; Mas'ud et al , 2020).…”

Sustainable Strategies in Onshore Gas Exploration: Incorporating Carbon Capture for Environmental Compliance

“…Evaluating the economic and social value from gas flaring is crucial for addressing environmental concerns and maximizing benefits (Romsom & McPhail, 2021). Environmental tax compliance models for the oil and gas industry aim to enhance regulatory frameworks and ensure adherence to environmental regulations (Mas'ud et al, 2020). Studies on environmental liabilities in the oil and gas industry stress the importance of life-cycle management and addressing climate change concerns (Zhao et al, 2013).…”

Understanding Sustainable Modern Tax Compliance Approach to Prevent Sanctions From Tax Authorities in Nigeria

“…Such compliance measures are tax audits and investigations after the taxpayers' file self-assessment returns. Despite recent developments in tax compliance research, which highlights the relevance of psychological variables, such as trust, deterrence measures are still relevant (Masud et al, 2020). Lois et al (2019) inferred that voluntary tax compliance is vital for governments to cope with budget deficits.…”