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Tax Administration In The Informal Sector: Kwara State Internal Revenue Service Perspective

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Abstract

Taxation in the informal sector has been very challenging for most tax authorities in Nigeria. The sector is largely characterised by low voluntary tax compliance. This study examines the challenges facing tax administration in the informal sector in Kwara State and the impact of measures taken by Kwara State Internal Revenue Service (KW-IRS) particularly, the Community Impact Programmes (CIPs)—direct and indirect intervention programmes to inspire voluntary tax compliance in the informal sector of the State. Survey research design was used for the study. A total of 56 staff from a population of 83 staff deployed to the Informal Sector Directorate of KW-IRS as at the period of the survey were sampled and descriptive statistical methods were used to analyse the results. The study finds that CIPs are impactful, but would not suffice in sustaining high level of tax compliance. Government therefore should provide basic social amenities to citizens in order to inspire voluntary tax compliance, and enforce penalties for those who evade tax payment.

Suggested Citation

  • Aminu Yaru, Mohammed & Aminu Yaru, Mohammed & Awodun, Muritala, 2019. "Tax Administration In The Informal Sector: Kwara State Internal Revenue Service Perspective," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 6(6), pages 1-12, June.
    • Handle: RePEc:ris:ilojep:0017
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    1. Alm, James & Bahl, Roy & Murray, Matthew N, 1990. "Tax Structure and Tax Compliance," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 603-613, November.
    2. Anna Alon & Amy Hageman, 2013. "The Impact of Corruption on Firm Tax Compliance in Transition Economies: Whom Do You Trust?," Journal of Business Ethics, Springer, vol. 116(3), pages 479-494, September.
    3. Tahseen Ajaz & Eatzaz Ahmad, 2010. "The Effect of Corruption and Governance on Tax Revenues," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 405-417.
    4. Kate Meagher, 2018. "Taxing Times: Taxation, Divided Societies and the Informal Economy in Northern Nigeria," Journal of Development Studies, Taylor & Francis Journals, vol. 54(1), pages 1-17, January.
    5. James Alm & Michael McKee, 1998. "Extending the lessons of laboratory experiments on tax compliance to managerial and decision economics," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(4-5), pages 259-275.
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    Cited by:

    1. Mohammed Aminu Yaru, 2022. "Budget transparency and internal revenue mobilisation at sub-national government level: evidence from Nigeria," Public Sector Economics, Institute of Public Finance, vol. 46(4), pages 505-531.

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    More about this item

    Keywords

    Tax Administration; Informal Sector; Kwara State;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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