Tax Enforcement Tools and Tax Compliance in Ondo State, Nigeria

Abstract This study assessed the effectiveness of tax enforcement tools as panacea for improving tax compliance and overall tax income in the Ondo State, Nigeria. Survey research design was adopted using primary data sourced through administration of structured questionnaire on 150 selected respondents from among staff of Federal Inland Revenue Service and State Board of Internal Revenue Service within the state. The Taro Yamane formula and judgment sampling technique were used to arrive at the sampled respondents. Outcome of Ordinary Least Square regression analysis showed regression coefficient and p-value of tax-audit (0.278; p=0.03<0.05) and tax penalty (0.463; p=0.000<0.05) respectively, indicating a positive and significant relationship of the two explanatory variables with tax compliance at .05 level of significance. The Implication is that a marginal increase in tax audit and tax penalty will lead to increase in tax compliance in Ondo State. No meaningful association exists between tax amnesty and tax compliance based on the finding of this study perhaps tax amnesty is a new policy that was just launched to encourage voluntary tax compliance. As such, it is imperative that tax audit and imposition of tax penalties be encouraged and sustained. These are envisaged to further improve the degree of tax compliance, consequently enhancing government tax revenue generation to augment dwindling oil revenue in Nigeria. As regards relatively new and still under watch tax amnesty, it may turn out to be a veritable tool for voluntary compliance in future if properly nursed.