TRUST IN GOVERNMENT, PEER GROUP INFLUENCE AND VOLUNTARY TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES OWNERS IN OYO STATE, NIGERIA

Abstract

In the recent time, it has been discovered that Nigeria government faces difficulty in raising revenue to the level required for the promotion of economic growth and development. Therefore, the country has been experiencing a consistent excess of expenditure over revenue for a good number of times. Hence, this study looked at factors influencing voluntary; tax compliance among SMES owners in Oyo State, Nigeria. The specific objectives are. to assess the effect of trust in government on voluntary taxpayers’ compliance among SMEs owners in Oyo state, to examine the extent to which reference group affect voluntary taxpayers’ compliance among SMEs owners in Oyo state. The study employed survey research design through the use of self-administered questionnaire, with the population of 4,396 SMEs owners in Oyo state. The sample of the study contained 367SMEs owners gotten by adopting Taro Yamani’s (1969) method. Stratified sampling technique was employed in the selection of the group to ensure that each member of the target population had equal chance of being selected. The hypotheses were tested with the aid of Partial Least Square-Structural Equation Model (PLS-SEM). The study found that trust in government (β = 0.163, t = 2.636, and p < 0.009) and reference group influence (b = 0.172, t = 3.608, and p < 0.000) have significant positive impact on voluntary taxpayers’ compliance at 0.05% level of significant among SMEs owners in Oyo state. The study therefore recommended among others that government should spend revenue generated from taxes according to peoples’ preferences; there should be various sensitization programmes targeted at various interest groups on the importance of tax payment to both the government and the masses.