SMALL AND MEDIUM ENTERPRISE PERCEPTION OF GOVERNMENT TRANSPARENCY AND TAX COMPLIANCE IN LAGOS STATE: THE MEDIATING ROLE OF TAXPAYERS’ SATISFACTION WITH REVENUE UTILISATION

Abstract

Tax compliance is a core subject in Nigeria because of the diminishing revenue accruing to the government coffers, resulting from oil revenue reduction. This study examined the impact of SME taxpayers’ perception of government transparency on tax compliance as mediated by taxpayers’ satisfaction with revenue utilisation in Lagos State, Nigeria. Both primary and secondary data were used in this research. The research design for this study was survey research. From a population of 42,067 SME owners in Lagos State, a total sample of 400 respondents was drawn which necessitated the administration of 400 questionnaire out of which 364 were returned while 342 copies were found usable. The study used both descriptive and inferential statistics to analyse the data collected. The test of the hypothesis was carried out using regression analysis while Process Macro on SPSS was deployed to test the mediating effects of taxpayers’ satisfaction on the relationship between the independent variables on tax compliance. Results of the study showed that government transparency has a significant bearing on taxpayers’ satisfaction with government spending and tax compliance. Finally, the study also revealed that taxpayers’ satisfaction mediated significantly on the relationship between government transparency and tax compliance among Lagos State SME owners. The study recommends that the government of Lagos State be more transparent in the utilisation of public funds.