Tax Administration and Capital Expenditure of Public Sectors in Southwestern States of Nigeria

Abstract

The study analyzed the effect of tax administration such as audit, enforcement and penalty fees on the capital expenditure of Southwestern States of Nigeria. The study adopted the ex post facto method of research. Secondary data were collected from each of the 6 Southwestern States from 1999-2023. Descriptive statistics, correlation analysis, multiple regression with other diagnostic tests such as unit root test and heteroskedasticity were conducted. Findings showed that tax audit fees (t = 17.260; P< 0.05) had a positive and significant effect on capital expenditure while enforcement and penalty fees have negative and non-significant effect on capital expenditure. The study concluded that there is a significant and positive relationship between tax administration (tax audit) and capital expenditure in the Southwestern States. It is recommended that policymakers should focus on improving tax collection mechanisms by improving taxpayer registration processes and providing relevant information to new taxpayers.