TAX COMPLIANCE AND ADMINISTRATIVE EFFICIENCY AS DETERMINANTS OF INTERNALLY GENERATED REVENUE IN KANO STATE

Abstract

Internally Generated Revenue (IGR) has become a critical source of fiscal sustainability for sub-national governments in Nigeria, especially in states like Kano, which face volatility in federal allocations due to fluctuations in oil revenue. This study examines the determinants of IGR in Kano State, focusing on tax compliance and tax administrative efficiency as key factors influencing revenue mobilization. The research adopts a quantitative survey design, using primary data collected from 385 respondents, including small and Medium-scale Enterprise (SME) owners, large taxpayers, and staff of the Kano State Internal Revenue Service (KIRS). A stratified and simple random sampling technique was employed to ensure representative participation, and the reliability of the instrument was confirmed through Cronbach’s Alpha (? = 0.81). Descriptive statistics, correlation, and multiple regression analyses were applied to test the hypotheses. The results reveal that tax compliance has a strong positive effect on IGR (? = 0.52, p < 0.001), while tax administrative efficiency has a moderate positive effect (? = 0.41, p < 0.001). The model explains 62% of the variance in IGR (R² = 0.62), indicating the importance of these factors in revenue mobilization. The findings are consistent with Deterrence Theory, which emphasizes the role of credible enforcement and perceived penalties in motivating taxpayer compliance. The study recommends enhancing taxpayer education, awareness, and enforcement, alongside improving administrative processes, staff capacity, and digitalization of tax operations, to increase revenue collection. These measures will strengthen fiscal sustainability, reduce overreliance on federal allocations, and improve Kano State’s ability to finance public goods and services.