The Relationship Between Tax Revenue and Capital Expenditure in Kebbi State

This study examines the relationship between internally generated tax revenue and capital expenditure allocation in Kebbi State, North West Nigeria. Capital expenditure, encompassing investments in roads, schools, hospitals, and public utilities, is a critical driver of development in a predominantly agrarian state like Kebbi. The ability of the state government to fund capital projects without excessive dependence on federal allocations depends in large part on the robustness of its tax revenue base. This research employs an ex-post facto design, drawing on Kebbi State budget implementation reports, audited accounts, and revenue data from the Kebbi State Internal Revenue Board spanning the last six fiscal years. Trend analysis, correlation coefficients, and simple regression are the primary analytical methods. The study expects to reveal a positive but weak correlation between locally generated tax revenue and capital expenditure, with a significant share of capital projects funded from federal transfers and loans rather than own-source revenue. Agricultural income tax, business premises levies, and road taxes are identified as the primary components of state IGR with growth potential. Recommendations include expanding agricultural tax assessment to cover large-scale commercial farmers, improving property tax administration in Birnin Kebbi, and reducing the administrative overhead costs of revenue collection through digital platforms. Keywords: tax revenue, capital expenditure, Kebbi State, internally generated revenue, budget implementation.