Assessment of Tax Revenue Collection and Its Contribution to Development in Kwara State

Tax revenue is the primary internally generated resource for development financing in Nigerian states, and assessing collection efficiency and its development contribution in Kwara State provides evidence for fiscal reform. This study assessed tax revenue collection patterns and their contribution to infrastructure and social development in Kwara State between 2016 and 2022. Secondary data were obtained from the Kwara State Internal Revenue Service and the State Ministry of Finance. Descriptive statistical analysis and trend analysis were applied. Results showed that internally generated revenue from taxes grew from N14.2 billion in 2016 to N28.7 billion in 2022, a nominal increase of 101 percent. However, the tax-to-GDP ratio remained below 2 percent throughout the period, well below the 5 percent target in the state's medium-term expenditure framework. Informal sector businesses, estimated to constitute 65 percent of economic activity, contributed fewer than 15 percent of total IGR. Corporate income taxes were consistently under-collected relative to potential. Capital expenditure funded by tax revenue averaged only 23 percent of total state capital expenditure, with most infrastructure spending dependent on federal statutory allocations. The study concludes that Kwara State's tax collection is significantly below its potential. Recommendations include expanding the tax net to capture informal sector businesses, modernising tax administration through digitisation, and strengthening the autonomous operation of the Kwara Internal Revenue Service.

Keywords: tax revenue, internal revenue, Kwara State, fiscal policy, development finance