Taxpayers’ Education: Enhancing Tax Compliance in the Informal Sector of Nigeria

Abstract

Governments need tax revenues to finance developmental initiatives for the benefits of the citizens who operate both in the formal and informal sectors. While taxes are easily collectible from the formal sector, there exists a lot of challenge collecting taxes from the informal but dominant sector because players in the sector are neither organized or educated enough to appreciate the essence and benefits of paying taxes. This study sought to determine the impact of taxpayers’ education and enlightenment on tax compliance by operators in the informal sector. The survey method was adopted with a population of 19,383,447 from twelve states of Nigeria while the sample size of 400 was determined using the Taro Yamane formula. The study found a positive relation between the level of taxpayers’ education and tax compliance. The study therefore recommends that taxpayers’ education and enlightenment should be carried out regularly by State Boards of Internal Revenues across the country.