Determinants Of Tax Collection By Local Governments: Empirical Evidence From Kwara State

Local governments in Nigeria depend so much on monthly statutory allocations from the federation account. The allocations have not only been insufficient in meeting the financial needs of local governments but are also characterised by uncertainties and volatilities. Debt profiles of local governments have mounted as a result. Looking inwards to taxation and related internal revenue sources seem the best sustainable resort to avoid fiscal sustainability crisis. This study examined the determinants of revenue collection at the local government level in Kwara State, Nigeria. The study specifies and estimates a panel data econometric model using data set for the sixteen (16) local governments (LGs) of the State for the period 2009-2016. A set of three panel data models were estimated using Generalized Least Square (GLS) method. The results show that population density, a proxy for tax base and overhead expenditure, a proxy for fiscal needs/efforts are the most consistent significant determinants of tax and non-tax revenue generation in the local governments. The study recommends that LGs should strive to provide social amenities to attract more people and businesses (tax base) to their jurisdictions and intensify tax efforts to improve internally generated revenue.