Trust in Government and Peer Group Influence on Voluntary Tax Compliance Among Small and Medium Enterprises in Oyo State, Nigeria

group. Society may influence the behaviour of its members in many ways. For example, an individual may observe and internalize values from his/her society. These values are then adopted and adapted as his/her personal rules of conduct and behaviour in life. The influence of societal perceptions of tax compliance is possibly best explained by pro-social behaviour theories where the behaviour of others is taken into consideration (Fehr & Falk, 2002). This implies that a taxpayer will feel uncomfortable for not paying taxes if others are paying their taxes or vice versa. Furthermore, It is revealed that the most influential factor in influencing taxpayers’ compliance attitudes is a combination of taxpayers’ own values together with the values of others in their surroundings, thus, the perception by a taxpayer of other taxpayers’ behaviour gives a strong indication of his/her next action (Bobek et al., 2007).Tax moral, was explained as the aggregate attitude of a group to comply with tax laws. Tax morale was noted to impact positively on tax compliance. The point here is that people have a sentiment about responsibility to the society as a matter of patriotism. In this case, tax compliance will result as a sense of civic duty and not because of fear of sanction for non-compliance. Even at this, the sense of civic duty may have resulted from national appeal or propaganda through the constitution or such other mass mobilization public document, as in the case of Nigeria where citizens, according to the constitution, have the constitutional duty to declare income honestly and pay taxes promptly (Christian, 2016). 2.1.4 Small and Medium Enterprises There is no universally acceptable definition of what constitutes micro, small and medium small - scale enterprises. The term micros, small, medium and large scales are relative and differ from industry to industry. There is hardly unique or universally acceptable definition of Micro, Small and Medium scale enterprises because the classification of business into small, medium or large scale is subjective (Ajiboye & Dosunmu, 2007). The major criteria use in the definitions according to Carpenter (2003) could include various combinations of the following: Number of employees, financial strength, Sales value, Relative size, Initial capital outlay and Types of industry. Inang & Ukpong (2017) however, stressed the indicators prominent in most definitions namely, size of capital investment (fixed assets), value of annual turnover (gross output) and number of paid employees. Small and Medium Enterprises are non-subsidiary, independent firms /organizations which employ fewer numbers of employees. This number varies across countries. In Nigeria, the Central Bank of Nigeria in its monetary policies circular No. 22 of 1988 defined SMEs as enterprises which have an annual turnover not exceeding Five Hundred Million Naira (N500,000,000) (Omosomi, 2019). For the sake of clarity, the National Policy on Micro Small and Medium Enterprises has given a clear distinction of enterprises, based on employment and Assets. SMEs are organizations which can best be described through their capital, scope and cost of projects, annual turnover, financial strength and number of employees amongst other things. Such organizations must and can be registered under any part of the Companies and Allied Matters Act in order to do business in Nigeria. According to the Nigeria Bureau of Statistics (2019), small and medium scale enterprises in Nigeria have contributed about 48% of the national GDP in the last five years. With a total number of about 17.4 million, they account for about 50% of industrial jobs and nearly 90% of the manufacturing sector, in terms of number of enterprises (Mekwunye, 2018). Though significant growth has been achieved in the MSME sector, there is still much to be done. Other challenges encountered by the sector include lack of skilled manpower, multiplicity of taxes, and high cost of doing business, among others (Oyelaran, 2020). Small and Medium Scale Enterprises form the bulk of the businesses in Nigeria. The attractions to the owners include being less capital intensive and flexibility in filling the need in niche markets. Their contribution to the growth of the Nigerian economy cannot be understated as they drive the economic and industrial transformation of the country (Agbeyi, 2019). According to the 2019 Survey report on SMEs in Nigeria conducted by the National Bureau of Statistics in collaboration with SMEDAN, the SME sector in Nigeria is strategically positioned to absorb up to 80 percent of jobs, improve per capita income, increase value addition to raw materials supply, improve export earnings, enhance capacity utilization in key industries and unlock economic expansion and GDP growth (Agbeyi & Omosomi, 2019). As in developing economies, Nigeria with the introduction of the National Policy on MSMEs has addressed the issue of definition as to what constitutes micro, small and medium enterprises. The definition adopts a classification based on dual criteria, employment and assets (excluding land and buildings) as shown below. Table 2.1 Shows Categorization of Small and Medium Enterprises S/N Categorization Base of Categorization Tax Rate 1. Small Company Turnover of up to N25 million 0% 2. Medium Company Turnover > N25 million < N100 million 20% 3. Large Company Turnover > N100 million 30% Source, Nigeria New Finance Bill, 2019 2.3 Empirical Review This section gives insight into some of the empirical studies that have been carried out on the determinants of voluntary tax compliance. It looks at related studies carried out in developed countries, developing countries and Nigeria. Liucija (2014) explored the relationship between the’ taxpayers’ trust in government and their willingness to pay taxes among nonfarm sole proprietors. Literature on government regulation finds that if citizens trust the government, they are more likely to comply with laws and regulations. The index of trust in government calculated by the American National Elections Studies and the AGI (adjusted gross income) gap produced by the Department of Commerce’s Bureau of Economic Analysis were used to test an empirical model if trust in government has a positive impact on tax compliance of the least compliant taxpayers group - nonfarm sole proprietors - controlling for the deterrent effects of tax enforcement. The results indicated that the higher trust in government improves tax compliance. Ali and Fjeldstad (2014) explored factors that determine citizens’ tax compliance behavior in Kenya, Tanzania, Uganda and South Africa using attitude and perception data from the new round 5 of, Afro barometer surveys. Using a binary logit regression, they found those individuals who perceive that their ethnic group is treated unfairly are less likely to have a tax compliant attitude in Tanzania and South Africa some, they also found evidence that individuals who were more satisfied with public service provision were more likely to have a tax compliant attitude in all the four countries. However, frequent payment to non - state actors, e.g. to criminal gangs in exchange for protection, reduces individual’s tax compliant attitude. Furthermore, tax knowledge was also significantly correlated with tax compliant attitude in Tanzania and South Africa. Likewise, Inasius (2018) investigated factors influencing the tax compliance of small-and medium-sized enterprises for income-tax reporting requirements in Indonesia, referral group being the major variable. 328 respondents who were small business taxpayers participated. Using multiple regressions, six tax compliance factors were examined. Data were collected through a survey conducted in Jakarta. A researcher - administered questionnaire survey method was used for data collection. The results revealed that referral groups, the probability of audit, tax knowledge, and the perception of equity and fairness have a significant impact on tax compliance. In particular, the referral group had the most significant influence on the noncompliance behavior of SME taxpayers. In the same vein, Stefanos (2019) in his work examined the role of trust in authority and power of authority on tax compliance. To this effect, 25 European countries were selected for the research. It was hypothesized that (an individual's) tax compliance is determined by both the tax authority's powerfulness and its trustworthiness, and that the two dimensions moderate each other. By employing a within-country fixed effects analysis for 25 European countries, the paper tests the conjecture that a slippery slope exists also on the aggregate level. Results show that both trust and power are positively correlated with higher tax compliance. Trust and power also moderate each other: the lower trust, the greater the compliance-increasing impact of power. However, the positive effect decreases with increasing coercion. Strong deterrence policies may eventually damage tax compliance. Yesi (2019) examined the impact of justice and trust in government authorities on voluntary tax compliance. The study aimed at analyzing the influence of the tax dimension (general justice, exchange with the government, self-interests, special provisions, tax rate structure) by using trust in government authorities as a mediating variable. The population of the study was the Individual Taxpayer in Riau Province. Sampling technique used was purposive sampling. A total of 300 questionnaires were distributed to Individual Taxpayers in the cities of Pekanbaru, Bengkalis and Bangkinang, as many as 283 data can be processed. The results of the analysis with PLS showed the exchange with the government and, self-interests and the tax rate have an important effect on voluntary compliance while general justice, special provisions do not directly influence voluntary compliance. While, Adekoya and Akintoye (2019) examined the influence of trust in government and government transparency on individual taxpayers’ voluntary tax compliance behaviour in Nigeria. Survey design was used with focus on South-West, Nigeria. Population was 5,216,422 registered taxpayers while a sample size of 1,200 was used to collect data with a validated questionnaire. The study used descriptive and inferential statistics to analyze data at 5% significance level. The study revealed that government transparency positively influenced voluntary tax compliance among individual taxpayers in the study states. There was evidence that 'trust in government and government transparency have significant relationship with voluntary tax compliance behaviour in the study states, while gender and age do not have significant relationship respectively. Obaid (2020) investigated the determinants of tax compliance among Yemeni SMEs. The objective of the study was to investigate the effect of tax fairness, peer influence and perception of corruption on tax compliance behaviour among Yemeni manufacturing SMEs. The study utilized the socio-psychological theory as the underlying theory. The research employed a questionnaire survey technique. Survey instruments were circulated among 490 SMEs and the primary respondents were owner-managers of the businesses. Out of the survey questionnaire retrieved, 372 were found eligible for further analysis. The research hypotheses were subsequently tested using the Partial Least Squares software and the structural equation model technique. Findings from the study showed that tax fairness and peer influences are positively and significantly related to SMEs tax compliance behaviour. However, perception of corruption has an insignificant impact on tax compliance among Yemeni SMEs. 2.3 Theoretical Framework The theoretical basis for this study is the expectancy theory and social capital theory, this is because no single theory captures the two independent variables. For example, trust in government is rooted from the expectancy theory of motivation while peer group influence is supported by social capital theory. As emphasized by expectancy theory that individuals have the tendency to relate rewards directly to performance and to ensure that the rewards provided are those rewards deserved and expected by the recipients. Therefore, government is in the best position to motivate or reward the taxpayers by providing basic amenities such as good road network, affordable but quality education, healthcare facilities to people. The taxpayers who are recipients of these services will be encouraged to voluntarily pay their ’taxes without being forced. Also expectancy theory advocates that individuals make choices based on estimates of how well the expected result of given behaviour are going to match up with or eventually lead to the desired results. This suggests that for any government to enjoy voluntary compliance from people such government should be ready to render essential services that will meet up with the expectations of the masses. Therefore, in a situation where government fails to perform its responsibilities, people will begin to distrust such government and eventually lead to tax noncompliance. Based on the prediction of social capital theory that there is vital correlation between social capital and civic participation, which is the extent to which a person participates in or contributes to their community or country. It suggests that a person is more likely to participate in community building and bonding with those around them because, among other things, it works for their advantage. Hence, People see tax payment as a way of contributing to the society, because it is believed that the benefit in form of public services delivery by the government will work for their advantage. It is by social capital that individual behaviour regarding tax compliance is basically influenced by social interactions like other forms of behaviour, individuals are influenced by the social context they are into and the process by which decisions are made that they are motivated not simply by self-interest but also by group notions like social norms. This depicts that one can be easily influenced to pay tax voluntarily as a result of environment he finds himself, people he relates with. Methodology This chapter provides discussion of the research methods and procedures employed in the study. The steps include: research design, population of the study, sources of data, sampling technique, model for the study, the variables and method of data analysis. 3.1 Research Design The research design employed for the study was a survey design. It was a design which involves the use of questionnaire survey technique and testing of hypotheses gathered from primary data. The method was adopted basically due to its uniqueness in gathering information that may not be available in other method (Owens, 2002). 3.2 Population of the Study The population of this study comprised 4,396 small and medium scale entrepreneurs from the 33 local government areas of Oyo state. The sector was selected been one of the major employers of labour in the country and the roles it plays in wealth creation (Fowler, 2017). According to Federal Inland Revenue Service (FIRS, 2018), there are 4,396 registered small and medium entrepreneurs in Oyo state. Table 3.1: Distribution of Small and Medium Enterprises in Oyo State Nature of Business Population Manuf. / Agro-allied 752 Trading 1,954 Services 1,024 Others 666 Total 4,396 Source: FIRS, Oyo Medium Scale Tax Office 3.3 Sample Size and Sampling Technique. The sample of 367 was chosen using Taro Yamani’s. (1969) method. The researcher thought it was adequate to represent the salient features of target population in the study and to possibly make generalization of finding to small and medium businesses in Oyo State. Stratified sampling technique was employed in the selection of the group to ensure that each member of the target population had equal chance of being included in the sample. Stratified sampling is a kind of probability sampling which limits biasness of researcher in the process of selecting sample for the study. The main advantage of this technique is that it captures key population characteristics in the sample and produces characteristics in the sample that are proportional to the overall population (Haves, 2019) . The formula goes thus: n = N\ (1 + Ne2). Where n = sample size; N = population; e — margin of error at 0.05. Sample size for the study goes thus: n = 4,396\ 1 + 4,396(0.05)2 n = 367 Table 3.2 Computation of Sample Size from each Group Nature of Business Population of Each Group Computation of Sample No of SMEs Owners Manuf.\Agro-allied 752 752/4,396 x 367 = 62.78 63 Trading 1,954 1,954\4,396 x 367 = 163.13 163 Services 1,024 1,024/4,396 x 367 = 85 48 85 Others 666 666/4,396 x 367 = 55.60 56 Total 4,396 367 Source: Author’s Computation, (2025) 3.4 Method of Data Collection The researcher made use of primary data which were gathered with the aid of self-administered questionnaires from the sampled SMEs owners in Oyo state. The primary data was collected from 367 SMEs. Using questionnaire as a data collecting tool is due to its ability to generate relevant information as compared to other data collecting instruments which enhances the problem-solving ability of the study (Greener, 2018). The questionnaire is grouped into two main sections. Section A is structured to capture personal information of the respondents. While section B is designed on 5-point Likert scale to elicit responses on questions relating to data on both dependent and independent variables. 3.5 Data Analysis and Estimation Technique Based on the objectives of the study, the data collected was analyzed using both descriptive and inferential statistics. The descriptive statistics employed were the frequencies and percentages to show brief components of the variables used and highlight the demographic characteristics of the respondents. Prior to the testing of hypotheses, normality test was conducted to test the reliability of the data collected using graphical method. Furthermore, other preliminary analyses were also conducted which included multi-collinearity test using the variance inflation factor to ascertain interrelation among the independent variable. Partial Least Square analysis was used for inferential statistics. This was considered appropriate for the study to explore the relationship between the dependent variable (voluntary tax compliance) and independent variables (trust in government and reference group influence). Therefore, the hypotheses were tested using Partial Least Square. 3.6 Model Specification The model of Dinku and Alamirew (2018) was adapted in this study, it was used to find the relationship between independent variables (audit probability, reference group influence and criminal penalty) and voluntary tax compliance. The model was written as follow: VTC= β0 + β1 (AP) + β2 + β3 +εi VTC = Voluntary tax compliance AP = Audit probability RGI = Reference group influence CPT = Criminal penalty This model was adapted due to the fact that it contains one independent variable (reference group influence) which the present study intends to use. Criminal penalty was not considered in this work. Therefore this was replaced by trust in government. The model of this study is therefore a modification of Dinku and Alamirew (2018) model. Hence, the model of the present study is written thus: VTC = βo + β1 + β2 + ei Where, VTC— Voluntary tax compliance TIG = Trust in Government PGI = Peer Group Influence βo = the intercept of the regression line ei = the error term The a-priori expectation of the model is a positive relationship between the dependent variable and independent variables, i.e. β1, β2 and > 0. Results and Discussion Of Findings This chapter deals with the analysis of the data collected, interpretation of results and hypotheses testing using Partial Least Square. It also deals with the discussion of findings. 4.1 Preliminary Analysis of Data 4.1.1 Normality Test It is essential to ensure that data comes from a nodal distribution and to achieve this, normality test has to be carried out. As stated by Nandakishore (2019) that when the majority of the points fall onto the line, then, it is assumed that the data represents a normal distribution. This study used graphical method of checking normality. This is considered appropriate because of its suitability of large sample size (Reinartz, 2019). And also the model is complex integrating two independent variables and one dependent variable (Henseler et al., 2012) Histogram Dependent Variable: Tax Compliance Regression Standardized Residual Figure 4.1 Regression Standardized Residual 4.1.2 Linearity A residual scatter plot is a figure that shows one axis for predicted scores and one axis for errors of prediction. Tabachnick and Fidell (2007) explain the residuals (the difference between the obtained dependent variable and the predicted dependent variable scores) and the variance of the residuals should be the same for all predicted scores (homoscedasticity). If this is true, the assumption is met and the scatter plot takes the (approximate) shape of a rectangular; scores will be concentrated in the center (about the 0 point) and distributed in a rectangular pattern. More simply, scores will be randomly scattered about a horizontal line. Normal P – P plot of Regression Standardized Residual \ Figure 4.2, Scatter Plots between TIG, PGI and tax compliance 4.1.3 Multicollinearity Test Table 4.1 Collinearity test (VIF and Tolerance) Variables N Tolerance VIF Trust in Government 367 .977 1.023 Peer Group Influence 367 .816 1.225 Source: Research Survey, 2025 The result in table 4.1 shows that the interrelation among the independent variables. As concluded by Gujarati (2004) that there is presence of multicollinearity if the mean VIF is greater than ID and the tolerance value is less than the significance level. From Table 4.1, it is revealed that there is absence of multicollinearity problem as Variance Inflation Factor of each independent variable is less than 10 and their level of tolerance is greater than 0.05 significance. 4.2 Descriptive Statistics This entails the analysis of data in a more meaningful and concise way to give room for simpler interpretation of the data. 4.2.1 Demographic Characteristics of the Respondents Table 4.2: Summary of the Respondents’ Demographics Items Frequency Percentage (%) Gender Male 198 54 Female 169 46 Age 18 — 30yrs 88 24.0 31 —’40yrs 122 33.2 41 — 50yrs 106 28.9 51 – 60 39 10.6 60 yrs. and Above 12 3.3 Academic Qualification First School Leaving Certificate 49 13.4 WAEC/GCE/NECO 108 29.4 NCE/OND 100 27.2 HND/BSc 67 18.3 Postgraduate/Professional 43 11.7 Business Classification Manufacturing/Agro-Allied 60 16.3 Trading 162 44.1 Services 89 24.3 Others 56 15.3 Source: Research Survey, (2025) Table 4.2 reveals the frequency and percentages of male and female respondents for the study. It was revealed that male respondents carried larger percentage representing 54%. While female respondents was 46%. Likewise, the descriptive statistics shows the age bracket of respondents between 18 - 30 years 24.0%, followed by age bracket 31 - 40 years which is 33.2%, next is 41- 50 years which is 28.9%, next is 51 - 60 years which is 10.6%, and lastly 61 years and above carries 3.3%. The implication of this is that majority of the respondents fall within the age bracket of 31 — 40 years which takes highest percentage of 33.2. The survey also revealed that majority of the respondents has WAEC\GCE\NECO representing 29.24%, followed by the group NCE\OND which carried 27.2%. 18.3% of the respondents have HND\BSc; 13.4% of the respondents have First School Leaving Certificate and lastly 11.7% have Post graduate\Professional qualification. Regarding business classification of the respondents, 44.1% were traders; 24.3% were service providers; 16.3% were into manufacturing/agro-allied business; and the rest 15.3% were others apart from the ones mentioned earlier. 4.2.2 Trust in Government Table 4.3 Trust in Government S/N Items Min Max Mean S.Dev 1 Increase in tax revenue has led to appreciable development. 1 5 3.39 1.096 2 The services provided by the government are not comparable with the amount of taxes paid 1 5 ,3.51 1.144 3 The government is not being transparent in spending taxpayers’ money 1 5 3.35 1.235 4 Public funds are allocated equitably among citizens. 1 5 3.28 1.214 5 Access to good health facilities has substantially improved. 1 5 3.31 1.236 6 Security situation has significantly improved as a result of increase in tax revenue. 1 5 3.22 .948 7 Government is highly responsible to both social and infrastructural facilities. 1 5 3.16 1.281 8 The tax authority is transparent. 1 5 3.31 1.102 Source: Research Survey, (2025). The result in Table 4.3 relating to trust in government as a factor affecting voluntary tax compliance was expressed through items TIG1 to TIG8. The means of these constructs range from 3.16 .to 3.51 while the standard deviation range from 0.948 to 1.281. This show that majority of the respondents strongly agreed that trust in government in term of TIG1 to TIG8 have effect on voluntary tax compliance. Therefore, the respondents had a strong agreement on the direct effect of trust in government on voluntary tax compliance. Generally, the overall mean score and standard deviation of 2.85 and 0.440 respectively on all the items on trust in government depict that the respondents agreed on trust in government. Peer Group Influence Table 4.4 Peer Group Influence S/N Items Min Max Mean S.Dev 1 I feel uncomfortable for not paying tax if others are paying their taxes 1 5 2.43 1.291 2 The unwilling to fulfill someone else’s tax obligation affects my tax behaviour 1 5 2.44 1.067 2 I usually make decision to pay taxes based on friends experience or suggestions 1 5 2.21 1.075 4 My decision to pay taxes is always influenced by my surrounding 1 5 2.41 1.070 5 Compliance behavior and attitudes towards taxation are affected by the social norms of an individual’s reference group 1 5 2.62 1.169 Source: Research Survey, (2020). The descriptive statistics regarding peer group influence of respondents of SMEs owners in Oyo state, Nigeria and voluntary tax compliance are stated in Table 4.5. It was revealed that the mean scores of the respondents concerning peer group influence range from 2.21 to 2.62, while the standard deviation range from 1.067 to 1.291. Therefore, this implies that the respondents agreed that peer group influence in terms of PGI1 to PGI5 to some extent have influence on voluntary tax compliance. Generally, the overall mean score of 2.58 and standard deviation of 0.732 on all the items of trust in government suggest that the respondents agreed on peer group influence. 4.2.4 Voluntary Tax Compliance Table 4.5 Voluntary Tax Compliance S/N Items Min Max Mean S.Dev I Declaration of all sources of income is essential for a good tax system. 1 5 4.13 .900 2 Taxpayers always file their tax returns accurately and timely. 1 5 2.82 1.177 3 Effective tax system depends on declaration of all sources of income. 1 5 4.20 .724 4 Citizens’ willingness to pay taxes voluntarily rests on the government capacity to provide public goods. 1 5 4.11 .907 5 I usually file my tax return before the due date. 1 5 2.99 1.193 6 If everyone pays the correct amount of tax, we would enjoy better public facilities. 1 5 4.07 .918 7 Since the tax law does not treat everyone equally, it is fair for taxpayers to not declare all information correctly. 1 5 3.99 1.223 Source: Research Survey, (2025). The respondents’ views on voluntary tax compliance in Oyo state were expressed through items VTC1 to VTC7. The results of the descriptive statistics of the items were shown in Table 4.5. It was revealed that the opinion of the respondents about voluntary tax compliance as indicated in items VTC1 to VTC7 was strong. This is evidenced in the strong mean scores which range from 2.82 to 4.13. While the standard deviation range from 0.900 to 1.223. It was also revealed that more respondents expressed strong agreement with the item VTC1 (declaration of all sources of income is essential for a good tax system) than in the rest six items. 3.74 and 0.451 were shown as the overall mean score and standard deviation respectively, this shows that majority of the respondents strongly agreed on voluntary tax compliance. 4.3.1 Assessment of Measurement Model Assessment of measurement model is used to examine individual item reliability; ascertain internal consistency reliability; ascertain convergent validity; and ascertain discriminant validity. Table 4.6 Cross Loading for the Latent Variables Constructs Items PGI TIG TC Peer Group influence PG11 PG12 PG13 0.665 0.797 0.777 0.203 0.050 -0.012 0.180 0.236 0.209 Trust in Government TIG2 TIG3 0.181 -0.052 0.888 0.784 0.219 0.162 Tax Compliance (TC) VTC4 VTC5 0.203 0.215 0.198 0.148 0.724 0.768 Source: Research Survey, (2025). To ensure that the measurement model is valid and reliable, the position of Basbeth (2018) was held who stated that the rules of thumb are, for an outer loading to be valid, it should be 0.05 and above, while the average variance extracted should greater than 0.5. Consequently, those items with outer loading below 0.05 were deleted. A cross section of the loadings and cross loadings to be able to detect any problem with the items, this also serves as a prerequisite for determining the convergent validity was carried out as indicated in Table 4.6. 4.3.2 Assessment of Structural Model Result Table 4.7 revealed the basic assumption summary supported and not supported in the study. This shows that all the variables were supported. Table 4.7 Assessment of Structural Model Result for Hypotheses Testing, Variables Beta S. E T values P Values Decision Pear Group Influence -> Tax Compliance 0.172 0.048 3.608 0.000 Supported Trust in Government -> Tax Compliance 0.163 0.062 2.636 0.009 Supported Source: Research Survey, (2020). Hypothesis (H1) Based on the result shown in Table 4.7, the finding revealed that trust in government exhibits a significant positive influence on voluntary tax compliance among SMEs owners in Oyo state as indicated by (β = 0.163, t = 2.636, and p <0.009). This provides room to reject the null hypothesis which states that trust in government has no significant relationship with voluntary tax compliance among SMEs owners in Oyo state. Therefore, hypothesis 1 is supported. Hypothesis (H2) predicted that peer group influence is related to voluntary tax compliance. Result (Table 4.7) showed a significant positive relationship between peer group influence and voluntary tax compliance. (β = 0.172, t = 3.608, and p <0.00). Hence, hypothesis 1 is supported. 4.4 Discussion of Findings From the empirical analysis and hypotheses tested, the empirical results showed that the independent variables proxy with trust in government and peer group influence are significant positive determinants of voluntary tax compliance among SMEs owners in Oyo state. 4.4.1 Trust in Government as a determinant of Voluntary Tax Compliance among SMEs Owners in Oyo State As stated by research question one which intends to investigate the first objective to examine the impact of trust in government on voluntary tax compliance among SMEs owners in Oyo state. The result from the PLS-SEM analysis (β = 0.163, p < 0.009) indicated that there is a positive and significant relationship between trust in government and voluntary tax compliance. This implies that for a government which expects citizens to pay their taxes voluntarily, such a government should be ready to make available basic amenities to its citizen. This goes in line with the prediction of expectancy theory that individuals have the tendency to relate rewards directly to performance and to ensure that the rewards provided are those rewards deserved and expected by the recipients, people can therefore trust government in a situation where their expectations are met. This significant positive finding is in line with the results of Antonios and Jorge (2009); Benk and Budak (2011); Modugu and Izedonmi (2012); Liucija (2014) and Stefenos (2019). However, the result is in contrast to the findings of Fadjar (2013) and Kostritsa (2014). The result also goes in line with the a priori expectation that, trust in government would in no small way influence voluntary tax compliance among taxpayers. 4.4.2 Impact of Peer Group Influence on Voluntary Tax Compliance among SMEs owners in Oyo State Similarly, the study revealed that peer group influence has significant and positive influence on the voluntary tax compliance among SMEs owners in Oyo state (β = 0.172, p < 0.000). The result supports the prediction of social capital theory that a person is more likely to participate in community building and bonding with those around him because, among other things, it works to their advantage. The implication of this is that many problems will be taken care of by social networking. Therefore, citizen will now see that paying taxes voluntarily is a collective responsibility of every individual. The result likewise corroborates the a-priori expectation as the researcher expects that peer group influence would impact positively on the level of voluntary tax compliance among SMEs owners in Oyo state. Also, the significant positive finding is in line with result of Inasius (2018) who concluded that one of the ways to pay taxes voluntarily is through the influence from peer group. 4.5 Summary of Findings After all the results have been presented and the effects discussed in the preceding sections, the results of all the hypotheses tested are now presented in Table 4.8. As revealed in the Table 4.8, the two hypotheses were supported. Table 4.8: Summary of Hypotheses Testing Variables Beta S.E P Values Decision Peer Group Influence -> Tax Compliance 0.172 0.048 3.608 0.000 Supported Trust in Government -> Tax Compliance 0.163 0.062 2.636 0.009 Supported Summary, Conclusion and Recommendations This chapter focuses on the summary, conclusion and recommendations of the study. 5.1 Summary `Despite the fact that taxation is perceived to have being a dynamic tool for sustainable national development, the level of voluntary tax compliance by taxpayers has not been impressive and this has aggravated many failures on the part of the’ government. The tax noncompliance has often been attributed to such factors as lack of robust framework for the taxation of informal sector and high network individuals, thus limiting the revenue base and creating inequality; fragmented database of taxpayers and feeble structure for exchange of information by and with tax authorities, resulting in revenue leakage; inordinate drive by all tiers of government to grow internally generated revenue which has led to the arbitrary exercise of regulatory powers for revenue purpose. (National Tax Policy, 2017). The study reviewed several literatures on voluntary tax compliance. The literature review was divided into three sub-units which include the conceptual review, empirical review and theoretical framework. In the same vein, the study was guided by theories such as expectancy theory and social capital theory. The findings of previous researchers on studies relating to this in recent years were also looked into to expose the gap on the previous studies on the determinants of voluntary tax compliance. The theories on which the study was anchored are expectancy theory and social capital theory. The study adopted survey research design. While the sample frame of the comprised three hundred and sixty-seven (367) SMEs owners in Oyo state, captured into the tax net by Small Tax Office of FIRS. The data was sourced from the SMEs owners in Oyo state through self- administered questionnaires and was analyzed with the aid of descriptive and inferential statistics while the hypotheses were tested using Partial Least Square . As most of the SMEs fall within the informal business, surprisingly, large percentage of them seem not pay their taxes voluntarily. Given the role of SMEs in an economy, this sector is pivot to the economic development of the country. Therefore, full compliance by this sector is very essential than any other sector of the economy as revenue through taxes generated will in no small way help in sustaining the economy. It is against this background that the study investigated the various factors influencing voluntary tax compliance in Oyo state, Nigeria. This was achieved through two specific objectives that were developed to proffer answers to the research questions and they include: to assess the effect of trust in government on voluntary taxpayers’ compliance among SMEs owners in Oyo state, and to examine the extent to which reference group affect voluntary taxpayers’ compliance among SMEs owners in Oyo state. Lastly the study ‘found among others that trust in government and peer group have significant positive effect on voluntary tax compliance among SMEs owners in Oyo state. 5.2 Conclusion Based on the empirical results of the hypothesis tested in chapter four, it was concluded that both trust in government and peer group influence have positive and significant effect on voluntary tax compliance among SMEs owners in Oyo state. Therefore, the study concluded that these two determinants are very essential in boosting voluntary tax compliance among taxpayers. This implies that adequate provision of basic amenities by the government will encourage taxpayers to pay their taxes willingly without being forced. Also, taxpayers will like to pay their taxes voluntarily while being motivated by groups such as friends, coworkers and family members. 5.3 Recommendation The following recommendations are made based on the empirical findings of this study in order to improve the level of voluntary tax compliance among SMEs owners in Oyo state. i. Based on the finding which shows that trust in government has significant positive effect on voluntary tax compliance among SMEs owners in Oyo state, this study recommends that government should spend revenue generated from taxes according to peoples’ preferences by making sure that adequate facilities such as good road, access to good and affordable public education, regular electricity supply, security of life and properties are provided to the masses. This will typically encourage taxpayers to pay their taxes voluntarily. ii. 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