Governance Quality and Informal Sector Tax Compliance Behaviour in Oyo State, Nigeria

This study examines the influence of governance quality on informal sector tax compliance behaviour in Oyo state, Nigeria. Primary data was obtained through the administration of structured questionnaire to 241 respondents out of total population of 610 comprising trading association, petty traders, market traders and tax practitioners. Data obtained was analyzed using descriptive, regression analysis via structural equation model and factor analysis.  The results of the analysis obtained revealed that governance quality has a positive and significant influence on tax compliance among informal sector taxpayers in Oyo State (t-v= 390.73, p<0.05) which suggests that improved governance builds trust and when taxpayers see transparency and accountability, they are more likely to meet their tax obligations, believing their contributions are used effectively. The study concluded that there is a pathway from governance quality to informal sector tax compliance behaviour in Oyo State. It was recommended that informal taxes collected by the state government be invested in other domestic sectors, such as agriculture and infrastructure.