EFFECT OF TAX REVENUE AND GOVERNMENT EXPENDITURE ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES (SMES) IN NIGERIA

This study investigated the impact of tax revenue and government expenditure on the performance of SMEs in Ibadan, Oyo State, Nigeria. The purpose of the study is to evaluate the effect of Total Tax Revenue, to investigate the effect of Capital Expenditure, and to determine the effect of Recurrent Expenditure on Performance of Small and Medium Enterprises The researchers chose a mixed method research design to collect and analyze primary (qualitative and quantitative) and best suited secondary (quantitative). The population was 7,468 registered SMEs in Ibadan, a sample size of 380 was derived from the Taro Yamane formula at 5 percent level of significance and distributed equally across five urban Local Government Area through stratified random sampling. The required secondary data were collected from appropriate financial authorities covering the period of 2000-2024. The evinced panel least squares regression was employed using E-views version 13. The findings revealed the Total Tax Revenue (β = −2.71E−05, p = 0.0000) and Capital Expenditure (β = −2.50E−05, p = 0.0000) have negative and significant effect whereas Recurrent Expenditure (β = 0.000114, p = 0.0000) has positive and significant effect on SME performance. The R-squared was found to be 0.198989. The study concluded that fiscal components impacted SME performance significantly. Therefore, the study recommended that tax administration should be restructured to lessen onerous burdens on the SMEs and boost productive reinvestment.