EFFECT OF COERCIVE INSTRUMENTS: EVALUATING TAX ENFORCEMENT STRATEGIES ON CORPORATE COMPLIANCE IN KWARA STATE

Abstract

This study investigates the efficacy of coercive enforcement strategies specifically penalties, premises sealing, and legal prosecution on corporate tax compliance within Kwara State, Nigeria. Amidst aggressive domestic resource mobilization efforts by the Kwara State Internal Revenue Service (KW-IRS), this research addresses the critical tension between state-backed punitive measures and long-term taxpayer sustainability. Utilizing a quantitative survey design, the study synthesized perspectives from 345 respondents, including tax administrators and corporate taxpayers, and employed multiple regression analysis to assess the impact of enforcement mechanisms. Empirical findings reveal a statistically significant positive relationship between coercive strategies and tax compliance. However, descriptive data exposes a deterrence paradox: while coercive measures, particularly public shaming through premises sealing, effectively induce short-term compliance, they simultaneously foster an adversarial business-government climate. An overwhelming 89.2% of taxpayers reported that these tactics strain their relationship with the state, and 48.3% admitted that aggressive enforcement incentivizes creative tax avoidance. Furthermore, KW-IRS staff identified a frequent culture of penalty negotiation, which undermines the perceived consistency of enforcement. The study concludes that while coercion is an efficacious short-term revenue tool, its over-reliance threatens business survival and erodes voluntary tax morale. Consequently, the study recommends a transition toward a responsive regulatory model that balances aggressive prosecution of chronic defaulters with improved taxpayer education and standardized, automated penalty frameworks to ensure long-term fiscal sustainability.