The influence of tax service quality, government trust, and social value orientation on tax compliance among small and medium enterprises in North Rift Economic Bloc, Kenya

Abstract

Strengthening domestic resource mobilization has become critical for governments globally as fiscal space for growth and development spending continues to shrink. Effective tax collection is vital for state financing, but it is equally important to improve how revenue is raised. The purpose of this study was to determine the effect of tax service quality, government trust, and social value orientation on tax compliance of small and medium enterprises (SMEs) in the North Rift Economic Bloc, Kenya. Using a positivist research philosophy and explanatory design, a sample of 393 SME owners/managers was drawn from a target population of 21,232 registered SMEs through stratified sampling. Data was collected via a self-administered questionnaire, and reliability and validity were confirmed with a Cronbach’s alpha coefficient of 0.7 and factor analysis. Descriptive and inferential statistics were employed, with multiple regression analysis conducted using the Andrew Hayes Process macro. The study found that tax service quality (β =.541, p =.0000<0.05), government trust (β =.375, p =.000<0.05), and social value orientation (β =.234, p =.0000<0.05) had a positive and significant effect on tax compliance. The study underscores the importance of enhancing tax service quality and fostering government trust as key strategies to improve tax compliance among SMEs. Additionally, incorporating social value orientation into tax policy design is essential for optimizing revenue collection. This research offers new insights into the dynamic interplay between tax service quality, government trust, and social value orientation, providing a comprehensive understanding of their combined impact on tax compliance in the SME sector