International Journal of Accounting and Taxation June 2016, Vol. 4, No. 1, pp. 53-68 ISSN: 2372-4978 (Print), 2372-4986 (Online) Copyright © The Author(s). All Rights Reserved. Published by American Research Institute for Policy Development DOI: 10.15640/ijat.v4n1a3 URL: https://doi.org/10.15640/ijat.v4n1a3 The E ffect of Tax Avoidance on Government Budget Implementation in Southwest Nigeria AKINLE YE , Gideon Tayo 1 & OGUNMAKIN, Adeduro Adesola 2 Abstract The study examined the effect of tax avoidance on government budget implementation in Southwest Nigeria for the period 1999-2014. Out of the six states in Southwest Nigeria (Lagos, Ondo, E kiti, Oyo, Osun and Ogun), simple random sampling was used to select E kiti, Ondo, Osun and Ogun states. Secondary data on VAT, PAYE , CGT, and WIT were gathered from office of Budget and E conomic Planning, Research Department and Internal Revenue office of sampled Southwest states. The estimated parameters for tax avoidance variables from the model were statistically significant at 0.05 for assessing and determining the performance of budget implementation. Descriptive and inferential statistics were used to analyse the data. The f-statistic value 5.409 and the probability of f -statistic 0.0005 revealed that the panel regression model was appropriate, valid, reliable, and acceptable for the study. The results showed that 61 percent of the expected revenue of the states was hampered by avoidable consequence of tax avoidance through non compliance with collection and remittances. The level of tax avoidance through implementation of tax laws and policies in Southwest Nigeria revealed negative performance of government budget implementation and as such affected the development of the economies of sampled states (t = 3.84, 6.36 and 9.94 for VAT, CGT and WIT respectively). The study concluded that there is a linear relationship among three out of the four independent variables considered (VAT, CGT and WIT) and budget implementation in South West Nigeria. The study recommended that government should develop a well equipped database aiming at identifying all possible sources of tax avoidance by companies and individual tax payers, which will help in checking truancy of tax payers, thereby leading to reduction in non compliance and remittances of appropriate tax dues. It was equally recommended that state governments should establish proper accountability and transparency agencies to monitor the collection and remittances of tax revenue. Tax agencies must be strictly positioned to discourage every form of unwholesome or corrupt practices connected with the tax system. Keywords: Taxation, Tax avoidance, Value added tax, PAYE , Capital gains tax, Withholding tax, Government Budget, Panel regression. 1 Department of Accounting, Ekiti State University, Ado Ekiti, Ekiti State, Nigeria. Telephone No: +2348053506492, E-mail: gideon.akinleye@eksu.edu.ng 2 Department of Accounting, Ekiti State University, Ado Ekiti, Ekiti State, Nigeria. Telephone No: +2348064960285, E-mail: boladuro2014@gmail.com