Page 1
FACULTY OF BUSINESS & INFORMATION
TECHNOLOGY
DEPARTMENT OF ECONOMICS AND FINANCE
Research topic: The Effect of Taxpayer Education on Voluntary
Taxpayer Compliance: A case of SMEs in Lusaka’s CBD
BY:
Andrew Saratiyeri Nayaho
Student number: 004-149
Cell: +260968381980
Email: [email protected]
Proposal submitted in partial fulfilment to the requirement for the award of Bachelor of
Arts in Economics
2020
Page 2
i | P a g e
Declaration
I Andrew Saratiyeri Nayaho hereby declare that this research or dissertation has been
composed solely by myself after the registration for the degree in Economics at Cavendish
University Zambia and that it has not been submitted, in whole or in part, in any previous
application for a degree, diploma or other qualifications. Except where states otherwise by
reference or acknowledgement, the presented is entirely my own.
Author: Andrew Saratiyeri Nayaho Signature: ……………………………….
Supervisor: Mr. Taonga Simwaka Signature: ………………………………..
Page 3
ii | P a g e
Acknowledgement
First of all, I want to acknowledge with gratitude to God for his unfailing love and protection
and for the opportunity made possible by him for me to be able to acquire a degree in this
lifetime. I am so humbled and grateful because through his love and protection I managed
to persevere and endure in all the challenges that came in my way as I was pursuing this
degree.
I wish to sincerely thank all those who have contributed in one way or another to this study.
Words can only inadequately express my deepest gratitude to my supervisor, Mr. Taonga
Simwaka, for his meticulous care, kindness and generosity. His fruitful comments and
insightful suggestions have been a crucial formative influence on the present study. He has
supported me in every possible way since the beginning of my research. His critical and
careful reading of my writing has saved me from a lot of errors. Without his guidance and
encouragement, my research would have never come out in the present form. I have seen
in him an unpretentious and devoted scholar. Furthermore, it has been a memorable and
enjoyable experience for me to work with him.
The love and support from my family cannot be overlooked and taken for granted. Hence I
want to thank with a grateful heart my parents Vercus Ndoricimpa my father and Sabimana
Anna my loving mother, my brothers Jesepth Desire Nayaho and Kelvin Nayaho and also my
lovely two sisters Vestina Nayaho and Harriet Nayaho for always being there for me
throughout my entire life. It is the unity and the love among us that gave me strength to go
all the way to the finish line to acquiring this degree.
To my friend and classmate Nawa C. Nawa, I want to say thank you. Without you on my side
throughout this journey it would have been very difficult for me to succeed and acquire this
degree. You were always there to encourage me and to have faith in every difficult task that
I faced throughout this journey.
Andrew Saratiyeri Nayaho
Page 4
iii | P a g e
Table of Contents
Declaration .................................................................................................................................. i
Acknowledgement ..................................................................................................................... ii
Table of Contents ..................................................................................................................... iii
List of Figures ........................................................................................................................... vi
List of Tables ........................................................................................................................... vii
List of Acronyms ................................................................................................................... viii
Abstract ..................................................................................................................................... ix
Chapter One ............................................................................................................................... 1
Background ................................................................................................................................ 1
1.0 Introduction .......................................................................................................................... 1
1.1 Background of the Study ..................................................................................................... 1
1.1.1 Overview of SMEs ............................................................................................................ 4
1.2 Statement of the Problem ..................................................................................................... 6
1.3 Research Objectives ............................................................................................................. 7
1.4 Research Questions .............................................................................................................. 7
1.5 Assumptions ......................................................................................................................... 7
1.6 Rationale .............................................................................................................................. 7
1.7 Limitations ........................................................................................................................... 7
1.8 Delimitations of the Study ................................................................................................... 8
1.9 Scope of the Study ............................................................................................................... 8
1.10 Definition of Key Terms, Concepts and Variables ............................................................ 8
Chapter Two............................................................................................................................... 9
Literature Review....................................................................................................................... 9
2.0 Introduction .......................................................................................................................... 9
2.1 Tax Compliance ................................................................................................................... 9
2.2 Theoretical Framework ........................................................................................................ 9
2.2.1 Ability to pay Theory of Taxation .................................................................................... 9
2.2.2 Economic deterrent theory .............................................................................................. 10
2.3 Empirical literature ............................................................................................................ 10
2.3.1 Factors affecting Tax Compliance on a global level ...................................................... 10
2.3.2 Factors affecting Tax Compliance in the African region ................................................ 13
Page 5
iv | P a g e
2.3.3 Factors affecting Tax Compliance in Zambia ................................................................. 19
2.3.4 The Gap in Theory .......................................................................................................... 21
2.5 Conceptual Framework ..................................................................................................... 22
Chapter Three........................................................................................................................... 23
Research Methodology ............................................................................................................ 23
3.0 Introduction ........................................................................................................................ 23
3.1 Research Design................................................................................................................. 23
3.2 Study Location, .................................................................................................................. 23
3.3 Characteristics of the study population .............................................................................. 23
3.4 Sample Size, design and techniques .................................................................................. 23
3.5 Data Collection Instruments .............................................................................................. 24
3.5.1 Primary Data ................................................................................................................... 24
3.5.2 Secondary Data ............................................................................................................... 24
3.5 Data Analysis processing procedure .................................................................................. 24
3.6 Ethical Considerations ....................................................................................................... 25
Chapter Four ............................................................................................................................ 26
PRESENTATION OF FINDINGS .......................................................................................... 26
4.0 Introduction ........................................................................................................................ 26
4.1 Background of the Respondents ........................................................................................ 26
4.2 To assess the effect of Taxpayer Education on Voluntary Tax Compliance by SMEs in
Zambia. .................................................................................................................................... 30
a) Chi-Square Tests for Significance ....................................................................................... 30
4.3 To understand if SMEs have been exposed to any taxpayer education ............................. 33
4.4 To determine SMEs level of understanding of tax system and how it influences the tax
compliance rate ........................................................................................................................ 35
4.5 To examine measures that the ZRA put in place to educate SMEs on the importance of tax
compliance ............................................................................................................................... 37
4.6 Discussions of the Findings ............................................................................................... 38
CHAPTER FIVE ..................................................................................................................... 40
CONCLUSIONS AND RECOMMENDATIONS .................................................................. 40
5.0 Introduction ........................................................................................................................ 40
5.1 Conclusion ......................................................................................................................... 40
5.2 Recommendations and Areas for Further Studies ............................................................. 40
References ................................................................................................................................ 42
Page 6
v | P a g e
APPENDIX .............................................................................................................................. 46
Research Questionnaire for SMEs ........................................................................................... 46
Interview for ZRA Staff ........................................................................................................... 48
Page 7
vi | P a g e
List of Figures
Figure 1: Education Level of Respondent ............................................................................... 27
Figure 2: Monthly net income generated by the business ........................................................ 28
Figure 3: What is the size of the business in terms of employees? .......................................... 30
Page 8
vii | P a g e
List of Tables
Table 4.1.1 what type of business are you undertaking? * The business stated above is of what
form? Cross tabulation
TABLE 4.2.1 HYPOTHESIS TESTING DECISION RULE
Table 4.1.1 Gender of respondent
Table 4.1.2 what type of business are you undertaking? * The business stated above is of what
form? Cross tabulation
Table 4.1.3 how long have you been in this business?
TABLE 4.2.1 HYPOTHESIS TESTING DECISION RULE
Table 4.2.2 Crosstab
Table 4.2.2 (a) Chi-Square Tests
Table 4.2.3 Crosstab
Table 4.2.3 (a) Chi-Square Tests
Table 4.3.1 Are you able to determine accurately your tax liability and income?
Table 4.3.2 Do you have enough information on tax and tax procedures?
Table 4.3.3 Do you find tax filing and payment procedures complex?
Table 4.3.4 Do you require simplified forms of tax payment?
Table 4.3.5 Have you registered with ZRA for tax remitting?
Table 4.4.1 to what extent do you agree that tax officials should use Tax penalty and fines to
curb tax non-compliance?
Table 4.4.2 to what extent do you agree that tax officials should use Tax audit to curb tax non-
compliance?
Table 4.4.3 to what extent do you agree that tax officials should use Imprisonment to curb tax
non-compliance?
Page 9
viii | P a g e
List of Acronyms
CBD: Central Business District
IMF: International Monetary Fund
SME: Small and Medium Enterprises
VTC: Voluntary Tax Compliance
ZIPAR: Zambia Institute of Policy Analysis and Research
ZRA: Zambia Revenue Authority
Page 10
ix | P a g e
Abstract
The present study was aimed at assessing the effect of Taxpayer Education on Voluntary Tax
Compliance by SMEs in Zambia, with the main focus being on SMEs operating in Lusaka’s
CBD. An exploratory research design was employed that is both quantitative and qualitative
data was used which provided a better understanding of the research problem than either type
by itself. The purposive sampling procedure used in selecting and identifying the respondents
who were Small and Medium Enterprises (SMEs) in Lusaka’s CBD.
A sample of 50 SMEs was drawn from the population of 500 SMEs, with only 40 answering
the research questionnaires out of the targeted 50. Furthermore, two (2) assistant inspectors
from the Zambia revenue Authority (ZRA) also participated in the study and data was
collected from them by were of an interview. The researcher used Pearson’s chi-square test and
correlation for purposes of data analysis, and the using Statistical Package for Social Sciences
(SPSS) to establish the relationships and associations between the dependent and independent
variables proposed in the conceptual framework of this study.
With respect to the main objective, findings revealed that tax education has a significant
positive impact on voluntary tax compliance by Small and Medium Enterprises (SMEs), the
above findings were arrived at based on the asymptotic or probability values derived from
Pearson’s chi-square test for significance which were all below 0.1. Additionally, the study
also found that the tax inspectors at the Zambia Revenue Authority (ZRA) stated that Tax
education has an effective role to play when it comes to compliance levels by SMEs, as
evidenced by improvements in terms of voluntary tax compliance by SMEs in Zambia. The
majority of SMEs found the process of tax filing and payment procedures to be complex.
Recommendations based on the above findings included ZRA must increase its efforts towards
taxation education to SMEs in Zambia in order to improve the levels of voluntary tax
compliance by SMEs. ZRA must must ensure that they cover all taxation loopholes in order to
enhance or increase tax compliance levels by SMEs and other taxpayers in the country, as
taxation has a fundamental role to play in economic activity and the overall development of a
country.
Key Words: Tax Education, Voluntary Tax Compliance, ZRA, SMEs
Page 11
1 | P a g e
Chapter One
Background
1.0 Introduction
The chapter provides a detailed background to the study, statement of the problem, research
objectives and research questions as well as the scope and significance of the study.
1.1 Background of the Study
Taxation is the primary source of revenue for governments throughout the world to implement
their social and political agendas and to deliver services to the citizens (Thananga et al, 2013).
Primarily a country’s tax system must provide sufficient funds for government expenditure
Programs (Nhekairo, 2014). However, the means of attaining this basic requirement to get a
sufficient level of taxation matters a lot. The Zambian tax system broadly comprises income
taxes, consumption taxes and trade taxes (Zambia Revenue Authority (ZRA), 2017). These
taxes are collected by the Zambia Revenue Authority (ZRA) which is the corporate body
mandated to collect all taxes (Nhekairo, 2014).
According to Drummond et al (2012), the process of raising more domestic revenue is a salient
priority for most sub-Saharan African countries, as the mobilisation of revenue is a platform
which enables governments’ to create fiscal space, as well as provide essential public services
and reduce the reliance on foreign aid coupled with single resource dependence. However, the
domestic tax bases in most sub-Saharan African countries are undermined by widespread tax
avoidance and evasion (International Monetary Fund (IMF), 2011).
Becker (1968) refers to tax evasion as a form of white collar crime. Later, Allingham and
Sandmo (1972) hypothesised that it is a gambling decision on the part of the taxpayer whether
to declare income or not. Hence, if the cost of detection, audit and penalty appears to outweigh
the benefit of evading tax, then taxpayer would not be encouraged to go for evasion and vice
versa.
As eluded to earlier, through taxation a country can raise enough revenue to implement the
aforementioned agendas, however, raising of revenue through taxation in many developing as
well as developed countries has proved to be a big challenge for most in a bid to spearhead
their national developmental aspirations (Masango, 2019). Additionally, this has also been
Page 12
2 | P a g e
further constrained by most developing countries such as Zambia having weak tax
administrations and poor governance to enforce tax compliance, which has resulted in high
levels of tax evasion and tax avoidance.
There is no doubt that tax compliance is a major problem confronting almost each and every
revenue authority, whether in developed or developing countries (IMF, 2017). According to
Nhekairo (2014), questions and debates pertaining to tax compliance are as old as taxes
themselves, and will remain an area of discovery as long as taxes exist. Tax compliance can be
defined as the degree to which a taxpayer complies or fails to comply with the tax rules of his
country, for example by declaring income, filing a return, and paying the tax due in a timely
manner (Masango, 2019).
Although taxpayer non‐compliance is a continual and growing global problem, many
indications suggest that developing countries, many of them in Sub‐Saharan Africa, are the
hardest hit (Nhekairo, 2014). Economists and financials experts both agree that the salient
instrument which countries can use to generate resources is an effective tax policy or system,
which has been implemented.
According to Ongwamuhana (2011), a country’s tax system which is heavily reliant or
dependent on tax enforcement needs to have a large team of tax auditors and tax investigators
who must all be well equipped to undertake their respective duties. In addition, the tax system
also needs to involve court bailiffs and property auctioneers, as well as the police for protection,
or to give police powers to tax administrators (Ongwamuhana, 2011). All this increases the
cost of tax collection and eats into tax revenues.
The aforementioned costs and procedures, will have to be followed by a tax system which is
heavily reliant on tax enforcement leads to the argument for tax education which encompasses
training and sensitisation on tax payments and compliance. A bad image of the government is
painted because of its failure to discharge functions due to a flawed tax system or policy and
heavy reliance on tax enforcement with different penalties or fines for non-compliance which
serves as a great disincentive for some businesses paying taxes, as most people feel that tax is
a burden and should be avoided (Masango, 2019).
Nevertheless, an argument that has gained a lot of attention in academic research is tax
education or tax knowledge and how it affects compliance levels with respect to taxation by
taxpayers, mostly notably Small and Medium Enterprises (SMEs). The accumulation of tax
Page 13
3 | P a g e
arrears due to non-compliance by taxpayers means less revenue to government (Zambia
Institute of Policy Analysis and Research (ZIPAR), 2015).
Unless taxpayer compliance is achieved at sufficient levels, the performance of the tax system
will be significantly impaired (ZIPAR), 2015). In 2017, the former Minister of Finance Felix
Mutati attributed the low level of tax compliance in Zambia to the poor quality of tax education
in the country (Zambia Daily Mail, 2017). Since the Zambian government’s decision to
privatize most national companies beginning in 1993, there has been an appreciable increase
in the self-employed activities or informal sector businesses. It has however been widely
observed that a larger portion of the self-employed or informal businesses have a poor record
of non-compliance with taxation rules (Langmead et. al, 2006).
Policy makers and researchers have argued that measuring tax compliance and evaluating its
determinants is challenging in any context, moreover, when it comes to examining tax
compliance in developing countries it is particularly difficult, due to the large size of the
informal sector (Ahmed et al, 2012).There are a number of promising options to increase tax
revenue in a sustainable and equitable way, although they are often difficult to implement due
to lack of administrative capacity or political constraints (Moore and Prichard 2017).
Tax compliance literature has often focused on two sets of factors that can help to increase
compliance and tax revenue, these are deterrence and tax morale (Mascagni and Santoro,
2018). A third and related factor is knowledge and education, which can help taxpayers
navigate complex tax systems (Mascagni and Santoro, 2018).
According to Mascagni and Santoro (2018), although there is little research on tax education,
recent studies have shown that taxpayers often have little understanding of how tax systems
work (Kira 2017; Feldman et al. 2016; Tanui 2016). According to Isbell (2017) as cited by
Mascagni and Santoro (2018) report on thirty-six (36) African countries based on
Afrobarometer data, showed that the majority of respondents had difficulty figuring out what
taxes they owe to the government. While small taxpayers are likely to suffer more from lack
of tax knowledge, large taxpayers and business associations are also not immune to this issue
(Nalishebo and Halwampa, 2014).
According to Djawadi and Fahr (2013), evidence through research has suggested that educating
tax payers about the tax system, tax laws and informing them about negative effects of tax
evasion, sanctions and fines is a useful policy in order to increase trust in authorities, and
Page 14
4 | P a g e
resulting in more tax compliance. When a tax system is flawed with regards to non-compliance
as is the case with most developing countries, Zambia inclusive, the cost of tax enforcement
increases (ZIPAR, 2014).
Financial experts have for years advocated for an increase in taxation education in countries or
jurisdictions which have poor or low levels of compliance. According to Miller (2015), tax
education has a positive and direct bearing on the compliance as well as onward enforcement
of tax. ZIPAR (2014) stated that the country can increase tax compliance through embarking
on taxpayer education to improve tax literacy. The aforementioned can be achieved through
establishing call centres in each provincial centre for the purpose of taking tax literacy closer
to the people (ZIPAR, 2014).
Since the individual SMEs pay a very small amount of tax compared what the larger
establishment would pay, tax authorities tend give the larger corporations more attention.
However, taxes from SMEs are also viewed as important in the overall revenue collections for
various developmental projects, as research has shown that the amount of tax that SMEs avoid
to pay can be used to fund a number of government project’s which have stalled especially in
developing countries which are synonymous with huge government borrowing aimed at
sustaining a number of public services (Wasao, 2014).
Therefore, this entails that the government through its Taxation Authority has to take an active
role in enabling the capacity with respect to financial education and accounting skills pertaining
to taxation education in order for SMEs along with other larger enterprises to be fully equipped
and knowledge when it comes to tax compliance. Lumumba (2010) found that SMEs did not
pay their tax obligation because of their inability to understand tax law requirements.
In line with the aforementioned, the present study seeks to assess the effect of taxpayer
education on Voluntary Taxpayer Compliance, with the focus on SMEs in Lusaka’s Central
Business District (CBD)
1.1.1 Overview of SMEs
Small and Medium Enterprises (SMEs) role and contribution to society cannot be
overemphasized. These businesses make significant strides and contribution to the socio-
economic as well as political infrastructure of both developed and developing countries.
Page 15
5 | P a g e
In developing economies, the growth of the economy could be fostered and enhanced by the
expansion of the private sector which encompasses SMEs, as this sector is the engine of
economic growth (Rungani & Potgieter, 2018). Consequently, it is necessary to accelerate the
success of small, medium and micro enterprises (SMMEs) to achieve sustainability in this
sector of the economy (Rungani & Potgieter, 2018).
Many financial scholars and experts have for years asserted that a vibrant and expanding SME
sector is cardinal for competitive advantage along with economic growth for nations (Berger
and Udell 2006.) Small business owners are responsible for collecting as well as for remitting
taxes (Christensen et al., 2001). They are, hence, important players in a country’s tax system.
Though the evidence is not unequivocal most research suggests that small business owner-
managers are more likely to cheat than other groups of taxpayers (Schuetze, 2002). Even the
Organisation for Economic Co-operation and Development (2004) considers small business
owners a high-risk group in terms of tax compliance.
SMEs have for years acted as a conduit for government in terms of employment creation and
revenue generation, with developed countries paying particular attention to their wellbeing and
activities due to the significant contributions that they have in a country (Sibanda, 2018).
In Zambia, issues of non-payment of taxes have been on the rise for a number of years, which
prompted the Zambia Revenue Authority to issue an amnesty which included the waiving of
all interest and penalties to tax defaulters in the Country in April 2017. Small and Medium
enterprises (SMEs) make up the majority of businesses in the world, this is also the case for
Zambia.
Since the individual SMEs pay a very small amount of tax compared what the larger
establishment would pay, tax authorities tend give the larger corporations more attention.
However, taxes from SMEs are also important in the overall revenue collections for various
developmental projects. Clough et al (2014) reported that uncollected revenues from non-
compliant taxpayers which were mainly SMEs deprived the government from much required
finance in provision of infrastructures for enabling business growth. This challenge has also
been observed in Zambia, as can be seen from the measures which were undertaken by the
Zambia revenue Authority
In light of the aforementioned, this paper contributes to the quest of furthering our
understanding of factors affecting tax compliance levels of SMEs, with particular emphasis on
tax education or tax knowledge.
Page 16
6 | P a g e
1.2 Statement of the Problem
Taxes remain vital to state building, funding public expenditures and infrastructure, and
generating a ‘fiscal social contract’ between states and citizens (Forstater, 2018). Nevertheless,
tax administrators have a formidable challenge when it comes to achieving high levels of tax
compliance and collection of much needed revenue (Ahmed, 2019).
The aforementioned is particularly true for most developing countries, most notably those in
sub-Saharan Africa. While the developed countries have been able to collect tax revenue to a
satisfactory level, developing countries have not been able to do so (Ahmed, 2019). They are
still struggling with tax compliance problem. However, despite plethora of research with tax
compliance, it is still a puzzle why taxpayers comply and do not.
Zambia has experienced budget deficit consistently over the past five years. Government’s
strategy to reduce the size of the deficits includes domestic revenue mobilisation through
improved tax compliance, efficient and effective revenue administration (KPMG, 2019). Given
the far-reaching effect of revenue losses due to tax non-compliance, Zambia has undertaken
tax reforms to improve its tax administration and has incorporated and implemented various
anti-avoidance measures and regulation in the tax law to combat tax evasion (ZIPAR, 2014).
In order to reduce compliance costs for the taxpayers thereby improve voluntary compliance,
ZRA has developed an automated system called Tax-Online that will facilitate e-registration,
e-filing and e-payment. Initiatives such as the creation of Taxpayer Education and Advisory
Services centres all work towards improving tax knowledge thereby improve compliance.
ZRA has put in place a mechanism to educate its taxpayers in various issues aimed at increasing
compliance levels through Tax Payer Education and Advisory Services (TEAS) (ZRA, 2019).
Taxpayer education is a deliberate tool designed to enable taxpayers to understand tax laws,
processes and procedures. These measures create critical platforms to disseminate key
information to the taxpayers. Taxpayer education in Zambia is being provided to enhance
voluntary tax compliance among business houses, entrepreneurs and individuals.
While attempts have been made to establish the role of education in voluntary tax compliance,
the relationship has not been clearly defined thus the purpose of this study to assess the effect
of Taxpayer Education on Voluntary Tax Compliance by SMEs in Zambia.
Page 17
7 | P a g e
1.3 Research Objectives
The main objective of the study is to assess the effect of Taxpayer Education on Voluntary Tax
Compliance by SMEs in Zambia.
Specific Objectives
i. To understand if SMEs have been exposed to any taxpayer education
ii. To determine SMEs level of understanding of tax system and how it influences the tax
compliance rate
iii. To examine measures that the ZRA put in place to educate SMEs on the importance of
tax compliance
1.4 Research Questions
i. Have you been exposed and undergone any taxpayers’ education?
ii. What level of understanding do SMEs have on tax systems and how does this influence
their tax compliance rate?
iii. What measures have ZRA put in place to educate SMEs on the importance of tax
compliance?
1.5 Assumptions
The study was guided by the following assumptions:
Taxpayer Education does not significantly affect Voluntary Tax Compliance by SMEs in
Zambia.
Taxpayer Education significantly affects Voluntary Tax Compliance by SMEs in Zambia.
1.6 Rationale
The study is aimed at obtaining information about the effectiveness of tax education and its
relation to levels of voluntary tax compliance of SMEs in Zambia. This information would
eventually help policy makers and the tax Authority to intensify tax education and sensitization.
1.7 Limitations
The study could be subjected to limitations in terms of data collection from SMEs owners, as
they were not available and in some instances they did not want to comply in the undertaking
of the study due to covid-19 and fear that the researcher was an employee at the Zambia
Revenue Authority (ZRA).
Page 18
8 | P a g e
1.8 Delimitations of the Study
This study was mainly focused on selected SMEs operating in the CBD of Lusaka, with SMEs
undertaking general dealing business such as the sale of utility materials such as taps,
mechanical and electrical tools, and also those in the retail business being the main focus of
the study.
1.9 Scope of the Study
This study was mainly focused on SMEs operating in Lusaka.
1.10 Definition of Key Terms, Concepts and Variables
Central Business District: A central business district (CBD) is the commercial
and business center of a city, often referred to as the ‘financial district’
SME: Small and medium-sized enterprises (SMEs) are non-subsidiary, independent firms
which employ fewer than a given number of employees. This number varies across countries.
Tax Compliance: Tax compliance refers to the fulfillment of obligations in relation to taxation
voluntarily as required by the law
Tax Payer Education: This refers to programs aimed at teaching taxpayers about their tax
rights, responsibilities and legal requirements. Also refers to the method of educating the
people about the whole process of taxation and why they should pay tax.
Tax: Tax is defined as ‘a compulsory levy, imposed by government or other tax raising body,
on income, expenditure, or capital assets, for which the taxpayer receives nothing specific in
return’ (Lymer and Oats, 2009)
Voluntary Tax Compliance: Voluntary tax compliance refers to the principle that taxpayers
will cooperate with the tax system by filing honest and accurate annual returns.
Page 19
9 | P a g e
Chapter Two
Literature Review
2.0 Introduction
This chapter provides an overview on the studies done by other authors on the relationship
between tax education and voluntary tax compliance of SMEs. The chapter also goes on to
suggest the gap that this paper tries to fill up.
2.1 Tax Compliance
According to Marti et al (2010), tax compliance refers to the fulfillment of obligations in
relation to taxation voluntarily as required by the law. In an article on tax compliance,
Organization of Economic Cooperation and Development (OECD) (2016), categorized tax
compliance in two namely; administrative compliance and technical compliance.
Administrative rules imply filing and making payments and ensuring that the due dates are
adhered to and the procedures also followed whereas the technical aspect refers to the
computation of the correct taxes (OECD, 2016).
Kirchler (2007) perceived a simpler definition in which tax compliance is defined as the most
neutral term to describe taxpayers’ willingness to pay their taxes. In contrast to tax compliance,
tax non-compliance is defined as taxpayer’s failure to remit a proper amount of tax, perhaps on
account of the complexity or even contradictions in the tax legislation or tax administration
procedure (Palil & Mustapha, 2011). Non-compliance is also perceived as the failure of a
taxpayer to report (correctly) the actual income, claim deductions and rebates and remit the
actual amount of tax payable to the tax authority on time (Kirchler, 2007).
2.2 Theoretical Framework
The study will be based on two theories pertaining to taxation compliance, these are ability to
pay theory of taxation and economic deterrent theory.
2.2.1 Ability to pay Theory of Taxation
According to Ocheni, (2015), the ability to pay theory of taxation was founded in the 16th
Century, and further extended by the Swiss philosopher Jean Jacques Rousseau (1712-1778),
and the French political economist Jean Baptiste Say (1767-1832).
Page 20
10 | P a g e
The ability to pay theory of taxation is more widely accepted principle based on equity or
justice (Obara & Nangih, 2017). The Theory emphasizes the ability to pay as the determinant
of paying taxes (Obara & Nangih, 2017). Individual capacity should be given serious
consideration before taxes are determined (Atawodi & Ojeka, 2012). Every government needs
to appraise its tax policies to ensure it is not detrimental to the development of the SMEs in the
country (Adebisi & Gbegi, 2013).
2.2.2 Economic deterrent theory
Economic deterrent theory argues that taxpayers comply because of fear of detection through
audit and punishment (Allingham and Sandmo, 1972). This theory posits on command and
control type regulation where stick is used to ensure compliance to law. The theory was first
presented by Professor Gary Becker. According to Becker (1968) punishment and sometimes
severe punishment must be rendered for crimes like robbery, murder including tax evasion.
This theory, also known as deterrence theory, holds that behavior of tax payers is impacted by
factors such as tax rate that determines the threats that may come with evasion, and also the
probability of being detected upon evasion along with the penalties that a taxpayer whose
evading tax may face as a result of evasion (Allingham and Sandmo, 1972).
Persuasive measures and also punitive measures can be combined to achieve deterrence.
Measures such as increased chances of detection for evaders, increasing tax rates for non-
compliers, and an imposition of tighter penalties. Alternative methods could include properly
educating the tax payers, increasing publicity and the associated incentives. In economic terms,
a tax payer is taken to be a person of upright morality who finds any ways to evade tax payment
with an aim of maximizing their utility.
Therefore, according to the theory, in order to improve compliance, audits and penalties for
non-compliance should be increased.
2.3 Empirical literature
Literature pertaining to tax education and other determinants of tax compliance will be
presented under this segment of the chapter from a global, regional and local perspective.
2.3.1 Factors affecting Tax Compliance on a global level
In India, Fauziati et al (2016) paper examined the impact that tax knowledge has on tax
compliance. The survey research design was used in the study, with primary data collected
Page 21
11 | P a g e
from three hundred (300) self- administered questionnaire which were distributed. The number
of questionnaire completed and returned was two hundred and thirty-seven (237), constituting
79% response rate. The simple linear regression models were used to estimate the relationship
between tax knowledge and tax compliance. The t-statistics were used to test the significance
of the study variables. The main findings of the study revealed that tax knowledge had impact
on tax compliance.
In Indonesia, Asrinanda (2018), examined the influence that tax knowledge, self-assessment
system and tax awareness had on taxpayer compliance in Banda Aceh City. The sampling
technique used was simple random sampling, in selecting a sample of 100 respondents. Results
showed that knowledge on taxation, self-assessment system (SAS) and tax awareness had a
semi-strong significant effect on taxpayer compliance in Banda Aceh City.Another study in
Indonesia by Setyorin (2016) was aimed at identifying the factors that affecting taxpayer’s
willingness to pay SMEs Tax obligations. The population of this study comprised of one
hundred and fifteen (115) “Kelom Geulies” SME owners that had registered their businesses
in 2012. A judgemental sampling method was used in study. The sample size consisted of 47
SME’s owners. Results based on the multivariate regression analysis showed that tax
knowledge, managerial benefit of tax, SME’s tax socialization, had a positive effect towards
the willingness of SMEs to pay tax. The results clearly showed that apart from tax knowledge
and managerial benefit, tax socialization had a salient role in increasing the willingness of
SMEs to pay taxes.
Another paper in Indonesia by Mukhlis et al (2015), analyzed the role that taxation education
plays and its impact on tax fairness and tax compliance of handicraft SME sector in Indonesia.
The researchers focussed on handicraft SMEs businessman located in the district/city in the
province of East Java, Indonesia. The primary data used in the study was obtained through a
questionnaire, which was the research instrument adopted. The data analysis method used was
the analysis of Structural Equation Modelling based on Partial Least Square Regression.
The study findings concluded that tax education had a positive and significant impact on tax
knowledge, tax knowledge in turn had a significant and positive effect on tax fairness, while
tax fairness had a significant positive effect on tax compliance. Hence, tax education had a
significant and positive effect on tax compliance. Based on these results, the strengthening of
the tax education was viewed to be very important when it comes to shaping the tax knowledge,
so that it can increase tax compliance.
Page 22
12 | P a g e
In Yemen, Helhel & Ahmed (2014) study was aimed at bringing insights on the influence of
attitudes and considerations of individual taxpayers on tax compliance in Yemen, while taking
into account internal and external factors. The study was conducted in Sana’a, the capital city
of Yemen to evaluate and rank the factors that reduce taxpayer compliance. A questionnaire
was used for data collection based on a five point Likert scale and distributed to tax payers in
order to learn their opinions. The results indicated that, high tax rates and unfair tax system are
the two most crucial factors associated with low compliance. Furthermore, insufficient tax
auditing, little deterrent effects of tax penalties and tax amnesties enacted frequently have
impact on taxpayers’ compliance decision. The factors like insufficient tax office staff number
and frequent tax code changes affect tax compliance to a lesser extent. Moreover, it was also
revealed that collected taxes did not return as public goods and services in Yemen.
In Malaysia, Saad (2014) examined taxpayers’ views on their level of tax knowledge and
perceived complexity of the income tax system. Further, the study attempts to delve in the
underlying reasons for non-compliance. Data was gathered through telephone interviews with
30 participants, and analysed using thematic analysis. Results showed that taxpayers had
inadequate technical knowledge and perceived complex. Tax knowledge and tax complexity
were found to be contributing factors towards non-compliance behaviour among taxpayers.
Niemirowski et al. (2012) in Australia targeted taxpayers with historical tax compliance
behaviour, in order to better understand community attitudes to tax. The researchers used
compliant and non-compliant taxpayer survey responses that included wider environmental
factors were matched to each individual’s tax return data, but not for tax staff, tax agents or
youth. Results of the analysis identified relationships between tax-based values, beliefs,
attitudes, knowledge and actual tax compliance behaviour. Noncompliance “intent” and
“tolerance” of some tax avoidance were two key determinants of taxpaying behaviour.
Furthermore, the researchers reported that Poor tax knowledge has the effect of evoking distrust
and negative sentiments towards tax, whereas good tax knowledge correlated positively with
attitudes towards taxation.
In Malaysia, Palil (2010) study focused on the level of individual Malaysian taxpayers’
knowledge and explored how tax knowledge levels influence tax compliance behaviour in a
new SAS. Data was collected through a large scale national postal survey resulting in 1,073
responses. Five stages were used to facilitate the analysis. Stage 1, using the t-test and ANOVA,
focuses on the characteristics of taxpayers’ knowledge including gender, ethnicity, educational
Page 23
13 | P a g e
level and income level. Stage 2 attempts to describe the relationship between tax knowledge
and tax compliance using multiple regressions. Stage 4 examines taxpayers’ compliance
determinants more widely than tax knowledge. Nine variables were tested in Stage 4. Control
variables were added in both Stage 3 and Stage 5 in order to assess whether the inclusion of
control variables significantly affects tax compliance behaviour. The results suggested that tax
knowledge has a significant impact on tax compliance even though the level of tax knowledge
varies significantly among respondents. The results also indicate that tax compliance is
influenced specifically by probability of being audited, perceptions of government spending,
penalties, personal financial constraints, and the influence of referent groups.
2.3.2 Factors affecting Tax Compliance in the African region
In Ghana, Okpeyo et al (2019) study examined the factors that influence tax compliance by
SMEs, as well as the differences in levels of tax compliance between SMEs and strategies that
would improve tax compliance in the country. The study applied stratified sampling procedures
in selecting 100 SMEs in Accra, and other Ghana Revenue Authority (GRA) officials for the
study. Data was analyzed qualitatively and quantitatively. The results of the study showed that
tax compliance cost, tax rates, tax audits and morals of taxpayers significantly influenced tax
compliance. The study findings provided evidence that there was a significant difference in the
levels of tax compliance level between SMEs. These difference were largely attributed to the
inability of most SMEs to file their tax returns on due dates and also to keep proper books of
records of their business transactions.
Another paper in Ghana by Trawule (2017), investigated the relationship between tax education
and tax compliance among the self-employed in the Cape Coast metropolis. The study applied
the quantitative approach by designing closed–ended questionnaires to collect the appropriate
numerical data necessary to address the study objectives. A total of four hundred (400)
respondents were selected from the estimated self-employed population of 28,355. The key
findings from the study indicated that tax education affects tax compliance among the self-
employed, however, the nature of the relationship depended on the type of the content of tax
education and the type of compliance to be achieved. An earlier study in Ghana by Wahabu
(2016) examined compliance with tax laws by SMEs in Tamale Metropolis. The researcher
adopted the descriptive survey and cross-sectional research designs. Sampling procedures used
were the Stratified sampling and simple random sampling to select a sample size of two
hundred and sixty-five (265) from a total population of eight hundred and fifty-one (851)
Page 24
14 | P a g e
SMEs. A close-ended questionnaire was employed in gathering primary data for the study. The
study was analysed using descriptive statistics and multiple regression. Findings from the study
revealed that the tax knowledge of owners of SMEs was low and that major factors contributing
to tax compliance among SMEs in the Tamale Metropolis of Ghana include complexity of the
tax laws, perception of government spending, profit level of businesses and the rate of tax. The
study concluded that there was a significant relationship between tax knowledge and tax
compliance.
Masango (2019) paper in Zimbabwe investigated the tax compliance practices with the current
tax regime and their effects on the overall performance of Zimbabwe Revenue Authority
(ZIMRA). A descriptive research design was adopted and the population of interest comprised
of 185,795 taxpayers in Harare. A sample of 65 taxpayers was selected through a simple
random stratified sampling method was used for the study. Regressions Analysis was used
establish the relationship between higher tax penalties & tax compliance, effective
communication (sensitisation) & tax compliance, managerial discretion in managing tax
payers’ resistance & tax compliance and use of authoritarian power by tax collectors & tax
compliance. The study established that higher penalties reduce the propensity to comply with
tax laws and vice versa, whereas effective communication (sensitisation) with stakeholders
(taxpayers) does increase compliance levels among tax payers. Increasing managerial
discretion increases compliance levels among taxpayers whilst draconian laws discourage tax
compliance.
Another paper in Zimbabwe by Newman and Nokhu (2018), aimed at evaluating if lack of tax
knowledge contributed to high levels of tax non-compliance amongst Small and Medium
Enterprise (SMEs) in Zimbabwe. A descriptive research design was adopted by the research
with the qualitative data collected by means of questionnaires and interviews. The responses
were analysed using narrative description method. For purposes of computing the sample size
a quantitative research approach was used involving a sample of 35 SMEs and 40 tax officials.
The findings of the paper reviewed that SMEs in Zimbabwe possess basic tax knowledge about
taxation but lack a deeper understanding like the difference between presumptive taxation and
income based taxation. However, this insignificantly influenced their non-compliance
behaviour. It emerged that in order for tax knowledge to influence tax compliance positively,
the tax rates and corruption needed to be addressed too. An earlier study by Mwandiambira
(2017) evaluated if lack of tax knowledge was contributing to the high levels of tax non-
Page 25
15 | P a g e
compliance amongst SMEs in Zimbabwe. In order to achieve the aforesaid, a qualitative
research approach was used involving a sample of thirty-five (35) SMEs and forty (40) tax
officials. The findings were that SMEs in Zimbabwe possess basic tax knowledge about
taxation but lack a deeper understanding like the difference between presumptive taxation and
income based taxation, however, this insignificantly influenced SMEs non-compliance
behaviour.
Similarly, Sigauke (2017) investigated the influence of tax knowledge on tax compliance using
Zimtile (Pvt) Ltd, an SME in Zimbabwe as a case study. The researcher used a descriptive case
study based on a mixed methods research design. Data was collected through interviews from
4interviewees and through questionnaires from 32 respondents. Data analysed from the
research showed that tax knowledge had a strong and significant positive impact on tax
compliance of Zimtile (Pvt) Ltd. The researcher also concluded that there are other factors such
as complexity of the tax system and awareness of tax offences and penalties that affect tax
compliance of Zimtile (Pvt) Ltd.
Nyamwananza et al (2014) on SMEs’ Attitudes and Practices towards tax compliance in
Zimbabwe focussed on 50 SMEs in the retail sector in Gweru. The findings of the study showed
that minimal efforts were being put in place to enforce compliance, and corruption levels are
high among the tax collection officials. Small and medium enterprises (SMEs) evade
compliance by paying bribes, keeping two sets of records, relocating to new premises without
notifying authorities, and temporarily closing businesses during compliance blitz. Penalties
were found to be the most effective when it came to enforcing taxation compliance.
Maseko (2014) investigated the impact of personal tax knowledge and compliance costs on tax
compliance behaviour of SMEs in Zimbabwe. The study adopted a qualitative research design.
Primary data was collected through face to face interviews from SME operators and tax
consultants in Harare, Chitungwiza and Bindura. The results indicated that SMEs face different
business conditions from large companies which cause them to bear high tax compliance
burdens. The results also indicated that the perceptions of SME operators about tax fairness,
tax service quality and government spending priorities greatly affect their tax compliance
decisions.
Kirchler (2014) observed that general education on taxation was significantly related to tax
compliance. The aforementioned is in line with Muchani (2010), who argued that one of the
Page 26
16 | P a g e
fundamental ways to increase public awareness is for the taxpayer to have knowledge about
taxation.Small and Medium enterprises (SMEs) are common culprits when it comes to avoiding
tax or compiling with regards to taxations returns submissions, this has been attributed to the
fact that most revenue authorities around the world tend to focus on larger corporations which
make huge profits compared to the SMEs(Wasao, 2014).
In Kenya, Omondi and Theuri (2019), investigated the effect of tax awareness and cost of
compliance on tax compliance in the small scale traders within Nakuru town. The study was
guided by the economic deterrent and psychological theories of tax compliance. The study used
descriptive research design. A sample size of three hundred and two (302) was drawn from the
target population of 1416 licensed small scale traders by the County government of Nakuru.
Data was collected using structured questionnaire. The data was also coded, analysis was done
quantitatively using both inferential and descriptive statistics. The data was then summarized
in form of tables and charts. The findings revealed that tax awareness and education has a
positive and significant effect on the tax compliance, and the cost of compliance has a
significant effect on the level of tax compliance.
Prior to the above the study, Gitonga and Memba (2018) sought to establish the determinants
of tax compliance by public transport savings and credit cooperative societies in Kenya. The
study adopted a descriptive research design, and a population of this study was made of 40
public transport Saccos in Kiambu County. The collected data was summarized using
descriptive statistics such as mean and frequencies, which helped in meaningfully describing
the distribution of responses. A Binary logit regression model was used to establish the
relationship between the tax compliance determinants and tax compliance by public transport
Sacco’s in Kiambu County. The findings revealed tax deterrence sanction, tax compliance costs
and tax knowledge levels had a statistically significant relationship with tax compliance levels
by public transport SACCOs in Kenya. The study, however, did not find a significant
relationship between the tax system and tax compliance levels by public transport SACCOs in
Kenya.
Prior to Gitonga and Memba (2018) study, a paper by Gitaru (2017) assessed the effect of
taxpayer education on tax compliance in Kenya, the case of SMEs in Nairobi CBD. The study
established the effect of electronic taxpayer education, print media tax payer education, and
stakeholder engagement on tax compliance. The target population was SMEs in Nairobi CBD
Tax area. The study targeted SMEs conducting business within Nairobi CBD. Data was
Page 27
17 | P a g e
collected by administration of pretested questionnaires to the owners of SMEs business. Data
was analyzed using both descriptive and inferential statistics. The nominal and ordinal data
was collected using questionnaires and later subjected to quantitative analysis using Statistical
Package for Social Sciences (SPSS). Data was presented in the form of frequency distribution
tables & graphs. The study results showed that indeed; electronic taxpayer education, print
media tax payer education, and stakeholder engagement, influences tax compliance among
SMEs in Nairobi’s CBD area. Correlation Matrix was done to determine the correlation
between the independent variables. The results showed that stakeholder’s sensitization is
positively related to the taxpayers’ education to correctly calculate the tax compliance.
Another paper in Kenya, Thananga et al (2013) sought to establish how landlords in Nakuru
Municipality of Kenya had responded to the new taxation measures, and the factors that
influenced their taxation compliance. A sample of ninety-four (94) respondents was selected
to take part in the study using convenience sampling technique. Primary data for the study was
collected by way of seeking opinion from selected landlords through the use of semi-structured
questionnaires. Results of the research show that, the level of full compliance to the provisions
of the rental income tax policy was low. Additionally, the study revealed that generally the
perception of landlords on rental income taxation and the taxman was negative and this highly
influenced their noncompliance. Taxpayers do not consider the implementation of this taxation
in good faith and also feel that taxes are not put into good use. Therefore, the landlords only
pay tax only when they deem it as necessary, and are ready to use any alternative to evade or
underpay taxes, this was found to highly influence their tax compliance. The knowledge on the
rental income tax policy was found to be relatively low especially when it came to the
provisions of the taxation policy itself. This was found to highly influence the levels of non-
compliance to taxation on rental income. However, most of the landlords had basic
understanding on tax calculations and procedures for filing returns. The cost of compliance
also played a key role in determining the level of compliance. The costs include both direct
taxes and indirect tax costs such as auditing costs, costs of hiring personnel and experts for the
purposes of compliance. Perception, knowledge and cost were found to be the major
components in compliance to rental income tax policy by landlords in Nakuru Municipality of
Kenya.
Obongo (2018) examine the influence of tax knowledge & awareness on tax compliance among
Export Processing Zones investors in Kenya. This research used a cross sectional survey
research design. The study population comprised of one hundred and fifty (152) duly registered
Page 28
18 | P a g e
and licensed firms by the Export Processing Zones Authority. Since all the registered investors
in the three Kenyan Cities were considered for the study, a census sampling technique was
employed. Primary data was gathered using structured questionnaires and captured through a
5-point type Likert Scale questionnaire. Statistical Package for Social Sciences (SPSS) was
used in the analysis of data. Data was analyzed use of descriptive and inferential statistics.
Analysis of Variance (ANOVA), multiple regression and correlation analysis was carried out
to test the hypothesis. The study findings revealed that tax knowledge and awareness had a
strong significant relationship with taxpayers’ ability to understand the laws and regulations of
taxation, and their ability to comply with them. Hence, firms with well-trained employees on
taxation issues had a higher probability of complying voluntarily with tax laws and regulations.
The study concluded that tax knowledge and awareness had a positive and significant
relationship with tax compliance.
Another paper in Kenya by Magiya (2016) sought to explore the different factors that determine
SMEs compliance in Nairobi East Tax District. The researcher used the linear regression probit
model for data analysis. Results obtained revealed some similarities and differences with
regards to factors that were correlated to tax compliance in the locality under study. The study
found that when there is an increase in the tax payers understanding of the tax laws and the tax
system coupled with an increase in government accountability with respect to provision of
public good and services, this resulted into higher taxation compliance levels by taxpayers,
thus more of funds through revenue collection.
In Nigeria, Aladejebi (2018) study examined the level of tax compliance among owners of
small and medium enterprises (SMEs) in Nigeria. Small business is vital to the economy of
Nigeria. The sample size for the research was 250 and 223 SME owners responded through the
questionnaire distributed. The quantitative method was used in analysing the data collected.
SPSS was used to analyse the data. Findings showed that female SMEs in Nigeria showed a
higher level of compliance with government regulations than male SME. These findings were
also confirmed by the test of association which showed a statistically significant relationship
between the level of compliance with tax regulations and gender of SMEs. Results further
revealed that the lack of compliance in filing annual returns and payment of Withholding Tax
(WHT) was evident among male entrepreneurs. The study revealed that there was need for tax
education among SMEs running limited companies with respect to the filing annual returns, a
ttaxation amnesty was found to increase the level of tax compliance by the surveyed SMEs.
Page 29
19 | P a g e
Oladipupo and Obazee (2016) paper in Nigeria investigated the impact of tax payers’
knowledge and penalties on tax compliance amongst SMEs in that country by using a survey
research design. The data obtained from questionnaire was analyzed using the Ordinary Least
Square (OLS) regression method. The results showed that tax knowledge had a positive
significant impact on tax compliance Thus, the study shows that tax knowledge has a higher
tendency to promote tax compliance Small and medium scale business owners should also seek
to advance their tax knowledge and awareness for the mutual benefits of the governments and
taxpayers.
Another study in Nigeria by Atawodi & Ojeka (2012) using SMEs in Zaria, North-Central
Nigeria aimed at evaluating and ranking the factors that encourage non-compliance with tax
obligation by SMEs. The study found that high tax rates and complex filing procedures were
the most crucial factors causing non-compliance of SMEs. Furthermore, other contributing
factors such as multiple taxation as well as lack of proper taxation education affect tax
compliance among the SMEs which were surveyed, though these were only to a minimal
extent.
2.3.3 Factors affecting Tax Compliance in Zambia
In Zambia, Resnick (2018) study titled “Tax Compliance and Representation in Zambia’s
Informal Economy”, examined tax compliance and implications for citizen representation
among informal workers, this study involved a survey of over 800 market workers in Lusaka.
The researcher also conducted interviews with the Lusaka City Council (LCC), the Ministry of
Local Government (MLG), the Zambian Revenue Authority (ZRA), and the Zambian National
Marketeers Credit Association (ZANAMACA), which represents approximately 400,000
informal traders in Zambia. The findings revealed that higher compliance with taxes is strongly
associated with respondents who have greater access to services within the market, which
supports the fiscal exchange hypothesis that citizens are more likely to pay taxes when they
personally experience direct benefits in return. Among those who pay those taxes, norms of tax
compliance are much higher, as is a desire to rely on mobile technology for tax collection rather
than deal with a physical collector.
Resnick (2018) reported that among a relatively poor segment of the population in Zambia, tax
revenue can be mobilized if the benefits of those taxes are directly experienced and that just
the process of paying taxes can affect an individual’s demand for representation by
policymakers.
Page 30
20 | P a g e
Policy Monitoring and Research (PMRC) (2014) undertook a study on the role that tax morale
plays in increasing domestic revenue collection and tax compliance in Zambia. The study the
study was based on a desktop research design with literature from countries in the SADC region
(i.e. Botswana and South Africa) used in comparing tax morale and tax compliance levels. The
study revealed that tax morale is an important determinant of tax compliance in Zambia,
however, tax morale has remained relatively low in Zambia and this in run has affected the
levels of tax compliance in the country.
Nyambe (2013) study was aimed at identifying adult education processes that can be used to
enhance the self-employed artisans’ understanding of Zambia’s taxation issues in selected
markets of Lusaka. Six artisan markets out of the targeted fifteen were purposively selected
after a conducted mapping exercise during the months of October to November, 2009.
The selection was done on account of the market’s business viability. These markets where the
study took place are: Alick Nkhata in Kalingalinga, Buseko in Matero, Chifundo in Chaisa,
Katima-mulilo in Garden, Kwacha in Chilulu and Tiyeseko in Marrapodi. The descriptive
research design was used in this study to systematically describe the facts and characteristics
held by artisan Marketeers over taxation issues affecting them. The population for this study
was 168 artisan Marketeers. Out of this population, 138 artisan Marketeers were selected using
proportionate random sampling procedure. Four key informants, namely: one from the Zambia
Revenue Authority (ZRA) Head Office and three from the Market Management Committee
(MMCs) members were also purposively selected. The study revealed that there was a dearth
of knowledge on a number of issues with regard to taxation as the majority of artisan
Marketeers lacked adequate information on how to register as eligible taxpayers with ZRA.
For instance, on knowledge of registration procedures for new taxpayers, the study revealed
that out of 138 artisan Marketeers, the majority 134 or 97% lacked knowledge about the
registration procedure. This was because they did not know that they needed to notify the
Commissioner-General (CG) at ZRA within thirty days of business commencement in order to
be allocated a Tax Payer’s Index Number (TPIN). On knowledge of the main type of tax
applicable to them, the study showed that out of 138 artisan Marketeers, the majority 136 or
99% were unable to identify income tax as the main one applicable to them.
Finally, on knowledge of the recommended minimum amount for tax exclusion, the study
revealed that out of 138 respondents, the majority 136 or 99% lacked knowledge regarding the
threshold for eligibility to paying income tax per annum.
Page 31
21 | P a g e
2.3.4 The Gap in Theory
The literature reviewed was mainly focused on developed countries in relation to tax
knowledge that SMEs have and how this affects the levels of tax compliance.
Studies conducted by Fauziati et al (2016) in India; Setyorin (2016) in Indonesia; Mukhlis et
al (2015) in Indonesia and Helhel & Ahmed (2014) in Yemen, were mainly based on
quantitative data and all adpdpetd different research models(i.e. Linear regression, multi variate
regression, ordinary least square, structural equation modelling and partial least square
regression) for purposes of analysing the data in meeting their research objectives. However,
this study was based on a combination of qualitative and quantitative data, with Pearson’s chi-
square test for significance used for purposes of analysing the data that was obtained from the
SMEs in Lusaka’s CBD. In addition, the main objective of this study differs from other studies
such as Helhel Ahmed (2014) in Yemen which focussed on finding out how attitudes and
conditions of tax payers affect voluntary tax compliance, Saad (2014) study in Indonesia and
Nyamwananza et al (2014) in Zimbabwe mainly focussed on taxpayers views or perceptions
relative to the complexity of the income tax system in that country, while this study focuses on
tax educational and its effect on Voluntary Tax Compliance. Furthermore, Omondi and Theuri
(2019), investigated the effect of tax awareness and cost of compliance on tax compliance in
Kenya, as well as Policy Monitoring and Research (PMRC) (2014) study on the role that tax
morale plays in increasing domestic revenue collection and tax compliance in Zambia, all the
studies mentioned above differs from this study’s main objective which focused on tax
education and Voluntary Tax Compliance.
This was also the case with Gitonga and Memba (2018), who sought to establish the
determinants of tax compliance by public transport savings and credit cooperative societies in
Kenya, and Aladejebi (2018) in Nigeria who examined the level of tax compliance among
owners of small and medium enterprises (SMEs) in Nigeria, as the main objectives of these
studies were different in comparison to this study.
As can be observed above, the majority of the studies mainly focused on the SMEs perspectives
or views with respect to their knowledge on taxes and these views were used as a basis for
determining or assessing the low or high levels of tax compliance. However, this study will
focus on demand and supply side factors that is the SMEs and the Zambia Revenue Authority
(ZRA), in order to determine how tax education affects the tax compliance levels of SMEs.
Page 32
22 | P a g e
The literature reviewed from the Zambian perspective showed that there is scarcity in data on
the role that tax education plays with respect to tax compliance of SMEs in Zambia, and hence
this study sought to bridge this gap in literature.
2.5 Conceptual Framework
A conceptual framework can be defined as a set of broad ideas and principles taken from
relevant fields of enquiry and used to structure a subsequent presentation (Reichel and Ramey,
1987). The conceptual framework that will be adopted in this study is shown below:
Figure 1: Conceptual framework, Source: Magiya, O, S (2016). Determinants of Tax
Compliance among Small and Medium sized Enterprises in Nairobi East Tax District,
University of Nairobi, Kenya
Depedent variable
Tax Compliance of SMEs
Independent Variable
Economic factors
-tax rates
-government spending
Independent Variable
Demographic factors
-age
-gender
-education
Independent Variable
Social factors
-ethics
-tax education
-perception of equity and fairness
-awareness of offences and penalties
Page 33
23 | P a g e
Chapter Three
Research Methodology
3.0 Introduction
This chapter outlines how the research was conducted. It contains the research design, target
population, sampling design and procedures, data collection instruments and data analysis.
3.1 Research Design
An exploratory research design which seeks to find out what is happening as well as seeking
new insights, asking questions and assessing the research phenomena in a new light (Robson,
2002).
For this research, an exploratory research design was employed that is both quantitative and
qualitative data was used which provided a better understanding of the research problem than
either type by itself.
As stated above, the study was based on an exploratory research design. This design has been
chosen due to the nature of the topic at hand which has not been investigated at arm’s length
in Zambia. The scarce local literature pertaining to tax education and tax compliance by SMEs
in Zambia has necessitated the adoption of the exploratory research design.
3.2 Study Location,
This study was undertaken in Lusaka, with the location being the central business district.
3.3 Characteristics of the study population
The population under review comprised of 500 SMEs undertaking various business activities
from the sale of utility goods and food stuff in Lusaka’s central business district.
3.4 Sample Size, design and techniques
The sample size of 50 SMEs which was 10% of the estimated SMEs currently operating in the
central business district in Lusaka was used for purposes of undertaking the study.
Non probability sampling was used when selecting the respondents, with purposive sampling
being used by the researcher when it came to selecting SMEs that were most likely affected by
Page 34
24 | P a g e
the independent variables under review being selected or included, while those which are not
affected to a large extent will be excluded.
3.5 Data Collection Instruments
The main data collection instruments that were used in this study were semi-structured
questionnaires. The questionnaire comprised of structured questions which will be delivered
directly to individuals and will be collected within two weeks. Likert scale comprising of five
responses was used with matrix questions. To ensure confidentiality of the individuals, the
questionnaire will bear a letter explaining the purpose of the research. Reminders will be sent
and follow ups will be made.
In this study, semi-structured questionnaires were used to do the research in order to achieve
the objective of the study. A questionnaire is a tool for collecting standardized data about a
particular issue from the public. It includes clear instructions with a multiple of questions by
providing enough space for answers.
3.5.1 Primary Data
Primary data was gathered from respondents who were the owners of local businesses in
Lusaka’s central business district. This information was collected through the use of
questionnaires.
3.5.2 Secondary Data
Secondary data was obtained from sources like, Journals. Articles, internet, newspapers and
books related to the subject under study. These sources were used length to extract information
required to support the findings from the study respondents.
3.5 Data Analysis processing procedure
The researcher used Pearson’s chi-square test and correlation for purposes of data analysis, and
the using Statistical Package for Social Sciences (SPSS) to establish the relationships and
associations between the dependent and independent variables proposed in the conceptual
framework of this study.
The chi-square (r2) test of independence is used to test for a statistically significant relationship
between two categorical variables. This is an inferential test that uses data from a sample to
make conclusions about the relationship between categorical variables in the population.
Page 35
25 | P a g e
The chi-square distribution is a special type of right skewed distribution. Like the t distribution,
the chi-square distribution varies depending on the degree of freedom. Chi-square test is a
statistical test commonly used to compare observed data with data we would expect to obtain
according to a specific hypothesis. The chi-square test is always testing for what scientists call
the null hypothesis. The formula for calculating chi-square (r2) is:
𝑟2 =∑(𝑜 − 𝑒)2
𝑒
Where; r2-the chi-square
o -the observed data
e-the expected data
That is, chi-square is the sum of the squared difference between observed (o) and the expected
(e) data, divided by the expected data in all possible categories.
3.6 Ethical Considerations
The nature of the study which was academic was explained fully to the respondents before the
commencement of data collection. The need to collect data from the respondents was justified
by obtaining consent from the respondents used in the study and to ensure that they participated
voluntarily.
Page 36
26 | P a g e
Chapter Four
PRESENTATION OF FINDINGS
4.0 Introduction
This chapter presents the research findings based on the data analysis and interpretation of
findings based on the data collected using the methodology outlined in the previous chapter.
Furthermore, this chapter also provides a discussion of the research findings in line with
empirical literature outlined in the second chapter.
The chapter begins with an overview of the respondents’ demographics as well as the
characteristics of the respondents. Thereafter, the findings based on the research objectives and
hypothesis are presented and discussed.
4.1 Background of the Respondents
The information on general background of respondents was sought to be of great importance
because it gives an idea of how reliable the information given is. A total of forty (40)
respondents took part in the study out of the 500 SMEs in the in Lusaka’s CBD, and this was
a reliable sample for purposes of undertaking this study.
a) Gender of Respondents
The Gender of the respondents was sought after by the researcher in order to have an
understanding of how females and males perceive issues pertaining to tax education and
voluntary tax compliance in Zambia by SMEs.
The following is a representation of the gender of the respondents at Lusaka’s central
business district where the targeted SMEs were operating from:
The results on Table 4.1.1 revealed that of the 40 Small and Medium Enterprises (SMEs)
approached in Lusaka’s CBD, 32 (80.00%) were male and 8 (24.00%) were female. This
signifies that the majority of SMEs in the targeted area (i.e. Lusaka central business district)
were owned or run by male owners with the minority being run or owned by females.
Table 4.1.1 Gender of respondent
Frequency Percent Valid Percent Cumulative Percent
Valid Male 32 80.0 80.0 80.0
Female 8 20.0 20.0 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
b) Level of education
Page 37
27 | P a g e
A question was also posed to the respondents which required them to indicate the level of
education they had attained, the findings based on this question are shown below on figure 1.
The research findings based on the educational qualifications of the respondents is depicted on
Figure 1 below, with the results showing that 37.5% of the respondents had college educational
qualifications, followed by 30% of the respondents who had secondary education qualifications
and 20% of the respondents had graduate educational qualifications respectively. On the other
hand, the minority of respondents (12.5%) had post-graduate educational qualifications.
Figure 1: Education Level of Respondent
Source: SPSS version 25, Compiled by: Author (2020)
c) Monthly Net income of Respondents
The monthly net income of the respondents was sought after by the researcher in order to have
and understanding of how much income SMEs within the CBD of Lusaka make or generate on
a monthly basis
Figure 2 below gives a representation of the monthly net income of the respondents in
Lusaka’s CBD. The findings on figure 3 revealed that of the 40 Small and Medium Enterprises
(SMEs) approached in Lusaka’s CBD, the majority 47.5% were earning a monthly net income
of above K15, 000, followed by 30% of the respondents who were earning a monthly net
Page 38
28 | P a g e
income between K10, 000 and K15000 while the minority of targeted SMEs were earning
monthly net incomes ranging from K5000 to K10,000.
This signifies that the majority of SMEs in the targeted area (i.e. Lusaka CBD of Lusaka) were
earning above K10, 000.00 per month from their respective business undertakings.
Figure 2: Monthly net income generated by the business
Source: SPSS version 25, Compiled by: Author (2020)
d) Type and Form of Business undertaken by respondents
A question pertaining to the type of business being undertaken, as well as the form in terms
of ownership structure of that business were posed to the respondents by the researcher.
The following is a representation of the type and form of business being undertaken by
SMEs in Lusaka’s CBD where the targeted SMEs were operating from.
The results on Table 4.1.2 above revealed that of the 40 Small and Medium Enterprises (SMEs)
approached in Lusaka’s CBD of Lusaka, 22 (55.00%) were operating as groups (partnerships),
with 12 (30.00%) operating as sole traders. Additionally, the majority of SMEs who responded
to the aforementioned question, were running businesses under the general dealers’ category,
followed by hardware and electronics category respectively.
Page 39
29 | P a g e
This signifies that the SMEs used in the study were operating in different forms of businesses,
and hence this eliminated any form of biasness when it came to the responses which were
provided by respondents.
Table 4.1.2 What type of business are you undertaking? * The business stated above is of what form?
Cross tabulation
The business stated above is of what form? Total
Sole trader Cooperative Group
(Partnership)
What type of business are you
undertaking?
Barbershop 0 1 2 3
Saloon 4 0 0 4
Welding 0 2 1 3
Internet café 1 0 2 3
General Dealers 3 0 11 14
Hardware 3 1 2 6
Electronics 0 1 4 5
Boutique 1 1 0 2
Total 12 6 22 40
Source: SPSS version 25, Compiled by: Author (2020)
e) Period of Operation for the Respondents Businesses
The SMEs used in the study were asked how long they had been operating or running their
respective businesses. The following is a representation of the period of operation of the
targeted SMEs in Lusaka’s CBD of Lusaka.
Table 4.1.3 How long have you been in this business?
Frequency Percent Valid Percent Cumulative
Percent
Valid 0 - 2 Years 5 12.5 12.5 12.5
2 - 5 Years 8 20.0 20.0 32.5
More than 5 Years 27 67.5 67.5 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
The results on Table 4.1.3 above revealed that of the 40 Small and Medium Enterprises (SMEs)
approached in Lusaka’s CBD, 27 (67.50%) had been operating in the CBD of Lusaka for more
than 5 years, while 20% had been operating for a period of two (2) to five (5) years. In addition,
the minority of respondents (5 of 40 or 12.5%) stated that they had been operating in the CBD
of Lusaka for a period ranging between o to 2years.
This shows that most SMEs targeted had been in operation for a period of more than five
years, as can be seen from the findings presented above.
Page 40
30 | P a g e
f) Size of Businesses in terms of employees (labour)
The SMEs used in the study were asked the size of the workforce or employees at their
respective businesses. Figure 3 below shows that 65% of the respondents had zero (0) to five
(5) employees who were working at their respective businesses, while 30% of the respondent
had six (6) to ten (10 employees, and the minority (5%) had employed eleven (11) to fifteen
(15) employees at their respective businesses, this shows that most SMEs targeted in Lusaka’s
CBD had less than 5 employees.
Figure 3: What is the size of the business in terms of employees?
Source: SPSS version 25, Compiled by: Author (2020)
4.2 To assess the effect of Taxpayer Education on Voluntary Tax Compliance
by SMEs in Zambia.
The main research objective which was aimed at assessing the effect of Taxpayer education on
voluntary tax compliance by SMEs in Zambia. Findings based on the questions and statements
in line with the aforementioned research objective which were posed to the respondents are
presented below as follows:
a) Chi-Square Tests for Significance
Chi-square test for significance helps to determine whether categorical data shows dependency
or the two classifications are independent. It can also be used to make comparisons between
theoretical populations and actual data when categories are used.
Page 41
31 | P a g e
TABLE 4.2.1 HYPOTHESIS TESTING DECISION RULE
NULL HYPOTHESIS ACCEPT NULL HYPOTHESIS REJECT NULL HYPOTHESIS
ROSCAS do not have a
significant impact on poverty
reduction.
Asymptotic value > 0.1
(90% confidence interval)
Asymptotic value ≤ 0.1
(90% confidence interval)
Source: Author (2020)
Therefore, in order to answer the main objective of the study, Pearson’s chi-square test for
significance were ran, and findings based on this test are presented and discussed below as
follows:
Table 4.2.2 Crosstab
Do you find tax filing and payment
procedures complex?
Total
Yes No
Having tax education increases the
likelihood of me paying taxes
Strongly Agree 1 4 5
Agree 3 7 10
Neutral 4 3 7
Disagree 13 0 13
Strongly Disagree 4 1 5
Total 25 15 40
Source: Source: SPSS version 25 output)
Research findings on Table 4.2.2 below show that the majority of SMEs (25 out of 40 or 62.5%)
gave a Yes response when asked if they find tax filing and payment procedures to be complex,
with the minority giving a No response (15 out of 40 or 37.5%). Additionally, the majority of
SMEs (32.5%) disagreed when asked if having tax education increases the likelihood of them
paying taxes. On the other hand, the minority, strongly agreed and strongly disagreed when
posed with the question on the Table 4.2.2.
These findings indicate that the SMEs approached have different perceptions of how tax
education affects the probability of a tax payer, in this case an SME, paying their respective
tax liabilities as can be seen from the contrasting findings on Table 4.2.2 above.
Table 4.2.2 (a) Chi-Square Tests
Value df Asymptotic
Significance (2-sided)
Pearson Chi-Square 16.899a 4 .002
Likelihood Ratio 21.139 4 .000
Linear-by-Linear Association 13.222 1 .000
N of Valid Cases 40
a. 8 cells (80.0%) have expected count less than 5. The minimum expected count is 1.88.
Source: SPSS version 25 output
Page 42
32 | P a g e
The findings presented above on Table 4.2.1 (a) shows that the asymptotic value or probability
value is 0.002 which is less than the p-value of 0.1, hence, tax payer education has a statistically
significant relationship with one finding tax filing and tax payment procedures complex.
Therefore, we fail to accept the null hypothesis which states that Tax payer education does not
have a significant positive impact on voluntary tax compliance.
Based on the above findings, we accept the alternative hypothesis which states that Tax
education has a significant positive impact on tax compliance.
Table 4.2.3 Crosstab
Count
Do you require simplified forms of tax payment? Total
Strongly
Agree
Agree Disagre
e
Strongly
Disagree
Having tax education
increases the likelihood
of me paying taxes
Strongly Agree 1 0 3 1 5
Agree 4 0 3 3 10
Neutral 2 2 1 2 7
Disagree 7 6 0 0 13
Strongly
Disagree
3 1 1 0 5
Total 17 9 8 6 40
Source: SPSS version 25 output
Table 4.2.3 (a) Chi-Square Tests
Value df Asymptotic
Significance (2-
sided)
Pearson Chi-Square 20.777a 12 .054
Likelihood Ratio 26.806 12 .008
Linear-by-Linear Association 9.013 1 .003
N of Valid Cases 40
a. 19 cells (95.0%) have expected count less than 5. The minimum expected count is .75.
Source: SPSS version 25 output
The findings presented above on Table 4.2.3 (a) shows that the asymptotic value or probability
value is 0.054 which is less than the p-value of 0.1, hence, tax payer education has a statistically
significant relationship with one requiring or not requiring simplified forms of tax payment.
Therefore, we fail to accept the null hypothesis which states that Tax payer education does not
have a significant positive impact on voluntary tax compliance. Based on the above findings,
we accept the alternative hypothesis which states that Tax education has a significant positive
impact on tax compliance.
Page 43
33 | P a g e
4.3 To understand if SMEs have been exposed to any taxpayer education
The specific research objective which was aimed at understanding if SMEs have been exposed
to any taxpayer education, was met through questions and statements in line with the
aforementioned research objective which were posed to the respondents are presented below
as follows:
Table 4.3.1 Are you able to determine accurately your tax liability and income?
Frequency Percent Valid Percent Cumulative
Percent
Valid Strongly Agree 14 35.0 35.0 35.0
Agree 13 32.5 32.5 67.5
Neutral 6 15.0 15.0 82.5
Disagree 5 12.5 12.5 95.0
Strongly Disagree 2 5.0 5.0 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Research findings on Table 4.3.1 above show that the majority of respondents (i.e. SMEs)
targeted (35%) strongly agreed, followed by 32.5% who agreed when asked if they were able
to accurately determine their tax liabilities. On the other hand, the minority of respondents (i.e.
SMEs) (5%) strongly disagreed when posed with the question on Table 4.3.1.
These findings clearly indicate that the SMEs targeted are able to accurately determine their
tax liabilities and income, which implies that they have been exposed to some taxpayer
education.
Table 4.3.2 Do you have enough information on tax and tax procedures?
Frequency Percent Valid Percent Cumulative Percent
Valid Yes 26 65.0 65.0 65.0
No 14 35.0 35.0 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Research findings on Table 4.3.2 above show that the majority of respondents (i.e. SMEs)
targeted (65%) gave a Yes response, while the minority (35%) gave a No response when asked
if they had enough information on taxation and tax procedures. These findings clearly indicate
that not all SMEs targeted in Lusaka’s CBD have enough information on taxation and taxation
procedures, and hence ZRA must carry out more sensitization in order to level the playing field
in terms of taxation education of SMEs.
Page 44
34 | P a g e
Table 4.3.3 Do you find tax filing and payment procedures complex?
Frequency Percent Valid Percent Cumulative
Percent
Valid Yes 25 62.5 62.5 62.5
No 15 37.5 37.5 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Research findings on Table 4.3.3 above show that the majority of respondents (i.e. SMEs)
targeted (62.5%) gave a Yes response, while the minority (32.5%) gave a No response when
asked if they found tax filing and payment procedures complex. These contrasting findings
clearly indicate that tax filing and payment procedures are not easily understood by all SMEs
in Lusaka’s CBD, and hence there is need for more tax education in order for the level of
understanding on these tax procedures to be easily understood by SMEs.
Table 4.3.4 Do you require simplified forms of tax payment?
Frequency Percent Valid Percent Cumulative
Percent
Valid Strongly Agree 17 42.5 42.5 42.5
Agree 9 22.5 22.5 65.0
Disagree 8 20.0 20.0 85.0
Strongly Disagree 6 15.0 15.0 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Research findings on Table 4.3.4 above show that the majority of respondents (i.e. SMEs)
targeted (42.5%) strongly agreed when asked if they required simplified forms of tax payments,
while the minority (15%) strongly disagreed when asked the question on Table 4.3.4. These
findings show that SMEs in Lusaka’s CBD clearly have challenges in terms of understanding
taxation, and as such there is need for more tax education in order for them to increase their
level of understanding of taxation. The Zambia Revenue Authority (ZRA) must ensure that
they simply the taxation forms by using less complicated terms or also using vernacular in
order for all types of SMEs to understand the online or manual tax forms.
Table 4.3.5 Have you registered with ZRA for tax remitting
Frequency Percent Valid Percent Cumulative Percent
Valid Yes 35 87.5 87.5 87.5
No 5 12.5 12.5 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Page 45
35 | P a g e
Research findings on Table 4.3.5 above show that the majority of respondents (i.e. SMEs)
targeted (87.5%) gave a Yes response when asked if they have registered with ZRA for
purposes of remitting tax, while the minority (12.5%) gave a No response when asked the same
question on Table 4.3.5. These results clearly show that most of the targeted SMEs have
registered with ZRA, as can be seen from their responses.
Table 4.3.6 On the basis of your personal experience, how difficult or easy is it for a person to
avoid paying taxes owed to the government?
Frequency Percent Valid Percent Cumulative Percent
Valid Very easy 20 50.0 50.0 50.0
Easy 11 27.5 27.5 77.5
Difficult 6 15.0 15.0 92.5
Very Difficult 3 7.5 7.5 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Research findings on Table 4.3.6 above show that the majority of respondents (i.e. SMEs)
targeted (50%) stated that it is ‘very easy’ when asked how difficult or easy is it for a person
to avoid paying taxes owed to the government, while the minority (7.5%) stated that it is ‘Very
Difficult’ when asked the question on Table 4.3.6.
These findings clearly reveal that tax avoidance by SMEs in Zambia is a major problem, as
most SMEs targeted stated that it is very easy and easy for a taxpayer to avoid paying taxes
owed to the government or the state.
4.4 To determine SMEs level of understanding of tax system and how it
influences the tax compliance rate
The specific research objective which was aimed at determining SMEs level of understanding
of tax system and how it influences the tax compliance rate, was met through questions and
statements in line with the aforementioned research objective which were posed to the
respondents are presented below as follows:
Research findings on Table 4.4.1 below show that the majority of respondents (i.e. SMEs)
targeted (42.5%) strongly agreed, followed by 40% who agreed when asked ‘To what extent
do you agree that tax officials should use Tax penalty and fines to curb tax non-
compliance?’, while the minority (5%) disagreed when asked the question highlighted above.
Page 46
36 | P a g e
Table 4.4.1 To what extent do you agree that tax officials should use Tax penalty and fines to
curb tax non-compliance?
Frequency Percent Valid Percent Cumulative Percent
Valid Strongly Agree 16 40.0 40.0 40.0
Agree 17 42.5 42.5 82.5
Neutral 5 12.5 12.5 95.0
Disagree 2 5.0 5.0 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Research findings on Table 4.4.2 below show that the majority of respondents (i.e. SMEs)
targeted (55%) strongly agreed, followed by 27.5% who agreed when asked ‘To what extent
do you agree that tax officials should use Tax audit to curb tax non-compliance?’, while the
minority (5%) disagreed when asked the question highlighted above.
The above findings show that SMEs were in agreeance that tax officials should use taxation
audits as a mechanism of curbing non-compliance of taxes by taxpayers such as SMEs. This
shows that SMEs have a relative high degree of understanding of tax systems, which is a
positive indicator when it comes to compliance levels by SMEs.
Table 4.4.2 To what extent do you agree that tax officials should use Tax audit to curb tax non-
compliance?
Frequency Percent Valid Percent Cumulative Percent
Valid Strongly Agree 22 55.0 55.0 55.0
Agree 11 27.5 27.5 82.5
Neutral 5 12.5 12.5 95.0
Strongly Disagree 2 5.0 5.0 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
Research findings on Table 4.4.3 below show that the majority of respondents (i.e. SMEs)
targeted (35%) strongly agreed, followed by 27.5% who disagreed when asked ‘To what extent
do you agree that tax officials should use Imprisonment to curb tax non-compliance?’, while
the minority (7.5%) were neutral when asked the question highlighted above. These findings
show that the SMEs have different perceptions or views when it comes to the measures that
taxation collectors or authorities in a country should use for non-compliant tax payers in a
country.
Page 47
37 | P a g e
Table 4.4.3 To what extent do you agree that tax officials should use Imprisonment to curb
tax non-compliance?
Frequency Percent Valid Percent Cumulative Percent
Valid Strongly Agree 14 35.0 35.0 35.0
Agree 6 15.0 15.0 50.0
Neutral 3 7.5 7.5 57.5
Disagree 6 15.0 15.0 72.5
Strongly Disagree 11 27.5 27.5 100.0
Total 40 100.0 100.0
Source: SPSS version 25, Compiled by: Author (2020)
4.5 To examine measures that the ZRA put in place to educate SMEs on the
importance of tax compliance
The final specific research objective which was aimed at examining measures that ZRA has
put in place to educate SMEs on the importance of tax compliance. This objective was met
through questions posed to the officials from the Zambia Revenue Authority (ZRA) in line
with the aforementioned research objective. The responses with regards to the measures that
ZRA has put in place to educate SMEs on the importance of tax compliance which were given
by Assistant tax inspectors at ZRA headquarters in Lusaka, are presented below as follows:
There is a team under Direct and Indirect Taxes at all ZRA stations nationwide that are
responsible for tax education through workshops, tax clinics and university education.
ZRA has radio and television programs which run on Zambia National Broadcasting
Corporation (ZNBC) aimed at educating SMEs on the essence of tax compliance.
ZRA also has an outreach program where seminars and training workshops are
conducted to sensitize SMEs on taxation matters. These measures have been in place
for a long time and some were recently added under the ZRA modernisation program
which is currently underway.
In addition to the aforementioned findings, the ZRA assistant inspectors also provided
additional information in line with tax education and voluntary tax compliance by SMEs in
Zambia. The assistant inspectors stated that the level of tax education that SMEs in Zambia
have is not sufficient, as most SMEs have or understand very little pertaining to taxation
matters. Furthermore, the inspectors stated that many SMEs were not aware about various taxes
that they need to register for, as such, tax compliance levels were not good amongst SMEs.
Nevertheless, with the improved taxation education by ZRA, the authority expects to see an
improvement in terms of compliance levels amongst SMEs.
In addition, the Assistant inspector stated that the tax education measures that ZRA has put in
place are effective despite the unwillingness from some taxpayers to learn which is due to the
Page 48
38 | P a g e
negative perceptions attached to anything to do with taxation in the country. In justifying the
statement that the tax education measures have been effective, the inspectors stated that
taxpayer’s turnout for ZRA workshops and training has also been very good, and there has also
been an increase in compliance levels by a number of taxpayers. Lastly, the inspectors revealed
that there has been an increase in Taxpayer Identification Number (TPIN) registration for
SMEs and returns filing.
4.6 Discussions of the Findings
The present study was aimed at assessing the effect of Taxpayer Education on Voluntary Tax
Compliance by SMEs in Zambia, with the main focus being on SMEs operating in Lusaka’s
CBD. The study was guided by three specific objectives which were drawn from the main
objective, these were: to understand if SMEs have been exposed to any taxpayer education; to
determine SMEs level of understanding of tax system and how it influences the tax compliance
rate and examine measures that the ZRA put in place to educate SMEs on the importance of
tax compliance
Based on the main research objective, results obtained revealed that tax education has a
significant positive impact on voluntary tax compliance by Small and Medium Enterprises
(SMEs), the above findings were arrived at based on the asymptotic or probability values
derived from Pearson’s chi-square test for significance which were all below 0.1,
The asymptotic value or probability values of 0.002 and 0.054 were less than the p-value of
0.1, hence, tax payer education has a statistically significant relationship with voluntary tax
compliance. Therefore, we fail to accept the null hypothesis which states that Tax payer
education does not have a significant positive impact on voluntary tax compliance. These
findings were further supported by the responses given by the tax inspectors at the Zambia
Revenue Authority (ZRA) who stated that Tax education has an effective role to play when it
comes to compliance levels by SMEs, as evidenced by improvements in terms of voluntary tax
compliance by SMEs in Zambia.
The research findings obtained in this study were in line with those obtained by Trawule (2017)
in Ghana; Fauziati et al (2016) in India; Setyorin (2016) and Mukhlis et al (2015) in Indonesia;
and Kirchler (2014) in Zimbabwe, whose studies revealed that tax education and knowledge
affects tax compliance.
Page 49
39 | P a g e
Additionally, the objective aimed at understanding if SMEs have been exposed to any taxpayer
education, revealed that the most SMEs targeted have been exposed to some form of taxpayer
education as could be seen from the responses that were being given by the SMEs in Lusaka’s
CBD. The findings clearly indicated that the SMEs targeted were able to accurately determine
their tax liabilities and income, which implies that they have been exposed to some taxpayer
education. However, when it came to tax filing and payment procedures, the majority of SMEs
found the process to be complex, the above findings clearly indicated that not all SMEs targeted
in Lusaka’s CBD have enough information on taxation and taxation procedures, and hence
ZRA must carry out more sensitization in order to level the playing field in terms of taxation
education of SMEs. These findings were supported by the assistant inspectors at ZRA who
stated that the level of tax education that SMEs in Zambia have is not sufficient, as most SMEs
have or understand very little pertaining to taxation matters.
Furthermore, the specific research objective aimed at determining SMEs level of understanding
of tax system and how it influences the tax compliance rate, revealed that most of the SMEs
that were targeted understand that tax penalties and fines can be used to curb non-compliance
by SMEs, as these measures are used by all taxation authorities in countries around the globe,
Zambia inclusive. Nevertheless, there understanding of the tax system and how it influences
compliance rates was relative low as could be seen from their mixed responses on measures
that are taken by ZRA to curb non-compliance of taxation obligations.
Lastly, the final specific research objective was aimed at examining measures that ZRA has
put in place to educate SMEs on the importance of tax compliance, results in line with the
above research objective revealed that there is a team under Direct and Indirect Taxes at all
ZRA stations nationwide that are responsible for tax education through workshops, tax clinics
and university education. In addition, ZRA has radio and television programs which run on
ZNBC, along with an outreach program where seminars and training workshops are conducted
to sensitize SMEs on taxation matters. These measures have been in place for a long time and
some were recently added under the ZRA modernisation program which is currently underway.
Page 50
40 | P a g e
CHAPTER FIVE
CONCLUSIONS AND RECOMMENDATIONS
5.0 Introduction
This chapter presents a summary of the findings and discusses the conclusions as well as
recommendations in light of the research that was undertaken. The research objectives were
met through the analysis of data from the questionnaires distributed to the respondents who
were SMEs from Lusaka’s CBD and two assistant inspectors at the Zambia Revenue Authority
(ZRA)), and the research questions which were in line with the objectives were answered from
the data gathered during the course of the research. Recommendations and areas for future
studies are also included in this chapter
5.1 Conclusion
In summary, it can be seen from the findings obtained that indeed taxation education has a
salient and significant role to play when it comes to voluntary tax compliance levels of SMEs
in Zambia. Every country needs a stable taxation system which efficiently and effectively
collects or mobilizes revenue from different taxpayers across the country, in order to fund or
finance all key economic sectors in a country. Therefore, the low levels of tax compliance in
Zambia by SMEs and other taxpayers such as tenants and landlords which have been well
documented in the press and by other researchers or scholars needs to be addressed through tax
education.
In addition, conducting more taxation seminars as well as ensuring that SMEs understand
taxation systems as well as terms will be a step in the right direction for countries such as
Zambia which has challenges when it comes to tax compliance. The fact that SMEs stated that
is very easy for a taxpayer in Zambia to avoid paying taxation obligations is a major concern
for ZRA, and as such this loophole and others in the tax system in Zambia must be addressed
for the betterment of the country.
5.2 Recommendations and Areas for Further Studies
The recommendations and areas for future studies based on the research findings obtained in
carrying out this study are listed below:
Page 51
41 | P a g e
i. ZRA must increase its efforts towards taxation education to SMEs in Zambia in order to
improve the levels of voluntary tax compliance by SMEs.
ii. ZRA must must ensure that they cover all taxation loopholes in order to enhance or increase
tax compliance levels by SMEs and other taxpayers in the country, as taxation has a
fundamental role to play in economic activity and the overall development of a country.
iii. Stiffer penalties or measures must be put in place for SMEs that are not complainant in
terms of meeting their taxation obligations.
iv. A study on a larger sample of SMEs must be conducted in order to get a broader perspective
on the role that tax education plays on voluntary tax compliance levels in Zambia.
v. A study on firms in the mining sector which is synonymous for tax avoidance and evasion
must be undertaken in order to ascertain causes of low compliance in terms of various types
of taxation due to ZRA.
Page 52
42 | P a g e
References
1) Ahmed, U, S (2019). Tax Knowledge and Tax Compliance: Some Observations, the Cost
and Management, ISSN 1817-5090, Volume-47, Number-06, November-December 2019
2) Aladejebi, O (2018). Measuring Tax Compliance among Small and Medium Enterprises in
Nigeria, International Journal of Accounting and Taxation December 2018, Vol. 6, No. 2,
pp. 29-40
3) Asrinanda, Y. D. (2018). The Effect of Tax Knowledge, Self-Assessment System, and Tax
Awareness on Taxpayer Compliance. International Journal of Academic Research in
Business and Social Sciences, 8(10), 539–550.
4) Atawodi, O.W., & Ojeka, S.A. (2012). Factors that affect tax compliance among small and
medium enterprises (SMEs) in North Central Nigeria. International Journal of Business
and Management, 7(12), 87.
5) Becker, G, S. (1968). Crime and Punishment: An Economic Approach. Journal of Political
Economy, 76, 169-217.
6) Djawadi, M, B and Fahr, R (2013). The Impact of Tax Knowledge and Budget Spending
Influence on Tax Compliance, IZA DP No. 7255
7) Fauziati, P, Minovia, F, A Muslim, R, Y and Nasrah, R (2016). The Impact of Tax
Knowledge on Tax Compliance Case Study in Kota Padang, Indonesia, Journal of
Advanced Research in Business and Management Studies, Vol. 2, No. 1. Pages 22-30, 2016
8) Gcabo, R. & Robinson, Z. (2007). Tax compliance and behavioral response in South
Africa: An alternative investigation, SAJEMS ns, 10 (3): 357-370
9) Gitaru, K (2017). The Effect of Taxpayer Education on Tax Compliance in Kenya: A case
study of SME’s in Nairobi Central Business District, University of Nairobi
10) Gitonga, N, G and Memba, F (2018). Determinants of Tax Compliance by Public Transport
Savings and Credit Cooperative Societies in Kenya: A Case Study of Kiambu County,
International Journal of Social Sciences and Information Technology, 2412-0294, Vol Iv,
Issue 9
11) Helhel, Y., & Ahmed, Y. (2014). Factors affecting tax attitudes and tax compliance: A
survey study in Yemen. European Journal of Business and Management, 6(22), 78-98
12) Indabawa, S. and Mpofu, S. (2006). The Social Context of Adult Learning in Africa. Cape
Town: UNESCO Institute for Education.
Page 53
43 | P a g e
13) Kamleitner, B., Korunka, C., & Kirchler, E. (2012). Tax compliance of small business
owners: A review, International Journal of Entrepreneurial Behaviour & Research, 18(3)
330-351s
14) KPMG (2019). Zambia 2019 Budget Highlights, KPMG
15) Langmead, et. al. (Eds.) (2006) Tax Policy Issues in Zambia: Selected papers. Lusaka:
Langmead & Baker Limited – Fringilla.
16) Magiya, O, S (2016). Determinants of Tax Compliance among Small and Medium sized
Enterprises in Nairobi East Tax District, University of Nairobi, Kenya
17) Marti, L. O., Migwi, S. & Obara, M. (2010). Taxpayers' attitudes and tax compliance
behavior in Kenya. African Journal of Business &Management.
18) Masango, T, D (2019). “An Investigation into Tax Compliance Practices by Taxpayers with
Current Tax Regime and their Effects on Organisational Performance: A Case of
Zimbabwe Revenue Authority’’, Bindura University of Science Education
19) Mascagni, G and Santoro, F (2018). What is the role of taxpayer education in Africa?
African Tax Administration Paper 1, Bill and Melinda Gates Foundation
20) Maseko, N. (2014). The impact of personal tax knowledge and compliance costs on tax
compliance behaviour of SMEs in Zimbabwe. Elite Research Journal of Accounting and
Business Management, 2(3), 26-37,
21) Moyo, D. (2009). Dead Aid. London: Penguin Group Publishers.
22) Mukhlis, I., Utomo, S.H., & Soesetio, Y. (2015). The role of taxation education on taxation
knowledge and its effect on tax fairness as well as tax compliance on handicraft SMEs
sectors in Indonesia. International Journal of Financial Research, 6(4), 161-187
23) Mwandiambira, N (2017). Evaluating the impact of tax knowledge on tax knowledge
among SMEs in Zimbabwe, Midlands State University
24) Newman, W and Nokhu, M (2018). Evaluating the Impact of Tax Knowledge on Tax
Compliance among Small Medium Enterprises in a developing Country, Academy of
Accounting and Financial Studies Journal, Volume 22, Issue 6, 2018
25) Nhekairo, W (2014). “THE TAXATION SYSTEM IN ZAMBIA”, Jesuit Centre for
Theological Reflection
26) Niemirowski, P., Wearing, A.J., Baldwin, S., Leonard, B., & Mobbs, C. (2012). The
influence of tax related behaviours, beliefs, attitudes and values on Australian taxpayer
compliance, is tax avoidance intentional and how serious an offence is it? University of
New South Wales, Sydney.
Page 54
44 | P a g e
27) Nyambe, S, S (2013). Artisans’ Knowledge of Taxation Issues in Selected Markets of
Lusaka, University of Zambia
28) Nyamwananza, T., Mavhiki, S., Mapetere, D., & Nyamwanza, L. (2014). An analysis of
SMEs attitude and practices towards tax compliance in Zimbabwe. Sage open
29) Oberholzer, R. (2007). Attitudes of South African Taxpayers towards taxation: A pilot
study Accountancy business and public interest, 7(10: 44-69.
30) Obongo, M, B, Memba, S, F and Oluoch, O (2018). Influence of Tax Knowledge and
Awareness on Tax Compliance Among Investors in the Export Processing Zones in Kenya,
International Journal of Scientific Research and Management (IJSRM), Volume 06, Issue
10, pp 728-733
31) OECD (2004) Forum on Tax Administration, Compliance Subgroup; (2004) Compliance
Risk Management, Managing and Improving Tax Compliance‟
32) Okpeyo, T, E, Musah, A and Gakpetorc, D, E (2019). Determinants of Tax Compliance in
Ghana: The Case of Small and Medium Tax Payers in Greater Accra Region, Journal of
Applied Accounting and Taxation Article History Vol. 4, No. 1, March 2019, 1-14
33) Oladipupo, A.O. & Obazee, U. (2016). Tax knowledge, penalties and tax compliance in
small and medium scale enterprises in Nigeria.
34) Omondi, J. A. & Theuri, J. M. (2019). Effect of taxpayer awareness and compliance costs
on tax compliance among small scale traders in Nakuru town, Kenya. International
Academic Journal of Economics and Finance, 3(3), 279-295
35) Ongwamuhana, K (2011). Tax Compliance in Tanzania - An Analysis of Law and Policy
affecting Voluntary Taxpayer Compliance, University of Cape Town
36) Organization for Economic Co-operation and Development (OECD) (2016).
Understanding and Influencing Taxpayers’ Compliance Behavior Information Note. Forum
on Tax Administration: SME Compliance Subgroup. Paris: OECD
37) Palil, M, R (2010). Tax Knowledge and Tax Compliance Determinants in Self-Assessment
System in Malaysia, the University of Birmingham
38) Palil, M.R., & Mustapha, A.F. (2011). The evolution and concept of tax compliance in Asia
and Europe. Australian Journal of Basic and Applied Sciences, 5(11), 557-563
39) Policy Monitoring and Research (PMRC) (2014). The Role of Tax Morale in Enhanced
Tax Compliance: Increasing Domestic Revenue Collection Through Improved Tax Morale,
PMRC
Page 55
45 | P a g e
40) Resnick, D (2018). Tax Compliance and Representation in Zambia’s Informal Economy,
International Growth Centre (IGC), S-41418-ZMB-1
41) Saad, N. (2014). Tax knowledge, tax complexity and tax compliance: Taxpayers’ view.
Procedia-Social and Behavioural Sciences, 1069-1075.
42) Setyorin, T, C (2016). The Influence of Tax Knowledge, Managerial Benefit and Tax
Socialization toward Taxpayer’s Willingness to Pay SME’s Tax, Acta Universitatis
Danubius
43) Sigauke, M. (2017). An investigation on the influence of tax knowledge on tax compliance.
Harare: Mambo Press
44) Thananga, G, A, Wanyoike, M, D and Wagoki, J, A (2013). Factors Affecting Compliance
on Rental Income Tax Policy by Landlords in Nakuru Municipality, Journal of Agriculture
and Environmental Sciences 2(1); June 2013 pp. 26-38, American Research Institute for
Policy Development
45) Trawule, Y, A (2017). Tax Education and Tax Compliance: A Study of the Self-Employed
in the Cape Coast Metropolitan Assembly of Ghana, University of Cape Coast
46) Wahabu, A (2016). Examining Tax Compliance of Small and Medium-Sized Enterprises
in the Tamale Metropolis, University of Cape Coast
Page 56
46 | P a g e
APPENDIX
Research Questionnaire for SMEs
Instructions: Please cross (X) the answer which is in line with the questions which are being
asked of you, and provide short responses where applicable. Thank you
SECTION A: Background Information
1. Gender of respondent
a) Male b) Female
2. Education Level of Respondent
a) Primary [ ] b) Secondary [ ] c) College [ ] d) Graduate [ ]
e) Post graduate [ ]
3. Monthly net income generated by the business
a) Below K5000 [ ] b) K5, 00 – K7, 500 [ ] c) K7, 500 – K10, 000 [ ]
d) K10, 000 – K15, 000 [ ] e) Above K15, 000
4. What type of business are you undertaking?
Barbershop Saloon Welding Internet café
General Dealers others (specify)…………………………………………
5. The business stated above is of what form?
Sole trader
Cooperative
Group (Partnership)
Others……………………………………….
0 - 2 Years 2 - 5 Years More than 5 Years
6. How long have you been in this business?
0 - 2 Years 2 - 5 Years More than 5 Years
7. What is the size of business in terms of employees?
0-5 6-10 11-15
Section B: To assess the effect of Taxpayer Education on Voluntary Tax Compliance by
SMEs in Zambia.
Kindly indicate the level with which you agree with the statements below that motivate you to be tax
compliant (1 = Strongly Disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly Agree).
B (1) Tax Knowledge (Information) of SMEs
i. Do you have enough information on tax and tax procedures? A) Yes B) No
ii. Do you find tax filing and payment procedures complex? A) Yes B) No
iii. Do you require simplified forms of tax payment? A) Yes B) No
iv. Do you have enough information on tax and tax procedures? A) Yes B) No
Page 57
47 | P a g e
Statements 1
Strongly
Agree
2
Agree
3
Neutral
(Not sure)
4
Disagree
5
Strongly
Disagree
a) Are you able to determine
accurately your tax liability
and income
b) Have you registered with
ZRA for tax remitting
c) Do you file your returns
and pay taxes due in time
d) Have you ever been
charged for tax fines and
penalties
e) Do you keep up to date
books of account for your
business
f) Having tax education
increases the likelihood of
me paying taxes
B (2) Determinants of Tax Compliance
i. On the basis of your personal experience, how difficult or easy is it for a person to avoid paying
taxes owed to the government?
1=Very easy ( ) 2=Easy ( ) 3= Difficult ( ) 4=Very difficult ( )
ii. To what extent do you agree that tax officials should use the following measures to curb tax
non-compliance?
a. Tax penalty and fines
a) Strongly Agree [ ] b) Agree [ ] c) Neutral [ ] d) Disagree [ ]
e) Strongly Disagree [ ]
b. Tax audit
a) Strongly Agree [ ] b) Agree [ ] c) Neutral [ ] d) Disagree [ ]
e) Strongly Disagree [ ]
c. Imprisonment
a) Strongly Agree [ ] b) Agree [ ] c) Neutral [ ] d) Disagree [ ]
e) Strongly Disagree [ ]
END OF QUESTIONS, THANK YOU FOR YOUR PARTICIPATION
Page 58
48 | P a g e
Interview for ZRA Staff
Instructions: Please provide short responses to the questions pertaining to the measures
ZRA has put in place for purposes of Tax education, in line with the research topic of assessing
the effect of Taxpayer Education on Voluntary Tax Compliance by SMEs in Zambia.
1) Name of Institution
…………………………………………………………
2) Position held by Respondent
……………………………………….…………….…………….…………….
3) How would you describe the level of tax education that SMEs in Zambia currently
have?
……………………………………….…………….…………….…………….………
……………………………….…………….…………….…………….
4) What is your view with regards to the role that tax education plays on voluntary
tax compliance of SMEs?
……………………………………….…………….…………….…………….………
……………………………….…………….…………….…………….
5) What measures has ZRA put in place on tax education of SMEs in Zambia?
……………………………………….…………….…………….…………….………
……………………………….…………….…………….…………….………………
……………………….…………….…………….…………….………………………
……………….…………….…………….…………….
6) In which year were these measures on tax education implemented by ZRA?
……………….
7) How would you describe the effectiveness of the measures ZRA has put in place
on tax education with respect to voluntary tax compliance by SMEs in Zambia?
…………………………….…………….…………….…………….…………………
…………………….…………….…………….…………….…………………………
…………….…………….…………….…………….…………………………………
…….…………….…………….…………….
END OF INTERVIEW, THANK YOU FOR YOUR TIME
Page 59
49 | P a g e
Crosstab
Count
Do you file your returns and pay taxes due in time Total
Strongly
Agree
Agree Neutr
al
Disagr
ee
Strongly
Disagree
Having tax education
increases the
likelihood of me
paying taxes
Strongly
Agree
2 2 0 1 0 5
Agree 4 4 2 0 0 10
Neutral 3 2 1 1 0 7
Disagree 7 4 0 1 1 13
Strongly
Disagree
2 1 1 0 1 5
Total 18 13 4 3 2 40
Chi-Square Tests
Value df Asymptotic
Significance
(2-sided)
Pearson Chi-Square 10.454a 16 .842
Likelihood Ratio 12.710 16 .694
Linear-by-Linear
Association
.206 1 .650
N of Valid Cases 40
a. 24 cells (96.0%) have expected count less than 5. The minimum
expected count is .25.
Crosstab
Page 60
50 | P a g e
Count
Have you registered with ZRA for
tax remitting
Total
Yes No
Having tax education
increases the likelihood of
me paying taxes
Strongly Agree 4 1 5
Agree 10 0 10
Neutral 6 1 7
Disagree 11 2 13
Strongly Disagree 4 1 5
Total 35 5 40
Chi-Square Tests
Value df Asymptotic
Significance
(2-sided)
Pearson Chi-Square 2.062a 4 .724
Likelihood Ratio 3.230 4 .520
Linear-by-Linear
Association
.375 1 .540
N of Valid Cases 40
a. 7 cells (70.0%) have expected count less than 5. The minimum
expected count is .63.
Page 61
51 | P a g e
Crosstab
Count
Are you able to determine accurately your tax liability and income Total
Strongly
Agree
Agree Neutral Disagre
e
Strongly
Disagree
Having tax education
increases the
likelihood of me
paying taxes
Strongly Agree 2 2 1 0 0 5
Agree 5 4 0 1 0 10
Neutral 2 2 2 0 1 7
Disagree 4 4 2 2 1 13
Strongly
Disagree
1 1 1 2 0 5
Total 14 13 6 5 2 40
Chi-Square Tests
Value df Asymptotic
Significance (2-sided)
Pearson Chi-Square 11.279a 16 .792
Likelihood Ratio 13.534 16 .633
Linear-by-Linear Association 3.335 1 .068
N of Valid Cases 40
a. 25 cells (100.0%) have expected count less than 5. The minimum expected count is .25.