taxpayers' education on tax compliance - Mzumbe University

TAXPAYERS’ EDUCATION ON TAX COMPLIANCE

IN DAR ES SALAAM TANZANIA.

TAXPAYERS’ EDUCATION ON TAX COMPLIANCE

IN DAR ES SALAAM TANZANIA.

BY

RAMADHANI W. MSOBA

A Dissertation Submitted in Partial Fulfillment of the Requirements for the

Award of Masters Degree of Business Administration in Corporate

Management of Mzumbe University

2013

ii

CERTIFICATION

We, undersigned, certify that we have read and hereby recommend for acceptance by

the Mzumbe University, a dissertation entitled “To investigate how taxpayers’

education on tax compliance in Dar es salaam Tanzania” in partial fulfilment of the

requirement for Masters Degree of Business Administration in Corporate

Management of Mzumbe University.

………………………………………

Major Supervisor

………………………………………

Internal Examiner

………………………………………

External Supervisor

Accepted for the board…………………………………………

CHAIRPERSON, FACULTY/DIRECTORATE BOARD

DECLARATION AND COPYRIGHT

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I, Ramadhani W. Msoba declare that this dissertation is my own original work and

that it has not been presented and will not be presented to any other University for

similar or any other degree award.

Signature

Date

iv

COPYRIGHT ©

This thesis is copyright material protected under the Berne Convention, the

Copyright Act 1999 and other international and national enactments, in that behalf,

on intellectual property. It may not be reproduced by any means, in full or in part,

expect for short extracts in fair dealings, for research or private study, critical

scholarly review or discourse with an acknowledgment, without the written

permission of Mzumbe University, on behalf of the author.

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ACKNOWLEDGEMENT

This research work has been successful due to the contribution of many people who

assisted me through its accomplishment. It is impossible to mention all of them by

their names, but I feel so much obliged to mention few of them.

I would like to thanks my supervisor Mr,Makuru Ngemba for his precious support,

courage, guidance and consultations i received from him. His assistance played a big

role in the accomplishment of this research work, without him tireless guidance and

assistance this research could not have been a success.

Secondly, I am also grateful to my family for their emotional support. My special

gratitude goes to my dear wife, Gladis Haule and our children Derick Msoba and

Glory Msoba for their spiritual support, encouragement and more particularly during

my absence while attending the course works. I also would like to thank all my

colleagues of the encouragement and support during the courses.

I also extent my sincere gratitude to all my course instructors as well as my

colleagues whose knowledge and contribution assisted much in the entire

dissertation, I really appreciate their assistance and cooperation. My sincere thanks

should also go to TRA office and Tax payers for providing me with relevant data and

other contribution to the success of the study.

Finally, I have a reason to appreciate all the assistance accorded to me by my fellow

(MBA-Corporate Management) University colleagues who occasionally volunteered

to exchange experiences and materials with me, their input has assisted me a lot

especially in the literature review.

I wish to thank all people who assisted me in one way or another, whether directly or

indirectly in this undertaking, it is their assistance they provided that made this

research work possible.

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DEDICATION

I dedicate this work to my dear wife, Gladis Haul end our children, Derick Msoba

and Glory Msoba for giving me courage while carrying out the study.

vii

Abbreviations

E-filling - Electronic filling

E-government - Electronic Government

ICT - Information and Communication Technology

IMF - International monetary fund

IRS - Internal Revenue Service

IT - Information Technology

LGA - Local government Authority

LTUs - Large taxpayer units

NBS - National Bureau of Statistics

OECD - Organization for economic cooperation and development

PDAs - Personal Digital Assistants

PO-PSM - Prime Minister Office Public Service Management

TV - Television

TRA - Tanzania Revenue Authority

WAN - Wide Area Network

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ABSTRACT

Tanzania like most other countries is facing a problem of non-compliance to tax laws

and procedures; it estimates that the level of tax compliance in Tanzania and other

developing countries was below 60%.

This problem persist despite the tax reforms that have been undertaken, still there

were indications that non-compliance practice exist among business owners as the

result the value of addition of those business to total government revenue tends to be

too small, therefore our research problem was observed.

The research aimed at analyzing the influence of taxpayers’ education on the

performance of revenue collection, Tax compliance levels reflecting effectiveness of

tax administration, taxpayer attitudes towards taxation and towards government in

general.

Literature critically looked on various contexts based on attitudes which are formed

in a social context, factors such as perceived fairness of the tax structure, the ability

of government to deliver services to its people and the legitimacy of government

backed by government committed to serving its people to enhance good governance.

Both qualitative and quantitative data were collected through interviews and survey

from 90 respondents , these data obtained from the fields were analyzed and

discussed statistically to prove whether there were relationships between the

dependent and independent variables.

Through our collected data findings which proved that tax payers education is a most

significant approach in boosting national income

It was thus recommended that top Management of TRA and other stakeholders such

as Parliament, Ministries, Local Government Authorities, Unions, Private sectors,

International Agencies, and other research institutes to cooperate closely on the

research objectives discussed to enhance ,promote voluntary tax compliance and

sustainable tax administration.

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Table of Contents

Certification...................................................................................................................... II

Declaration And Copyright .............................................................................................. II

Acknowledgement............................................................................................................ V

Dedication .......................................................................................................................VI

Abbreviations ................................................................................................................ VII

Abstract ........................................................................................................................ VIII

Table of Contents ............................................................................................................IX

List of Tables................................................................................................................ XIII

List of Figures .............................................................................................................. XIV

Chapter One .................................................................................................................... 1

1.1 Information Background .......................................................................................... 1

1.2 Statement Of The Problem .......................................................................................... 2

1.3 Research Questions ..................................................................................................... 2

1.3.1 Main Research Question. ......................................................................................... 2

1.3.2 Specific Research Questions. ................................................................................... 2

1.4 Research Objectives .................................................................................................... 2

1.5 Significance Of The Study .......................................................................................... 3

1.6 Scope And Limitation Of The Study. ......................................................................... 4

Chapter Two .................................................................................................................... 5

Literature Review............................................................................................................ 5

2.0 Introduction ................................................................................................................. 5

2.1 Theoretical Literature Review..................................................................................... 6

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2.1.1 Definition Of Key Concepts..................................................................................... 5

2.1.2 Tax Compliance ....................................................................................................... 6

2.1.3 Promote Voluntary Tax Compliance ....................................................................... 6

2.1.4 Tax Education And Services .................................................................................... 8

2.1.5 Tax Law ................................................................................................................... 9

2.1.6 Policy And Legislative Changes ............................................................................ 10

2.1.7 Tanzania Taxation Policy ....................................................................................... 10

2.1.8 Training. ................................................................................................................. 14

2.1.9 Enhance Staff Performance Management System ................................................. 14

2.2.0 Record Keeping ...................................................................................................... 14

2.2.1 Factors affecting Tax Compliance ......................................................................... 15

2.2.2 Indicators of Voluntary Tax Compliance ............................................................... 16

2.2.3 Taxpayer Education ............................................................................................... 17

2.2.4 Relationship Between Taxpayer Education And Tax Compliance ........................ 18

2.2.5 Level of Taxpayer Education ................................................................................. 18

2.2.6 Level of Tax Compliance among SMES Entrepreneurs ........................................ 20

2.2.7 The Effect of Taxpayer education on the level of Tax Compliance ...................... 21

2.2.8 Conceptual Frame Work ........................................................................................ 26

2.2.9 Effectiveness of Enforcement ............. ERROR! BOOKMARK NOT DEFINED.

2.3.1 TRA Staff Skill Retention ................... ERROR! BOOKMARK NOT DEFINED.

2.3.3 TRA Performance Of Income Tax RevenueERROR! BOOKMARK NOT DEFINED.

Chapter Three ............................................................................................................... 28

Research Design and Methodology. ............................................................................ 28

3:1. Introduction .............................................................................................................. 28

3.2 Research Design. ....................................................................................................... 28

xi

3.3 Target Population. ..................................................................................................... 28

3.4 Sampling Design And Procedures. ........................................................................... 29

3.5 Data Collection Instruments And Procedures. .......................................................... 29

3.6 Data Analysis Procedures And Presentation. ............................................................ 31

Chapter Four ................................................................................................................. 32

Presentation of Findings, Analysis and Discusions .................................................... 32

4.1 Introduction ............................................................................................................. 32

4.2 General Observations ........................... ERROR! BOOKMARK NOT DEFINED.

4.3 Analysis and Interpretation of The Results ............................................................ 32

4.3.1 Gender of Respondents For Sample ....................................................................... 32

4.3.2: Age Group ............................................................................................................. 33

4.3.3 Education Level of Respondents .......................................................................... 34

4.4 Challenges faced by TRA in Providing Tax Payer Education for Influencing

Revenue Collection ......................................................................................................... 36

4.5 How do education On Tax Laws and Procedure Provided by TRA To Tax Payers

Affect The Tax Compliance In Tanzania ........................................................................ 39

4.6. Does Training Provided by TRA To Staffs Have Influenced Significantly Tax

Compliance In Tanzania ................................................................................................. 42

4.7 The Extent Education Provided To Tax Payers By TRA On Record Keeping has

Affected To Tax Compliance In Tanzania. ..................................................................... 44

4.8 Summary Of The Chapter ......................................................................................... 48

Chapter Five .................................................................................................................. 48

Conclusion and Recommendation ............................................................................... 48

5.1 Introduction ............................................................................................................... 48

5.2 Conclusion .............................................................................................................. 48

5.3 Recommendation....................................................................................................... 49

xii

5.4 Policy Implications ................................................................................................... 50

References ....................................................................................................................... 52

Appendices ...................................................................................................................... 54

Appendix I ....................................................................................................................... 54

Appendix Ii ..................................................................................................................... 55

xiii

LIST OF TABLES

Table: 2.0 Means of acquiring taxpayer education……………………………….....19

Table: 2.1 Analysis of filling tax returns…………………………………………...20

Table 2.2: Analysis of Tax compliance ……………………………….…………...20

Table 2.3: Change in willingness to pay taxes…………………………….………..21

Table 2.4: Accuracy in Determining Tax Liability………………….…………..….22

Table 2.5: Understanding Tax rights and obligations…………………….………...22

Table 4.1 Sex of respondents ……………………………….………………….…..32

Table 4.2 Age of respondents for employees……………….………………….…..33

Table 4.3 Education level of respondents………………………….…………..…...34

Table 4.4 Challenges faced in providing tax payer education ……………….…….36

Table 4.5 education on tax laws and procedure provided by TRA to tax payers…..40

Table 4.5.1 Change in willingness to pay taxes……………………………..…..…41

Table 4.6. Influence of Training provided by TRA to staffs………….…………...42

Table 4.6(b): Analysis of Tax compliance………………………………………....44

Table 4.6(b): Analysis of Tax compliance ……………….…………………..…...44

Table 4.7: Record keeping has affected to tax compliance in Tanzania…….…….45

Table: 4.7a Analysis of filling tax returns………………………..………….……46

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LIST OF FIGURES

Figure: 2.0 Schematic Diagram of Tanzania Taxation Policy…………………13

Figure 1: Conceptual framework of TRA taxpayer services on Income tax ….24

Figure 4.1 Bar Chart showing Sex of respondents………………….…………32

Figure 4.2: Bar chart showing Age of respondents for employees…………….33

Figure 4.3: Bar Chart showing education level of respondents…………….…34

Figure:4.4 Challenges faced in providing tax payer ............................……….37

Figure 4.5: education on tax laws and procedure provided by TRA …………41

Figure 4.6 influenced by TRA Training TRA to staff……………………….43

Figure 4.7 Record keeping has affected to tax compliance in Tanzania……….45

xv

1

CHAPTER ONE

1.1 BACKGROUND TO THE PROBLEM

There was an increased demand by taxpayer for better services from the authorities.

The Tanzania Revenue Authorities responded to the demand by the public through

creation of a taxpayer service unit in 1996, to support and ensure that TRA meets the

increased demand for better taxpayer services.

These problems were observed in which most of tax payers visited revenue offices

for various reasons but most importantly they are looking for information on tax

matters ,registering as taxpayers, the tax revenue organizations as services providers

were therefore under obligation to offer quality services to their customers, who were

mainly taxpayers in which the need to provide. Apart from this the country saw

many SME’s in various regional requesting tax education for operating and

administering their businesses where tax. Regarding many establishments from these

locations country wide the Tanzania Revenue Authority has been collecting taxes

with a small difference from one financial year to another, this revenue collected

posed many questions such that the government had to work out and create

sustainable revenue collections by promoting a voluntary tax compliances.

The rationale for providing quality taxpayer services is to rise tax awareness and

enhance the level of voluntary tax compliance .This is done by educating taxpayers

and their agents with clear precise and timely tax information, simplifying tax forms

and tax laws. All these taxpayer services quality issues needed to be explained and

understood by both tax payers and all staffs of the revenue authority in order to

minimize taxpayer’s complaints and improve their voluntary compliance to meet

government expectations so as to improve the quality of service delivery.

A quality taxpayer services was aimed at ensuring that every eligible taxpayer pays a

fair and right tax under the law and at the right time. Furthermore ,quality taxpayers

services was to facilitate the widening of tax base, attaining high revenue collections

efficiency and effectiveness and creating a taxpayer friendly environment for tax

administrations.

2

1.2 Statement of the problem

For a long time Tanzania like any other countries has been facing the problem of

non-compliance to on procedures, regulations and tax laws. This problem persist

despite the tax reforms that have been undertaken, still there were indications that

non-compliance practice exist among business owners as the result the value of

addition of those business to total government revenue tends to be too small.

Having seen these, the revenue authority decided to dig more on how it can promote

revenue and encourage voluntary tax compliances to all tax payers which had

obligation to do so, research was done from different sex, age gaps to both tax

payers TRA staffs to ensure that intended outputs are realized by having both

qualitative and quantitative data using interviews and survey collection methods in

conducting our research topic. The research aimed at ensuring voluntary tax

compliances through tax education to all tax payers which is a key factor in raising

revenue collection by the government.

1.3 Research Questions

1.3.1 Main Research Question.

What was the influence of taxpayers’ education on the performance of revenue

collection by Tanzania Revenue Authority in Tanzania?

1.3.2 Specific Research Questions.

a) What were the challenges faced by TRA on tax payers education?

b) Education on tax laws and procedures provided by TRA affect the tax compliance

in Tanzania?

c) Training provided by TRA to staffs and tax compliance in Tanzania?

d) Education tax payers on record keeping and tax compliance in Tanzania?

1.4 Research Objectives

1.4.1 General Objective

To investigate how taxpayers’ education has influenced the performance of revenue

collection by Tanzania Revenue Authority in Tanzania.

3

1.4.2 Specific Objectives

i. To investigate the challenges faced by Tanzania Revenue Authority in providing

tax payer education for the purpose of influencing revenue collection.

ii. To determine how education on tax laws and procedures provided by Tanzania

Revenue Authority affect tax compliance in Tanzania.

iii. To determine how the training provided by Tanzania Revenue Authority

management to staff have influenced significantly tax compliance in Tanzania.

iv. To determine the extent which the education provided to tax payers by Tanzania

Revenue Authority on record keeping has affected to tax compliance in Tanzania.

1.5 significance of the study

i. The research will draw decision and recommendation for tax payers education in

order to improve performance in revenue collection.

ii. The finding of this study will help the revenue authority to review the issues

concerning the provision of taxpayers education and other services for the aim of

creating strong relationship with business owners by understanding them and honour

them in order encourage to encourage voluntary tax compliance behaviour.

iii. The study sought to establish the effect of taxpayer education on voluntary tax

compliance

iv. The research will help to determine the extent the education provided to tax

payers by Tanzania Revenue Authority on record keeping has affected to tax

compliance in Tanzania.

v. The research helps to determine how education on tax laws and procedures

provided by Tanzania Revenue Authority to tax payers affect tax compliance in

Tanzania.

vi. The study helps to determine the challenges faced by Tanzania Revenue

Authority in providing tax payer education for the purpose of influencing revenue

collection.

4

1.6 Scope and Limitation of the study.

1.6.1 Scope of the study.

The research studied the quality of taxpayer services provided by TRA as one of the

factors that affected the level of taxpayer voluntary compliance and the performance

of income tax revenue collections, others which influenced the level taxpayer

voluntary compliance like corruption, economic conditions, nature of tax policy /law

and political interference were kept constant. Regarding that geographical study was

Tanzania. It covered tax payers’ education and performance of revenue collection.

i. Time

Time for this research is too short for researcher to have a wide scope of the study.

ii. Cost

High cost of conducting research will not enable me to have a wide scope of the

study.

iii. Data access

Other useful information will not be accessed by the researcher as the management

would not be ready to disclose all information which will be requested.

iv. Cooperative behavior of interviewee

Getting information will also be hindered by different behavior of interviewees and

the perceptions they will have on the study, some will not want to be interviewed and

other may not want to answer questionnaire claiming they do not have time.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter provides a thorough review of related literature so as to establish the

relationship between variables in the selected area of study .It establishes the

relationships that exist between contributions of tax payers’ education in providing

tax compliance. The researcher will present the theoretical as well as empirical

related literature review.

2.2 Key Conceptual Definition

Tax payer education program is one of the strategies of improving services delivery

to the tax payers. Improving service delivery is critical to enhance voluntary tax

compliance. Lack of voluntary tax compliance compels revenue authorities to use

costly and coercive methods for tax enforcement (Fjeldstad and Ranker, 2003).Thus,

tax payer education is a tool designed to enable taxpayers to understand tax laws and

procedures. It involves training of special units within the revenue departments, for

providing education, counseling and support to the taxpayers, through different

media which include newspapers, television, radio programs, website, seminars, and

front desk help to disseminate key information to the taxpayers.

Also the basic goal of most education programs is directed towards behavioral

change. Being the case, behavior analytical theories of change, and learning theories

can best explain how education can change the behavior of individual (Svetna and

Taumo,2007). Change theory is used to predict behavior change which assumes that

when the problem relating to behavior exists; there should be modifiable factors

that contribute to the problem. Some of the modifying factors were knowledge,

attitude, intentions, interpersonal support, organizational and environmental

conditions.

The theory assumes that education is fundamental, in bringing about change in the

modifiable factors, and the tax payer education is expected to change this behaviour.

6

Education changes the behavior of an individual by affecting the way he or she

makes decisions (Denis and Mehila, 2002). It has the significant positive impact on

the behavioral change of an individual (Campbell, 2008).

2.2.1 Tax compliance

Research on tax compliance can be done in various fields of study such as

accountancy, economics, criminal law, psychology, and sociology. (Fischer et la,

1992).

(Alm, 1991). Define tax compliance as the situation where by tax payers fulfil their

tax obligations by reporting of all income and paying of all taxes.

It also refers to filling various returns and documents on or by statutory due date and

report the correct income or tax base and tax due to the government.

Most tax authorities enhance voluntary tax compliance as it reduces the cost of

collecting the entire government revenue. Non-compliance to tax laws reduces tax

collections from the economy which might result to state failure in providing social

services to its citizens. Hence there is a need to ensure that the tax payers were

voluntary complying with the tax laws. Tax payers compliance behaviour is

influenced by various factors including the use tax education, their deposition

towards public institutions, the perceived fairness of the taxes, prevailing social

norms and the chances of non compliance being detected and punished

(Fransori,1998).

2.3 Theoretical literature review.

Under the theoretical related literature review the researcher covers study objectives

and concepts of areas under study.

2.3.1 Promote voluntary tax compliance

In order to warrant voluntary tax compliance, TRA will ensure that it is a fair and

competent tax administration, it has effective enforcement programmes and taxpayer

7

services and education programmes. These requirements must be completed by

adequate tax laws and an effective taxpayer charter.

TRA achieved this through enhancing the level of tax knowledge to both taxpayers

and staff by developing a unified system for communicating various laws,

regulations and their amendments; ensure availability of all tax information and to

enhance partnership with tax practitioners to ensure increase in voluntary

compliance.

In line with this, compliance studies was conducted on regular basis to determine the

overall of tax compliance for Tanzania which enabled monitoring of compliance

levels on regular basis. According to Organization for economic cooperation and

development (OECD) tax administration statistics over time, it has been noted that a

few Western countries such as Canada, Australia, Norway, Denmark and Sweden

have compliance rates of about 90% while most of developing countries have about

50% or less, this means that there is still a lot of effort needed in this area in order to

address compliance issues.

TRA has implemented risk management techniques following the categorization of

taxpayers between compliant, partially compliant and non-compliant.TRA will also

monitor sector-wise tax compliance behaviors with view to identifying economic

sectors manifesting high degree of non-compliance as well as low level of

compliance and undertake requisite measures. This means that TRA will continue to

identify and implement operational efficiencies to generate savings in resources that

can be realigned to high priority enforcement work that has the highest compliance

risk.TRA has established large taxpayer units (LTUs) by transferring best practice

from LTD to DRD as well as developing and implementing specific programs to

address specific compliance challenges in this segment. More effort and resources in

terms of enforcement were towards non-compliant and partially compliant taxpayers.

The aim was to ensure that more than 80%of revenue is generated from voluntary

compliance methods while the remaining 20% will be from enforced compliance

methods such as audit and investigations. With customs operations, focus will be on

the implementation of the fuel and cargo tracking system as well as carrying out a

study to find the best mechanism for monitoring of petroleum products.

8

The Local Government Authority (LGA) is mandated to collect local taxes and has

been doing a good job; however, TRA will continue to provide support to ensure that

the LGAs build capacity to collect the required taxes efficiently and effectively

through training as well as hands on audits. This support enhanced partnership and

information sharing for the benefit of both organisations in terms of revenue

collections.

2.3.2 Tax education and services

Taxpayers’ education and services is one of the new developments in tax

administration aimed at softening enforcement of the tax laws and regulations. The

objective is to enlighten tax payers on their rights and obligations in order to enhance

voluntary compliance.

This function is implemented at the TRA through establishment of taxpayers’

services desks which were charged with handling taxpayer inquires and complaints.

The desk makes sure that tax information is available to taxpayer through telephone,

tax leaflets, tax booklets and through verbal expiations. They disseminate tax

information about the tax; heads administered by the TRA which the tax payers were

expected to know and do as far as tax affairs were concerned. They educate them on

various tax forms and returns to fill, when to fill them and various due date for

payment of taxes.

Taxpayer services section aims at assisting taxpayers and TRA staffs to undertake

their mutual obligation accordingly. Specific obligations were:-

i. Customer care to taxpayer and TRA staff.

ii. Customer care training to TRA staff.

Iii. Public relations including media coverage.

iv. Information centre

v. Attending and monitor improvements on complaints.

Establishment of services centre intends

i. To simplify procedures.

iv. To enable any person who is in need of any information about TRA.

9

III. To removes bureaucracy.

iv. To direct a taxpayer to a right person.

v. To remove barrier of seeking information about TRA.

vi. To ensure that cost of seeking information is kept at minimum since

telephone number at the information centre were free to

Taxpayers services officer have been recruited in all regions in Tanzania. Education

to taxpayers section aim at provisioning of appropriate education to tax payers.

Specific obligations were:-

i. Management of seminars and workshops provided by TRA

ii. Design and commissioning of Radio and TV programs

iii. Manage publication and properly disseminate education information through

leaflets and brochures.

iii. Attending enquires that come by letters physical visits, telephone and

emails.

2.3.3 Tax law

Tax law refers to the legislation that regulates the process of government collecting

money from citizens or businesses. This money is usually a major source of

revenue for governments, but laws were needed to ensure that it is taken in a just and

fair manner. Tax law, therefore, tends to outline who must pay taxes and the rate at

which they can be taxed. Legislation also addresses situations that may arise in the

course of collecting and paying these dues, such as qualifying for exemptions or

seeking remedy for non-payment.

It is common for this type of legislation to be referred to as administrative law or

public law. Administrative law refers to regulations that were outlined by a

government agency. In the United States, for example, much of the tax law is

developed by the Internal Revenue Service (IRS). Each state also has its own

taxation agency. In some places, tax legislation is known as public law, which

http://www.wisegeek.com/what-is-administrative-law.htm

http://www.wisegeek.com/what-is-public-law.htm

10

defines a category of regulations that affect a government’s interaction with the

public and vice versa.

2.3.4 Policy and legislative changes

Fiscal policies like other public policies play a big role in ensuring sustainable

economic growth of any economy hence they need to be fair, equitable and stable. In

that regard tax policy formulation in the third corporate plan intends to serve the dual

purpose of revenue generation under a fair and equitable regime on one hand and

stimulating sustainable economic growth on the other .The focus will be to

streamline the existing tax policy for the purpose of broadening tax base by creating

an elastic tax regime that stimulates voluntary compliance and economic growth.

In providing fiscal advice to the government, TRA continuously consults with

various stakeholders there by establishing the capacity for comprehensive economic

impact analysis of its tax policy and recommendations.

During the implementation of the third corporate plan TRA has continued to play

the advisory role on fiscal policy and anticipates continued government support to

ensure that the policies were adopted and implemented.

Legislative changes were inevitable in any business operation and TRA is not an

exception.TRA would ensure that all fundamental policy and legal changes were

incorporated in revised legislations and regulations for the purpose of minimizing

loopholes of revenue leakages and or creating more taxable elements. The adoption

of the e-legislation will enable TRA to smoothly introduce e-taxation in the third

corporate plan that will provide additional service options to TRA stakeholders.

2.3.5 Tanzania Taxation Policy

The Tanzania taxation policy categories taxes as direct and indirect taxes.

Direct taxes

11

Direct taxes include income taxes, income tax is a tax charged on income of any

person. The term income is defined to include any gains, profits, interest and

dividend and also any non monetary benefit, advantage or facility obtained by a

person through gainful means (Income Tax Act 1997).

The income Tax Act, 1997 defined a person to include an individual, a partnership, a

trust, a company, a retirement fund, a government and an institution listed in the first

schedule of the Act.

The income tax category has a number of tax items, which were demarcated basing

on their source (tax base means of collection and administration process. The tax

items include individuals income tax ,corporate income tax 9CORPORATIO

TAX0,rental income tax ,pay as you earn(P.A.YE) Tax, withholding tax, income tax

for small taxpayers.

a: Individual income tax

This tax is charged on income earned by an individual, example, a sole trader. The

term is more applied to individuals in freelance business. However, individual

income tax is not limited to business income alone. It includes all income earned by

an individual from all sources except that income which is assessable separately,

example, rental income.

b: Corporate income tax (Corporation tax).

This tax is charged on income earned by a person like a company, a trust and other

than an individual. Like in case of individual income tax, corporate income

comprises income from various sources of the taxpayer. Corporate income taxed at a

corporation rate of tax.

C: Rental income tax

Under the Tax Act, 1997 rental income earned by a corporate landlord that is a

person other than an individual is part of corporate income and is taxed under

12

corporate income tax laws. Rental income earned from other sources by the same

individual and taxed separately under the rental tax rate structure.

d: Pay A S You Earn (P.A.YE) tax

This is a form of individual tax charged on employment income. This tax is deducted

by employers from employment emolument before effecting the last payment for the

period (Normally a month) to an employee, remitting the total tax deducted to TRA

and accounting to the employee that tax has actually been paid over to government.

e: Withholding Tax

Like P.A.Y.E tax, this is another form of sources tax. Withholding tax is a tax

deducted at sources by a person (Withholding agent) on the basis of the gross value

of the another person to whom the tax is applicable .Withholding tax is an fact

income tax paid in advance or as a final tax depending on the circumstance.

In direct Taxes

In direct taxes include, value added tax ( VAT) ,Excise duty, Custom duty and

Licenses.

a: Value added tax (VAT)

Is a tax on consumer expenditure. It collected on business transaction and imports.

Most business transactions involve supplies of goods or services. VAT is payable on

supplies which were made in Tanzania.

b: Excise duty

13

Figure: 2.0 Schematic Diagram of Tanzania Taxation Policy

Excise duty is any duty of excise imposed under the excise law. It is generally few

selected imported goods attract excise duty.

2.4 EMPIRICAL LITERATURE REVIE

14

2.4.1 Training.

Training is an educational process. People can learn new information, re-learn and

reinforce existing knowledge and skills, and most importantly have time to think and

consider what new options can help them improve their effectiveness at work.

Effective trainings convey relevant and useful information that inform participants

and develop skills and behaviours that can be transferred back to the workplace tax

return .The goal of training is to create an impact that lasts beyond the end time of

the training itself. The focus was on creating specific action steps and commitments

that focus people’s attention on incorporating their new skills and ideas back at work.

Training can be offered as skill development for individuals and groups. In general,

trainings involve presentation and learning of content as a means for enhancing skill

development and improving workplace behaviour.

2.4.2 Enhance staff performance management system

In order to be a modern tax administration, TRA will provide its employees with

necessary skills to support the workload changes needed to deliver high quality

services to remain a competitive and living organisation.TRA will ensure that the

training provided will utilise the latest technology to facilitate continuous and prompt

learning for both the organisation and personal growth. The performance

management system will be enhanced to ensure that reasonable compensation is

given to employees who diligently contribute to the achievements of organisational

goals and objectives.TRA will guarantee competitive employee compensation in a

bid to retain and attract employees with needed skills. Management controls will

continuously be strengthened to make TRA an organisation with high levels of

integrity and transparency.

2.4.3 Record keeping

Systematic procedure by which the records of an organization were created,

captured, maintained, and disposed of. This system also ensures their preservation

for evidential purposes, accurate and efficient updating, timely availability, and

control of access to the them only by authorized personnel.

http://www.businessdictionary.com/definition/systematic.html

http://www.businessdictionary.com/definition/procedure.html

http://www.businessdictionary.com/definition/record.html

http://www.businessdictionary.com/definition/organization.html

http://www.businessdictionary.com/definition/maintain.html

http://www.businessdictionary.com/definition/system.html

http://www.businessdictionary.com/definition/accurate.html

http://www.businessdictionary.com/definition/availability.html

http://www.businessdictionary.com/definition/control.html

http://www.businessdictionary.com/definition/access.html

http://www.businessdictionary.com/definition/authorization.html

http://www.businessdictionary.com/definition/personnel.html

15

2.4.4 Factors affecting tax compliance

There were two broad approaches to the problem of tax compliance that is the one

developed from economic rationality, using the economic analysis, while the second

is concerned with behavioural issues and draws heavily on concepts and researchers

from other disciplines, such as psychology and sociology (OECD, 2004).Economic

and behavioural approaches were sometimes regarded as competing explanations

(Valeria,2004).

The economic approach identifies economic factors that affect the tax compliance

behavior as follows:

Financial burden: There appears to be a relationship between the amount of tax

owed and compliance behaviour. For example if a business owner has a tax liability

that can easily be paid, he/she may be willing to comply. However if the liability is

large, potentially threatening the viability of the business ,the owner may avoid

paying it or trying to adjust the data reported so as to incur a smaller (but incorrect)

tax liability (ATO,2000/2001).

The costs of compliance: Cost of compliance were the common costs a taxpayer has

to incur in complying with tax obligations for example, time taken to completrns,

costs of hiring tax accounts, psychological costs such as stress ,arising as a result of

uncertainty that one is not sure that he/she has met all of the tax rules. The list is not

exhaustive.

The higher the compliance costs, the higher the chance of non compliance (OECD,

2003).

Incentives: Giving taxpayer incentives may have a positive effect on tax compliance

(Krischer, 2007).

The behavioural scholars identified behavioural factors that affect the compliance

behavioural as follows:-

Individual differences for example, gender, age, education level moral compass,

industry, personality, circumstances and personal assessment of risks (ATO, 1997).

Perceived inequality tax payers who believe the system is unfair, or who have

personal experiences of unfair treatment were less likely to comply (Roak and

Stephen, 1994).

16

Perception of minimal risks if tax payer has opportunity not to comply, and

perceives that there is only a minimal risk of being detected he/she will take the

opportunity (Kercher, 2007).

Risk taking some people view tax avoidance/tax evasion as a game to be played on

and on They would like to test their skills in avoiding being caught (OECD, 2004).

The compliance attitude of tax payer is affected by the factors from the external

environment of the taxpayer, for example, the nature of the business, industry and

economic conditions prevailing on the market such as demand and supply.

These were the factors that affect the competitive advantage hence creating a

perception that non-compliance to tax is the solution. It is also affected by internal

factors, such as sociological and psychological factors.

This suggests that the model to improve the tax payer compliance, should target at

improving the taxpayer capability to overcome the forces from those factors as

outlined in the model above, hence creating a positive tax compliance behaviour and

attitudes (Roak and Stephen,1994). Lacksson and Miliron (1986) listed the main

factors that have influences as ethics, legal sanctions, complexity of the tax laws, and

relationship with the tax authority, level and reliability of income sources, perceived

fairness of the tax system, and possibility of being audited and the level of tax rates.

2.4.5 Indicators of voluntary tax compliance

Tax compliance level can be identified by looking on the compliance indicators; here

one can examine the percentage of the tax revenue to the GPD (OECD, 2004). An

increased percentage of tax revenue in relation to the GDP signifies increases in the

level of tax compliance .Public opinion indicators were the perception of people

towards the taxation systems and taxes (Roak and Stephen, 1994). Other compliance

indicators were; percentage of income that is reported for the taxation purpose and

the program impact indicator. Here, one may assess the impact of specific programs

or initiatives on the compliance. Behaviour of the target tax payer population (ATO,

2001).

17

Another approach is to examine the trend, in the compliance aspects, for example

registration and filing of the return, correct reporting of the income and expenses, as

well as the payment of the correct amount of tax.

The trend should be examined or compared on the basis of percentages, rather than

additional revenue generated, by application of the specific compliance strategy or

comparing the percentage of tax revenue collected, with enforcement activities such

as audit ,penalties and fines, to the total revenue collected, with that paid voluntary

(IFC, 2007).

Tax compliance level may be identified by looking on tax gap. Tax gap represents

the difference between the actual revenue collected and the amount that would be

collected if there were 100 percent compliance (James et al, 2001).

For the purposes of this study tax compliance as measured by how the taxpayer fill

tax returns, reporting the correct tax liability and payment of the taxes due within the

statutory period.

The study also examined how the taxpayer was aware of his or her tax obligations

according to the laws and regulations. How the taxpayer viewed the tax laws and

system which provided an indication of his or her potential tax compliance.

2.4.6 Taxpayer education

The basic goal of most education programs is directed towards behaviour change.

Being the case, behaviour analytical theories of change ,and learning theories can

best explain how education can change the behaviour of an individual (Svetna and

Taumo,2007).Change theory is used to predict behaviour change, which assumes that

when the problem relating to behaviour exists; there should be modifiable factors

that contribute to the problem. Some of the modifying factors were knowledge,

attitude, intentions,interpersonal support, organizational and environment conditions.

The theory assume that education is fundamental, in bringing about change in the

modifiable factors, and the tax payer education is expected to is expected to change

this behaviour. Education changes the behaviour of an individual by affecting the

18

way he or she makes decisions (Denis and Mehila, 2002).It has the significant

positive impact on the behaviour change of an individual (Campbell,2008).

2.4.7 Relationship between Taxpayer Education and Tax compliance

There is a positive relationship between taxpayer education and voluntary tax

compliance (Kassipillai, 2003). Taxpayer education will provide the necessary tax

knowledge to comply with the tax matter and change the perceptions and attitude

towards tax compliance by creating more positive attitudes. This was confirmed in

the study carried out among the undergraduate students in the University of

Malaysia. Using the questionnaires administered to the students ,at the beginning of

the semester ,to test the compliance attitudes, before studying taxation subjects , and

their responses were recorded .At the end of the semester ,another set of

questionnaire, were administered to test the compliance attitude ,after acquiring the

tax knowledge.

The statistical finding confirmed the prevalence of the significant positive

relationship between the level of taxpayer education and the level of the tax

compliance .

However there is need to conduct similar study currently, because the above study

was conducted more than five years ago, using environment different from Tanzania

and the sample selected for the study was university students, who were not really in

business operations.

Lin and Carrol (2000), conducted a study to determine how enhanced tax knowledge

and tax attitude, affects the compliance behaviour among the taxpayers in New

Zealand. Analyzing the compliance behaviour of the taxpayers after acquiring the tax

knowledge did not have significant relationship with tax compliance behaviour.

2.4.8 Level of taxpayer Education

During the investigation, respondents indicated that they acquire tax knowledge

through the following means (see table 2.0. below)

19

Table: 2.0 Means of acquiring taxpayer education

No Means Frequency Percentage

1 Radio 18 25.00%

2 Newspaper 12 16.70%

3 Seminars/Workshops 11 15.30%

4 Television 10 13.90%

5 Banners 06 8.30%

6 Leaflets 05 6.90%

7 Announcement van 05 6.90%

8 Public materials 04 5.60%

9 Others (traditional dances etc) 01 1.40%

Total 90 100%

Source: Field data (2012)

These finding indicate that radio, newspapers, seminars workshops, training, and

televisions were among the major means through which tax knowledge was imparted

to the taxpayers.

The results were similar to the finding obtained by National Bureau of Statistics

(2003), in the study to evaluate the efficiency and effectiveness of the means of

delivering taxpayer allocation, which concludes that studio, newspapers, seminars,

and workshop were the most efficient means of delivering taxpayer education

As to what extent the taxpayers gained knowledge from the taxpayer education: 85%

of the respondents, admitted to have gained understanding of the basic tax laws and

procedures, while 15% showed that there was no improvement in understanding the

basic tax laws.78.7%of the respondents agreed that through the taxpayer education,

they had been able to understand and become aware of their taxpayer rights and

obligations, while 21.3% of the respondents said taxpayer education had not been

taken able to help them in understanding and becoming aware of their tax rights and

obligations.83% of the respondents agreed that taxpayer education helped them in

understanding Cleary the procedures of paying taxes, While 17% of the respondents

20

claimed that despite the tax education they received, they did not understand clearly

the procedures of paying taxes.

2.4.9 Level of Tax Compliance among SMEs Entrepreneurs

This was obtained by looking on the trend of tax compliance for the last three years

starting from financial year 2008/2009; 2009/2010 and 2010/2011. This was done by

analysing the total taxes collected into two components, namely that from the audit

and enforcement activities, and that which was paid voluntary .This approach was

also used by the Inland Revenue Services in United State of America, in assessing

the level of tax compliance (IRS, 2003).

Furthermore, interview was done to the officers, aimed at checking the improvement

in the timely filling of returns, accurate assessment of tax liability, and payment of

the taxes within the stipulated period, according to the law.

Table: 2.1 Analysis of filling tax returns

Year Total taxes Audit

Enforcement

Within period

2008/2009 100% 23% 77%

2009/2010 100% 21% 79%

2010/2011 100% 20% 80%


Response from the staff indicated that about 80% of the returns were lodged timely,

while the remaining 20% were not within the statutory periods and would attract

penalties and fines for late fill

Table 2.2: Analysis of Tax compliance

Year Total taxes Audit

Enforcement

Collected

voluntarily

2008/2009 100% 36% 64%

2009/2010 100% 29% 71%

2010/2011 100% 25% 75%


21

of the returns lodged, 67% declared accurate tax liability, while the remaining

contained errors, and additional taxes were assessed through auditing. 78% of those

who were required to pay taxes, paid within the stipulated time according to the law

while the remaining were late to pay taxes and it was necessary to use enforcement

strategies.

2.4.10 The Effect of Taxpayer Education on the Level of Tax Compliance

The effect of taxpayer education on tax compliance was analyzed by looking on how

the respondents change their behaviour with respect to specific compliance variables

due to the acquisition of the tax knowledge.

Regarding willingness to pay taxes, 80.6% of the respondents admitted that taxpayer

education had improved their willingness to pay taxes, as illustrated in table below

Table 2.3: Change in willingness to pay taxes

Change Frequency Percentage

Very big change 13 18.2%

Significant change 26 36.1%

Change but not significant 19 26.3%

Not sure 15 20%

Total 90 100%


The finding is similar to the survey carried out by National Bureau of Statistics (NBS

2003) which concludes that there is a significant change in the attitude of taxpayers

towards paying taxes due to the introduction of taxpayer education standing at

54.3%. The taxpayer education has affected the compliance behaviour by creating

willingness to pay taxes. The remaining 20% did not realize any change in their

willingness to pay taxes, caused by the taxpayer education

22

Table 2.4: Accuracy in Determining Tax Liability

Correctness Frequency Percentage

Very much 15 20.8%

Satisfactory 25 34.7%

Little 12 16.7%

Not sure 22 27.8%

Total 72 100%


72.2% of the respondents claimed that taxpayer education has enabled them to assess

their tax liability as shown in the table. The remaining 27.8% indicated that the

taxpayer education did not enable them to assess their tax liability correctly.

Table 2.5: Understanding Tax rights and obligations

Extent Frequency Percentage

Very much 18 25%

Satisfactory 26 36.1%

Little 20 27.7%

Not sure 8 11.2%

Total 72 100%

Source: Field data, (2012)

92.4% of the respondents, who were interviewed were registered by the Tanzania

Revenue Authority and have trading license and tax identification number. The

respondent said that tax education provided , enabled them to register their business

,as they understood the importance of having business register.11.2% claimed that

they had registered their business , because it is compulsory to be registered so that

they can operate business.

With regard to the payment of taxes due, within statutory period, 77.7% of the

respondents admitted that taxpayer education had enabled them to pay taxes within

statutory period. They said that by the way of announcements through different

media, they were able to understand and be reminded of the due dates for payment of

23

taxes .The remaining 22.3% of the respondents claimed that they paid taxes within

the statutory period, in fear of penalties and interests that were imposed on the taxes

due, if they remained outstanding

2.4.11 Effectiveness of Enforcement

The challenges facing TRA is to develop a business strategy with initiatives that

were geared towards promoting a high level of voluntary compliance by providing

high standard of service to our customers as well as helping them to comply with

their tax obligations. In view of this, the third corporate plan focuses its efforts to

provide incentives to compliant taxpayers through improvement of customer service,

enhancement of trade facilitation, enhancing risk management and tax knowledge to

taxpayers.

Additionally the available resources will be used to generate various mechanisms

that will result into enhanced controls and bring into the fold those taxpayers who

were less compliant. The strategies adopted in this plan have taken care of this

challenge and have been made flex able to address the range of scenarios that may

unfold over the next five years. The leading major economic sectors (drivers) for

domestic revenue generation during the entire period of the third corporate plan

include the Manufacturing and Trade (sale, maintenance and repairs, wholesale,

retail, restaurants, hotels). I n manufacturing sector ,the key activities will include

beer and other beverages like soft drinks and spirits, cigarettes, textiles,

pharmaceuticals, leather products, sugar, electrical appliances, as well agro-

processed products.

The other key sector includes the transport and communication due to finalization of

restructuring of air Tanzania and central railways line and improvement of road

networks.

TRA also recognizes that the achievement of these challenges requires a balanced

approach between TRA and other stakeholders

2.4.12 TRA staff skill Retention

Due to social and economical needs, movement of human capital from one

organization to another is inevitable as employees were continuously attracted to

24

higher remuneration organizations on one hand whereas organizations were attracted

to competent and experienced employees on the other hand .TRA is faced with this

challenges like any other organization. The constant remuneration package review,

improvement of working conditions and skill enhancement for TRA staff is therefore

a continuous effort to ensure that TRA retains staff in which it has invested

upon.TRA will also seek to sustain the global technological developments by

continuously training its staff and thereby be able to manage fully the modernized

operations and enable it to identify current and future skill set gaps. Additionally,

TRA will introduce the performance based pay in the third plan in order ensure that

its employees see their preferred future in TRA.

2.4.13 Capacity Building on utilization of ICT facilities

Globalization process through the expansion of information and Communication

Technology (ICT) makes the world a global village. ICT advancement has

worldwide multiplier effects and has become one among important economic drivers

in most economies in terms of both revenue generation and facilitation.

Communication sector in Tanzania is expected to enjoy the current growth of 19.2%

in real terms throughout the plan period due the improved road infrastructure,

telecommunication technology, promoting use of ICT and expanding

telecommunication network, increased demand of telephone services and

introduction of pre-paid facilities.

Indeed ICT is among priority areas of the third corporate plan. Deliberate effort of

promoting ICT and expanding telecommunication network would trigger the

effective use of the technology within TRA, which will be a major driving force of

modernization initiatives implemented in the plan.

Since the inception of TRA, ICT facilities have been procured and commissioned

with aim of modernizing TRA operations.

Challenges facing the organization include under –utilization of the available

resources and poor state of the telecommunication infrastructure needed to link all

the operational offices country –wide in order to facilitate e-business.

25

The third corporate plan has included initiative that will enquire the existing system

to be assed so as to determine if they were being used effectively and propose

strategies that will ensure all ICT investment s were utilize to optimal levels, well

managed and controlled so as to enable TRA attain its vision of becoming a modern

Tax Administration .Additionally, TRA will upgrade and or acquire new system in

order to cope with the frequent technological changes.

2.4.14 TRA performance of income tax revenue

Taxation is a government instrument for raising revenue to enable government to

carry out its role of financing government expenditure on public good and services.

A good tax revenue collection system ought to be capable of efficiently collecting

collections methods were effective if they can collect all the taxes as

projected/planned and efficiently if the collections were done with minimum

resources.

A quality taxpayer services program should ensure that there is timely handling of

taxpayer complaints and the tax officials have empathy and competent. The tax

office should be easily accessible either by telephone and internet or being in

convenient location. The tax administration should communicate to the taxpayers in

the language their understand endeavor to cater for special needs of the taxpayers.

Security of taxpayer’s documents and tax affairs should be of paramount.

The physical appearance of equipment, facilities and layout should facilitate

taxpayers services (Aslund 2002).

A well –implemented taxpayer services will result in informed taxpayer who is able

to register voluntary, fill his returns in time and honour his tax obligations. The

compliant taxpayer will be able to contribute his share of income tax collections

(Jenkins and Kladka, 2000).

The performance of tax revenue collections is anticipated to increase with improved

and sustained taxpayer services, change attitude and conduct of TRA staff aimed at

customer services and simple and under-stable tax administrative procedures put in

place. The taxpayers were likely to be responsive to tax laws and practice by

complying in voluntary registration, filing and payment. With the coming of self –

26

assessment in the income tax regime, the best alternative is to embrace taxpayer

services.

2.5 Research gap.

As seen in the literature reviewed in this study, many studies have been conducted on

the issue of tax compliance and economy in corporate firms. However, but no study

has been conducted on key statement of this study. Hence, there is a knowledge gap

that needs to be addresses, and it is the objective of this study to fill that knowledge

gap. Therefore, this study wants to find the challenges that tax payers lead not to

comply tax laws and regulations in Tanzania determine the problems of education,

examine measures that tax revenue authorities used to solve the problems of

voluntary tax compliances and find out strengths and weaknesses of education in

promoting voluntary tax compliances and sustainable tax administration in Tanzania.

2.6 Conceptual frame work

A conceptual frame work was developed as presented below. It enabled one to

understand Cleary the research problem and variable were studied under this

research.

The conceptual model shows three different variables that were studied and their

interrelationships. They include quality of taxpayer services, taxpayer voluntary

compliance and the performance of government revenue collections.

The quality of tax payer services TRA provided were evaluated considering five

dimensions of services quality namely: Tangibles, reliability ,responsiveness

assurance and empathy as independent variable, while the performance of the income

tax revenue collections as dependant variable, with taxpayer voluntary compliance as

moderating variable.

The influence of the factors like corruption, nature of tax policy /law, economic

conditions and political interference on the tax payer voluntary compliance and

income tax revenue collections were kept constant.

27

Figure 1: Conceptual framework of TRA taxpayer services on Income tax

Revenue.

Challenges Training

Tax payers

education

Tax laws Record keeping

Tax compliance

Source: survey (2014)

28

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY.

3:1. INTRODUCTION.

The area of interest in this chapter will include; design of the study, target

population, sampling design and procedures, and also how the research finding will

be presented.

3.2 Research Design.

The researcher used descriptive research, in her aim to achieve the objective of the

study. The research method is defined as a process of collecting data in order to

answer research questions concerning the current status of the subject of the study.

This method determines and reports the way things were. It attempts to such things

as possible behavior, attitudes, values and characteristics, Mugenda (2003). That is

why it will be the choice of the researcher since it will describe the important of

taxpayer education for performance of revenue collections. Questionnaire will be

used to select samples for observation and analysis, in order to estimate and interpret

the actual population characteristics.

Both qualitative and quantitative data will obtained which required statistical

techniques to analyze and present the results.

3.3 Target population.

The target population in this study referred to all the taxpayers within Dar es Salaam

city. The researcher will be unable to obtain the exactly number of taxpayers in the

Dar es Salaam city, since there is no existing database, as most of them were neither

registered nor licensed by the local authorities. Due to financial and time constraints

the researcher will not collect data from all taxpayers in study. Therefore, a randomly

selected sample size will be selected from across every street to maintain objectivity.

29

3.4 Sampling Design and Procedures.

Due to the fact that taxpayers were widely distributed virtually in all areas of Dar es

Salaam city, simple random sampling will be found to be more appropriate in

obtaining data compare to other methods. The questionnaires contained both open

ended and closed ended type of questions. In the closed ended type of questions, all

possible alternatives from which respondents selected the answer that best described

the situation were provided.

The open ended type gave the respondents the choice to respond in their own words.

Both methods were found to be advantageous. For closed ended questions they were

easier to analyze since they were in an immediate usable form, economical and easier

to administer. Open ended question also gave the respondent freedom to respond

giving greater depth of response it gave insight to the feelings of the response among

other advantages. Therefore the researcher found these instruments to be very

appropriate for study.

3.5 Data collection Methods and Instruments.

3.5.1 Data collection Methods

There are two types of data: Primary data and Secondary data. Primary data are those

data collected afresh and for the first time to be used to solve a problem under study.

In this research primary data was collected through interview, survey schedule and

observation methods in which were done to all respondents.

Secondary data were also collected to augment the studies. Through the secondary

information, the researcher search for the information that may be suited to the

objectives. The materials that the researcher used are Books, Journals, Magazines

and internet websites.

• Interview

The interview collection method was preferred because the face to face encounter

encouraged the respondents to be more co-operative in providing the information.

30

Among other advantages included ability to obtain in –depth data than with the use

of other methods, clarify and elaborate the purpose of research among others.

• Survey Schedules

Second method used was survey in which a sample population was identified and

agreed for the research topic; questionnaires as data collecting tool were also used.

The questionnaires contained a list of simple, structured questions, chosen after

considerable testing for the purpose of obtaining reliable information from the

respondents.

• Observation

This method involved observing what was taking place in the office; it was useful in

exploring the actual situation. It was enabling a researcher to eliminate biasness and

come up with what actually taking place and collect data independent

3.5.2 Data collection instruments

The following are the methods which were used to collect data

• Questionnaires

Structured questionnaires were administered to gather information from targeted

respondents. The questions were designed in such a way that, they captured both

qualitative and quantitative information. Questionnaires eliminated biasness and

enabled data to be collected from respondents not easily reached by the researcher.

Questionnaires were also used as an instrument for data collection. Structured

questionnaires was used to generate information and data which were subsequently

be used for both qualitative and quantitative analysis. Questionnaire as an instrument

preferable because it gives respondents time to come up with accurate answers and

collect relevant information.

• Interview

Direct interview with respondents was conducted, and conversations translated and

transferred into the structured questionnaires. The method chose because it more

31

economically, increases comparability between one interview and another, it made

analysis of responses become easier and provided a safe bas for generalizations. It

helped to elaborate to the respondent area of interest to the research questions so as

to avoid responses which are not required.

• Documentations

This instrument was used to collect all secondary information which was relevant to

the study. This information includes previous reports from the office documents,

publications, libraries, internet and other relevant documentations.

3.6 Data Analysis Procedures and Presentation.

Statistical data analysis techniques such as Ms. Excel bar charts, Ms. Words tables

were used in the analysis of the information obtained. Farther, both qualitative and

quantitative data analysis techniques were used in order to help the researcher to

bring out the information clearly. These analyses enabled patterns and relationship to

be formed which were not apparent in the raw data.

32

CHAPTER FOUR

PRESENTATION OF FINDINGS, ANALYSIS AND DISCUSIONS

4.1 Introduction

This chapter aims the research objectives (problem) using some hypothetical

statements which were guidelines and the general frame work for the study. Some of

the methods which have been used by the study to test these hypothetical statements

include the use of graphs, tables, and text. Result finding was collected all relevant

data were analyzed, processed and presentation was as given below it also discuss,

analyze and argues on the findings of the study in this chapter

4.2 Analysis and Interpretation of the Results

4.2.1 Gender of respondents for sample

Table 4.2 shows that 55.56% of the respondents were males and 44.44% females.

This is an indication that most of the respondents from the sample population were

men and therefore higher percentages of contribution to our study were men, but in

considering gender equality this shows a slight difference which signify women

participation in business industries and entrepreneurship which contribute to our

national economy

Table 4.1 Sex of respondents

Frequency Percent Valid Percent Cumulative Percent

Male

Female

Total

50

40

90

55.56

44.44

100.0

55.56

44.44

100.0

55.56

100.0

Source: Survey data (2014)

Figure 4.1 below also shows percentage and frequency of the number of respondents

regarding their sex from our sample showing a large number of men as compared to

women graphically above were among the sample population who responded our

questionnaires.

33

Figure 4.1 Bar Chart showing Sex of respondents


4.2.2: Age group

The range of respondents’ age was between 25 - 65, and over 66 years old. Almost,

55.55% of the respondents fall at the age of 35 to 55 years old. The percentage

distribution is as indicated in Table 4.4 below. It is therefore good to know that the

age gap is very normal for the population; therefore it is easy for the TRA to

harmonize this tax payers culture that in one way or another leads to systematic and

consistency performance in revenue collection.

Table 4.2 Age of respondents for employees

Valid Age Frequency Percent Valid Percent

Cumulative Percent

25 – 35

35 – 45

45 - 55

55 - 65

Over 66

years

10

21

29

21

9

11.11

23.33

32.22

23.33

10.00

11.11

23.33

32.22

23.33

10.00

11.11

34.44

66.66

89.99

100.00

Total 90 100.0 100.0


0102030405060708090

100

Male

Female

Total

34

Figure 4.2: Bar chart showing Age of respondents for employees

Source: survey data (2014)

Figure above also shows a range from 35 to 55 was seen to be a majority of the age

group being lead by 45-55 age groups. Therefore this is said to be good range of age

gap that can is very possible to be educated and was said to be ready for new

knowledge concerning tax compliance.

4.2.3 Education level of respondents

Four groups of education levels were chosen for the survey questionnaires and

groups of education levels were: certificate education or below, ordinary Diploma,

first degree and second degree or above. Table 4.3 show that % respondents attained

college/university level of education. Their respective scoring percentage is also

indicated in the Figure 4.3 below showing a high percentage in bar chart of the first

degree followed by second degree which is 20%. This was a good indication on our

side that information gathered from the respondents was from the very people of our

target since most of colleges/universities graduates have a clear understanding of the

questions asked in the questionnaires.

0 20 40 60 80 100

Valid Age

25 – 35

35 – 45

45 - 55

55 - 65

over 66 years

Total

35

Table 4.3 Education level of respondents


Certificate

Diploma

1st Degree

2nd Degree

40

25

15

10

44.44

27.78

66.67

20

44.44

27.78

16.67

11.11

44.44

72.22

88.89

100.

Total

90 100.0 100.0


Figure 4.3: Bar Chart showing education level of respondents


Figure 4.3 above also indicates that a large number of respondents from our sample

population were certificate holders followed by diploma and the minority were first

degree And second degree. Therefore our research finding and data collections fallen

to a large number of respondents who had satisfactory knowledge and awareness of

0

20

40

60

80

100

120

Certificate Diploma 1st Degree 2nd Degree Total

Frequency

Percent

Valid Percent

Cumulative Percent

36

the tax compliance to taxpayers’ education on the performance of revenue

collection by Tanzania Revenue Authority in Tanzania since these statistics were

from diffrerent demographic and geographical locations around the country.not only

this but it was noticed that most of tax payers who are business owner do not posses

a high level of education as it indicates in the figure above where certificate and

diploma holders are the majority of business/tax payers therefore they have

reasonablr education to understand tax laws, procedures and regurations guiding tax

compliance.

4.4 Challenges faced by TRA on tax payers’ education

From the respondents being interviewed as tax payers and other stake holders

explained are as shown in the Table 4.4 below.

Challenges were arranged in a table format and all respondents were to choose/tick

the best levels among three on each challenge, levels were High, Moderate and Low.

All respondents were free to choose the best option among three levels according to

individual awareness on each factor by considering how significance a particular

factor outstand (High, Moderate and Low) as in the table 4.4 below) with respective

to each percentage.

Table4.4 shows that almost all challenges were above 50% high, Considering each

challenge, our statistical data below shown the following results: Financial burden

had a most affecting with 61.11% compared to technology with 60% while culture

possessed 57.78% and knowledge both score 55.56% other challenges such as

Political influence 43.33%, Resistance scored 47.78% consecutively g

Table 4.4 Challenges faced in providing tax payer education

High Percent Moderate Percent Low Percent Total

Knowledge 50 55.56 30 33.33 10 11.11 90

Resistance 43 47.78 32 35.56 5 5.56 90

Culture 52 57.78 31 34.44 7 7.78 90

Technology 54 60 28 31.11 8 8.89 90

Political

Influence

39 43.33 31 34.44 10 11.11 90


37

Figure:4.4 Challenges faced in providing tax payer education


From our data collected with reference to the literature review above in chapter two

have proved a positive correlation revealing these factors. A financial burden where

most of tax payers are not ready to comply with laws as they are not willing to pay

right tax so that they get huge profits , this financial burden happen if the amount of

tax to be paid is a large amount therefore tax payers tend to adjust their financial

statement to less the tax fee(ATO,2000/2001) and (OECD,2003).

Cultural and behavioral situation among the society is another factor which was

observed to have 57.78% effect during data collection the extent that most of

respondents marked that most Tanzanian have very low moral behavior and willing

to meet their responsibility especially tax compliance, they want to do business

freely without paying government tax. This statistics gave a relevant correlation with

our literature review which was indicated as Psychology and sociology factors

(OECD, 2004), (Valeria, 2004)

Knowledge is also big challenge faced TRA during tax payers training and educating

in boosting revenue collections, such that most of tax payers come from different

geographical location and demographic levels around the country in which TRA

0

10

20

30

40

50

60

70

80

90

100

Knowledge

Resistance

Culture

Technology

Political influence

38

have not covered the whole country in providing this education to the community on

voluntary tax compliances towards national economy and indirect benefits to tax

payers as well. Knowledge possessed 55.56% which is a direct impact to the

community on tax knowledge to be given in all area around the country to soften

enforcement challenges towards tax education to our tax payers, this play a direct

relation concepts of unfair treatment among individuals in rating the tax to be paid

which is considered by tax officers from TRA which is sometimes lack of enough

knowledge about tax law and procedure(Roak and Stephen,1994)

Therefore a number of untold tax payers is also big and need to be reached by

widening services this was seen in the literature review and given different

approaches of providing education as in the table 2.0 above.

Technology is another challenging factor to tax payers because technology is

changing rapidly with time leaving a huge gap between current modes of business

towards the new technology, considering the situation in Tanzania where online

submission of return is taking lead to express and easy submission hence avoiding

physical visit and lining up for tax or return submission, apart from these also helps

TRA to use coercive means in data collection by onsite audit and annual audit of

returned report, other sources of education faced by tax payers are from that studio,

newspapers, seminars, and workshop were the most efficient means of delivering

taxpayer education which are seen to be very helpful in sharpening tax knowledge

All these challenges were seen to have high effect on the performance of revenue

collections by Tanzania Revenue Authority in Tanzania if they are well administered

to enhance voluntary tax compliances. In chapter two above as our correlation

coefficient of the data collected stated that that Some of the modifying factors were

knowledge, attitude, intentions, interpersonal support, organizational and

environment conditions. The theory assumes that education is fundamental, in

bringing about change in the modifiable factors, and the tax payer education was

expected to change these.

39

Education changes the behaviour of an individual by affecting the way he or she

makes decisions (Denis and Mehila, 2002).It has the significant positive impact on

the behaviour change of an individual (Campbell,2008).

Table: 2.0 Means of acquiring taxpayer education

No Means Frequency Percentage

1 Radio 18 25.00%

2 Newspaper 12 16.70%

3 Seminars/Workshops 11 15.30%

4 Television 10 13.90%

5 Banners 06 8.30%

6 Leaflets 05 6.90%

7 Announcement van 05 6.90%

8 Public materials 04 5.60%

9 Others (traditional dances etc) 01 1.40%

Total 90 100%


Political influence as a challenging factor was seen to be very effective in tax

collections and other return including mass resistances, in our research has been

observed that a good political will towards tax procedures and regulations results to

voluntary on tax payments.

Taking an example on EFD machines which have been introduced in recent year at

TRA has faced strong challenges which is looking with political eyes and

interference on how to deal, solve and implement it, this has made EFD not to be

effectively into use by all tax payers due to political interferences which has brought

a great impact to the community whether to accept or reject the government efforts

trough revenue Authorities

4.5 Education on tax laws and procedures provided by TRA affect the tax

compliance

Table 4.5 below shows how education on tax laws and procedures provided by

TRA to tax payers affected the tax compliance in Tanzania, criteria were used to

signify the effect to tax compliances.

The followings criteria were used during data collections in responding to our

questionnaires as, tax laws and procedures provided which were provided by

40

Revenue Authority has influenced tax payers by enhancing Good performances of

collecting revenue since education softened the revenue collection processes by

dealing with customers whom were well educated on the matters concerned,

Promoting a strong relationship between tax payers and the Revenue Authority since

all tax payers were free to pay tax voluntary getting to know laws, procedures and

other benefits behind a paid taxes to the national as indirect benefits to the society

at large,

Increasing voluntary on tax compliances since this was seen a normal obligation of

tax payers to his/her country to promote national income which tend to increase in

government to citizens service delivery.

Paying on due date was also seen among realized benefits after tax education on

laws and procedures to be implemented fully.

These effects on how education on laws and procedures has affected tax payer’s

compliances. Almost all these factors indicated that all effects are above 50% which

were said to be significant indicators of tax compliances upon dealt with, these

education on laws and procedures about tax compliances accelerated a numbers of

factors such as good performances with 66.67% importance effect of the rest,

followed by strong relation between tax payers and TRA during tax and revenue

collection was 62.22%

Submission of revenue on duet date with 60% these were purposely to promote

voluntary on tax compliances in which due to education on Law and procedures has

resulted to 55.56% positive since Tax payers are familiar with laws and regulations

guiding them

Table 4.5 education on tax laws and procedure provided by TRA to tax payers


Good performance 60 66.67 22 24.44 8 8.89 90

Strong relation 56 62.22 26 28.89 8 8.89 90

Voluntary on tax

compliance

50 55.56 26 28.89 14 15.56 90

Paying on due date 54 60 28 31.11 8 8.89 90


41

Referring to our literature review which is showing how education on tax law and

procedure has affected tax payers in complying their obligations voluntary and

became willing to pay without coercive from TRA staffs and the government at large

the table below from table 2.3 of the literature shows the majority responded to have

made a significant changes which correlates our data collected and the graphical

figure below from our literature review.

Table 4.5.1 Change in willingness to pay taxes

Change Frequency Percentage Very big change 13 18.2%

Significant change 26 36.1%

Change but not significant 19 26.3%

Not sure 15 20%

Total 90 100%


Figure 4.5: education on tax laws and procedure provided by TRA to tax payers


0

10

20

30

40

50

60

70

80

90

100

Good performance

Strong relation

Voluntary on taxcompliance

Paying on due date

42

Having a look on the graph from the surveyed data shown that all factors which

were: good performance, strong relations, voluntary on tax compliances and paying

on due date had a high percentage of voluntary and compliances due to the fact that

the education on law, procedures and regulation given to tax payers opened their

mind to realize the importance and obligations of paying tax on due date without

waiting for penalties and other Audit enforcement.

This made tax revenue collections and returns to increase gradually by making a

close relation between TRA and Tax payers to work together in a friendly manner

and therefore increasing performances on either party.

4.6 Training provided by TRA to staffs and tax compliance in Tanzania

From the table below respondents from different groups, age gaps and sex were

interviewed concerning satisfaction on all trainings which TRA gave to its staffs by

making them capable of educating tax payers which was mainly to promote

voluntary tax compliances.

Table 4.6. influence of Training provided by TRA to staffs

Yes Percent No

Percent Total

Tax payer 65

72.22 25 27.78 90

TRA staffs 82

91.11 8 8.89 90

Citizens 60

66.67 30 33.33 90

Source: survey (2014)

These groups were categorized as follows: tax payer, TRA staffs, and other citizens

who are familiar with tax issues, intentionally to see whether a public is getting

enough knowledge from TRA staffs on tax compliances and its other particulars like

laws, regulation and procedures.

43

Questionnaires were filled by the respondents and tabled as shown below: Tax

payers were seen to be satisfied 72.22% of TRA education to its staffs since

responded “Yes” while only 27.78% were not satisfied by the education provided to

staffs by putting “No”.

TRA staffs themselves filled the questionnaires to verify if tax law and procedural

knowledge they posses satisfies or is relevant to tax payers demand, it resulted that

91.11% of the staffs were satisfied with the content of the training given from the

employer was sufficient and only 8.89% were not satisfied with the training

provided.

Looking to other people who were also involved in our questionnaires to be able to

get their views in this research also responded with 66.67% that they are satisfied

with TRA education to its employees who are involved in tax collections and also

TRA education given in other approaches have proved great effects towards

voluntary tax payers.

Figure 4.6 influenced by TRA Training TRA to staff


0

10

20

30

40

50

60

70

80

90

100

Yes Percent No Percent Total

Tax payer

TRA staffs

Citizens

44

With reference to the literature review about our study proving that trainings and

developments to staffs had a great impact as compared to the literature showing an

increase from 2008 to 2011 by decreasing the audit Enforcement as below from 36%

in 2008 to 25% in 2011 consecutively which implicates that tax payers are getting a

relevant knowledge from TRA trained staffs about tax payment without any strike.

Table 4.6(b): Analysis of Tax compliance

Year Total taxes Audit Enforcement

2008/2009 100% 36%

2009/2010 100% 29%

2010/2011 100% 25%


Table 4.6(b): Analysis of Tax compliance

Year Total taxes Collected voluntarily

2008/2009 100% 64%

2009/2010 100% 71%

2010/2011 100% 75%


4.7 Education tax payers on record keeping and tax compliance in Tanzania.

Table below shows the extent education provided to tax payers on record keeping has

affected tax compliances in Tanzania; this signifies a number of factors which are

Accuracy, Efficiency, timely, availability and control.

The benefits identified were rated as excellent, very good and good regarding the

performance on record keepings. Questionnaires were collected from respondents

while data were analyzed and finally tabled as below, all these measures proved that

education on recording keeping given to tax payers helped to have excellent and very

good record keeping and statistics in their tax returns.

45

Therefore all factors indicated as follows Accuracy 40% excellent and 44.44% very

good record keeping. Efficiency resulted 42.22% excellent and 46.67% good record

statics while Timely and updating gave 37.78% excellent and 55.56% good statistical

record. Data availability with 44.44% excellent and 42.22% good and lastly a

control of Financial record is updated and maintained giving advantageous of

46% excellent and 44.44% good results.

From these facts data below shown that all five measures on record keeping were

statistically favouring both TRA and tax payers in promoting tax compliances. Sum

of excellent and good results is high as compared to a poor percentage. Likewise

figure 4.7, bar chart shows high percentage of good result and excellent.

Table 4.7: Record keeping has affected to tax compliance in Tanzania.

Excellent Percent Good Percent Poor Percent Total

Accuracy 36 40 40 44.44 14 15 90

Efficiency 38 42.22 42 46.67 10 11.11 90

Timely

updating

34 37.78 50 55.56 6 6.67 90

Availability 40 44.44 38 42.22 12 13.33 90

Control 42 46.67 40 44.44 8 8.89 90


46

Figure 4.7 Record keeping has affected to tax compliance in Tanzania.


All these data collected from our research reveals what were seen in chapter two

such that table 2.1 and table 2.2 in chapter two have proved a positive matching

between our research and survey data towards the literature review, also shown a

positive increase in tax revenue collections on both voluntary and audit enforcement

analysis gave more improvement yearly from 2008 to 2011 where percentages of

Audit Enforcement were decreasing from 23% in 2008 to 20% in 2011 showing that

that a paying within period and compliances are high.

Table: 4.7a Analysis of filling tax returns

Year Total taxes Audit Enforcement

2008/2009 100% 23%

2009/2010 100% 21%

2010/2011 100% 20%


0

10

20

30

40

50

60

70

80

90

100

Accuracy

Efficiency

Timely updating

Availability

Control

47

Table: 4.7b Analysis of filling tax returns

Year Total taxes Within period

2008/2009 100% 77%

2009/2010 100% 79%

2010/2011 100% 80%

Response from the staff indicated that about 80% of the returns were lodged timely,

while the remaining 20% were not within the statutory periods and would attract

penalties and fines for late fill of the returns lodged, 67% declared accurate tax

liability, while the remaining contained errors, and additional taxes were assessed

through auditing. 78% of those who were required to pay taxes, paid within the

stipulated time according to the law while the remaining were late to pay taxes and it

was necessary to use enforcement strategies.

48

CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.1 Introduction

This chapter represents the conclusion and recommendation of the study. The overall

objective was to investigate how taxpayers’ education has influenced the

performance of revenue collection by Tanzania Revenue Authority in Tanzania.

5.2 Summary

Chapter four has been exploring the real situation the tax payers and the society from

which respondents gave during data collection. These data have been collected from

a relevant Government authority which has been empowered to implement the tax

administration in the United Republic of Tanzania, therefore the collected data from

TRA and tax payers by 90 respondents as shown above in the given tables have

proved the objectives of the research topic and the current situation that ( i)

Challenges faced by TRA in providing tax payer education for influencing revenue

collection, (ii) How do education on tax laws and procedure provided by TRA to tax

payers affect the tax compliance in Tanzania, (iii) Does training provided by TRA to

staffs have influenced significantly tax compliance in Tanzania, (iv ) The extent

education provided to tax payers by TRA on record keeping has affected to tax

compliance in Tanzania. All are key issues for discussion and have been responded

accordingly as positive towards achieving the research gap.

Thus these results collected are relevant and are significant be used in the way

forward to enhance the realization of revenue collections and increased tax returns

regarding that data collected considered different age(age gap), education

levels(education gap), gender balance, and different groups of tax payers levels.

5.3 Conclusion

To enhance performance of revenue collection by Tanzania Revenue Authority, the

country through TRA need to embark on significant education particularly tax law,

procedures and regulations which guide tax payers to observe voluntary tax

49

compliances a in a very systematic and smooth way. It is observed that 80% of our

research sample as our respondents had a very positive towards our research goals on

how tax revenue collection can be increased by putting more efforts on education and

awareness creation to all tax payers and the community at large which if

administered and kept alive on tax payers ears and minds tend to changes the whole

systems used currently. Looking on the technology as our mode and driver of all

recent and upcoming global business activities in our daily lives. A government

through the authority needs to put more efforts to encourage technological means of

collecting taxes voluntarily from all types of tax payers. Basing on the current efforts

like e-filling systems, EFD machines, online payment through website and mobile

application by paying taxes through tax payers’ mobile phone from different telecom

companies such as Vodacom, Tigo and Airtel companies.

Apart from this, a genuine commitment of government leaders, private sector and

other institutions of the civil society is required to create leverages, observe benefits

from taxes collected by TRA in sustaining these voluntary tax compliances to

promote national economic development processes. Analysis and discussion has

shown, in facts of chapter four, that the introduction of tax education was either a

consequence of sound public sector reforms, tax payers, and citizens directed

towards the improvement of government service delivery to its citizens.

Therefore from chapter four above, it has been realized that tax education is a key

drivers of global world economy to any state.TRA do not need to pay a physical

visit to tax payers premises instead e-services is there to bridge government and its

different ends by voluntary tax compliances.

5.4 Recommendation.

Institutional capacity building and development goals in areas such as policy

development, public sector reform, Information and Communication Technology

revolution, legal and regulatory frameworks, strategic planning and change

management, as well as strong coordination of TRA with all tax payers are

50

required to accelerates this move, the change management process which is targeted

to promote voluntary tax compliances through educating tax payers and the

community at large also the importance , direct and indirect benefits of tax

revenue from low level of a family to high level as a nation. Furthermore, building a

positive perception about the value of taxes within government and society should be

regarded as a priority to individual and national level. Historical literature point of

view and our research data have proved that any nation will only be able to have

strong economy and become a superpower nation if its people (tax payers) have

realized a secrete of voluntary compliances to its government by getting qualified

education about benefits to themselves and the government so as to have a

government that gives a loud return in form of social services such as education,

health, water, energy, technology, transport and infrastructures.

Government should carefully plan its strategic goals, implementation timeframes and

resource budgeting, vis-a-vis obstacles and risks to be overcome, ensuring success

of this process and realizing better services performances which lead to good

governance.

5.5 Policy Implications

Through research findings which have been analyzed, presented and discussed in

chapter four above can be used by different groups, stakeholders and policy makers

to draw some frameworks, decisions for administrative purpose but also these

findings can be taken as catalyst to tax payers education in order to improve

performance in revenue collection towards sustainable economic development in

Tanzania.

Stakeholders such as

Parliament:

Responsible for providing an enabling policy and legislative framework for increased

revenue collections to see these opportunities being exposed to workout on particular

policies

51

Ministry of finance and home affairs:

Responsible for tax revenue policy, strategy, planning, coordination and

implementation and for providing a framework for intergovernmental and

international co-ordination

Policy Makers being responsible for reviewing and establishing new policy

required have this chance to utilize a recent research finding to have policies which

are inline with the fast growing tax collection modes in the world, to have updated

policies by including all technological gapes to make sure a trading global business

is taking place with no limited situation

These findings are helpful to TRA, tax payers and all graduates and other upcoming

scholars to have a competitive knowledge to determine how education on tax laws

and procedures provided by Tanzania Revenue Authority to tax payers affect tax

compliance and hence increased revenue collection.

These opportunities have to be taken as catalysts to strengthen tax education services

to tax payer’s altitude in order to enhance sustainable social, political and economic

development.

52

REFERENCES

Australian Tax Offices (1997). Improving Tax compliance in the cash economy.

Alligahm and Sandmo (2004); The theory of tax evasion, A retrospective view.

African Books Collective, 2011 - Business & Economics

Alexander,C. (1992): Why people pay taxes ?Tax compliance and Enforcement.

Behaviour change theories,sources;http//74.125.177.132

Burrows 1991, A methodology for comprehencive test data.

Dr.Siti Normala Sheik Obid,(2007).Voluntary compliance;Tax Education

preventive.

Valeria,H.(2004).Building Cooperative taxpaying culture.

Erich, K.(2007). The Economic psychology of Tax behavior.

Forum on Tax Administration, compliance subgroup ;( 2004). Compliance risk

management, managing and improving Tax Compliance.

http://books.google.co.tz/books/about/Tax_Compliance_in_Tanzania.html?id=GzcIN

CwEeOMC

Jayapalan, k.(2003).The influence of education on Tax Avoidance and Evasion.

Jamel,l; Michael,W. (2001).Ethics,norms and Tax compliance.

http://www.google.co.tz/search?tbo=p&tbm=bks&q=subject:%22Business+%26+Economics%22&source=gbs_ge_summary_r&cad=0

53

TRA website, on April, 2014 www.tra.go.tz/e-filling,

United Nations Development Program (2008) IT for development, accessed in May,

2013 from http://www.sdnp.undp.org/it4dev/stories/china.html

World Bank report published (2012), World Bank Indicators - Tanzania –

Communications http://www.tradingeconomics.com/tanzania/

54

APPENDICES

APPENDIX I

17th April, 2014

Dear Respondent,

REF: REQUEST FOR INTERVIEWS OPPORTUNITY.

Dear respondent. I am a Master student at Mzumbe University in Tanzania pursuing

a Master degree of Business Administration in Corporate Management. I am doing a

research study to investigate how taxpayers’ education has influenced the

performance of revenue collection by Tanzania Revenue Authority in Tanzania:

“Case of Dar es alaam City”. I would like to request for your assistant to fill in my

questionnaire which have been attached with the covering letter so as to facilitate

my thesis.

This will assist TRA to develop effectiveness and efficient strategy in investigate

how taxpayers’ education has influenced the performance of revenue collection by

Tanzania Revenue Authority in Tanzania. The Information so provided was sorely

used for academic purpose and on top of that anonymity and confidentiality of every

respondent was highly secured.

Sincerely,

Ramadhan W. Msoba

Mzumbe University, Dar es Salaam Campus

P o Box 20266.

Mzumbe Morogoro,

Tanzania.

55

APPENDIX II

Questionnaires

I: The Respondent’s Information:

The part intends to collect information related to the respondent in particulars. They

are of significant importance for future contacts.

1. Name Gender / Sex …………………………………………………………

(Optional)


Male

Female

Total

2. Age

(i) 25-35 ………………….

(ii) 35-45…………………..

(iii)45-65………………..

(iv) More than 66 years……………..

Valid Age Frequency Percent Valid Percent

Cumulative Percent

25 – 35

35 – 45

45 - 55

55 - 65

Over 66

years

Total 90

3. Highest level of Education Attained (Tick where appropriate)

(i) Primary Education…………………………………………….

(ii) Secondary education…………………………………………..

(iii) College Education…………………………………………….

(iv) Occupation…………..…………………………………………………

56

(v) Department……………………

(vi) Employer…………………………

(vii)University Education (Undergraduate)…… ………………….

(viii)University Education (Postgraduate)…… ………………….

(v) Others (Specify)………… …………………………………....


Certificate

Diploma

1st Degree

2nd Degree

.

Total

II. Please put a √ mark against the provided options that exactly or closely

represent your answer on each factor.

4. What were the challenges faced by Tanzania Revenue Authority in providing tax

payer education for the purpose of influencing revenue collection?

a) Knowledge [ ]

b) Resistance [ ]

c) Culture. [ ]

d) Technology. [ ]

e) . Political Influence [ ]

57


Knowledge

Resistance

Culture

Technology

Political

Influence

5. How education on tax laws and procedures provided by Tanzania Revenue

Authority to tax payers affect the tax compliance in Tanzania?

a) Good performance [ ]

b) Strong relation [ ]

c) Voluntary on tax compliance [ ]

d) Paying on due date [ ]


Good performance

Strong relation

Voluntary on tax

compliance

Paying on due date

58

6. Does training provided by Tanzania Revenue Authority to staff have

influence significantly tax compliance in Tanzania?

a) Tax payer

YES/NO [ ]

b) TRA staffs [ ]

YES /NO

c) Citizens [ ]

YES/NO

Yes Percent No

Percent Total

Tax payer

TRA staffs

Citizens

7. To what extent the education provided to tax payers by Tanzania Revenue

Authority on record keeping has affected to tax compliance in Tanzania?

a) Accuracy [ ]

b) Efficiency [ ]

c) Timely updating [ ]

d) Availability. [ ]

e) Control

59

excellent Percent good Percent Poor Percent Total

Accuracy

Efficiency

Timely

updating

Availability

Control

What do you recommend on e-government development practices at the E-

government Agency?

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THANK YOU FOR YOUR KIND CO-OPERATION.

taxpayers' education on tax compliance - Mzumbe University

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