TAXPAYERS’ EDUCATION, TAX COMPLIANCE AND TAX REVENUE COLLECTION: The case of Tanzania

Area of Study:
The study will be conducted from various taxpayers and Tanzania revenue Authority staff especially from the department of Taxpayers’ services and Education Department.

Background to the Study:
In this assignment the discussion is critically based on the impact of taxpayers’ education provided by Tanzania Revenue Authority (TRA) to the taxpayers’ compliance on tax law and tax revenue collection
The taxpayers Service and Education is one of the key functions of Tanzania Revenue Authority (TRA) conducted in order to educate taxpayers on various tax laws issues together with any changes that are made by the government on tax matters and laws. TRA conducts various tax seminars, workshops and competitions periodically to all areas within the country, through different media like radio, Televisions, magazines, mobile vans and conduction of tax clubs in secondary schools. From this taxpayers seminars, TRA provide tax education and services explaining various tax laws thus impacting taxpayers with tax knowledge and allow for questions from listeners and viewers for more verification. The service is widen to include the call centre where taxpayers are allowed to make calls free of charge asking for help on any tax issues at hand.

Statement of the Problem
Tax compliance in Tanzania has been increasing overtime. The provision of taxpayers’ education via radio, television programs, fliers, tax clubs and tax payers’ competitions has increased any awareness to taxpayers on tax matters and hence increased tax revenue collections.
Objectives of the Study (What does the study hope to achieve?)
General Objective
The general objective of this study was to understand whether taxpayers’ education as provided by Tanzania Revenue Authority has any role in taxpayers’ compliance in tax laws, paying taxes and hence increased tax revenue collection.
Specific objectives
The specific objectives were,
i. To assess the impacts of taxpayers education to taxpayers’ compliance on paying taxes. ii. To spot out how taxpayers education has improved the relationship between TRA and taxpayers within the country. iii. To identify relationship between taxpayers education and tax compliance. iv. To establish the relationship between tax revenue collection and tax education provided.
v. To establish other factors that influences the tax compliance in Tanzania.
Questions and/or Hypotheses
The Research Questions are based on the specific objectives of Study as follows,
i. What is the impact of taxpayers’ education to taxpayers’ compliance on paying taxes? ii. How taxpayers education has improved the relationship between TRA and taxpayers within the country. iii. What is the relationship between tax revenue collection and tax education provided? iv. What are other factors that influence the tax compliance in Tanzania?
Literature review
This section reviews the specific objectives of the study work on the impact of tax education on the tax compliance and tax revenue collection. The subject includes to assess the impacts of taxpayers education to taxpayers’ compliance on paying taxes, to spot out how taxpayers education has improved the relationship between TRA and taxpayers within the country, to identify relationship between taxpayers education and tax compliance, to establish the relationship between tax revenue collection and tax education provided and to establish other factors that influences the tax compliance in Tanzania.

There have been tax administration reforms to improve tax collections and compliances from taxpayers, the reforms include Integration of TRA operations, review of Pay as you earn Structure, payment of Taxes through Banks, Use of Information and Communication Technology systems for tax operations, risk based operations, governance and Integrity and monitoring of the Corporate Plan through Tanzania Revenue Authority Monitoring and Evaluation Database. The reforms also include the establishment of Taxpayer Service and Education, Stakeholders Taxpayers’ Day, Forum and Taxpayers’ Charter and Taxpayer call Centre.

The high-level taxpayer compliance is essential to the success of the tax system but tax enforcement alone like detection and punishment of tax delinquency, will not of itself lead to high-level tax compliance and revenue collection. Tax compliance levels reflect effectiveness of tax administration, taxpayer attitudes towards taxation and towards government in general.

Theoretical Framework
Along similar lines Mikesell and Birskyte (2007:1074) state that – “What lawmakers and researchers do not understand about taxpayer compliance gnaws at the fiscal foundation of government by threatening equity, efficiency, effectiveness, and yield of the tax system and there is no unified approach to making the necessary repairs.”
It is important to understand the environment within the relevant jurisdiction to be considered. In this context there are various relevant “environments” or factors, namely the political environment, prevailing economic environment, existing fiscal policies, the constitutional and legal (i.e. rule of law) environment, the tax administration, taxpayers, as well as in-country realities, that may impact on tax compliance.
“Abundant experience around the world has made it clear that the single most important ingredient for effective tax administration is clear recognition at the highest levels of politics of the importance of the task and the willingness to support good administrative practices even if political friends are hurt (Bird and Casanegra de Jantscher, 1992).
The poor performance by TRA are blamed on the lack of political support, although it is also seems that in some instance “ lack of political will” is used as blanket excuse by poorly performance.
Good tax policy is worth very little if it cannot be implemented effectively, hence the administration dimension of taxation cannot be ignored in good tax policy design.
Complexity of the tax laws and legislation reduces compliances. Laws that cannot be understood by taxpayers are subject to suspicion and undermine the popular support, where as complexities undermine the self assessment on which compliance depends.
Tax administrations should have the freedom to collect the tax due in terms of the laws. However, political and policy pressures often impact on the collection function. A clean administration consisting of sound tax structure and expenditure policy can be vitiated by a unreliable and corrupt tax administration of which taxpayers perception that tax administration is corrupt, tax evasion is the next step.
The morality of taxpayers toward taxes is affected by the high level of evasion puts pressure on otherwise “law-abiding citizens” who have to compensate for the additional burden resulting from large-scale tax evasion. Persons living in jurisdictions where large number of taxpayers willfully and sometimes successfully ignore efforts of the collecting agency and higher compliance is associated with low social standing of evaders, viewing tax evasion as ‘immoral’ by an individual, and a stronger sense of social cohesion.
Studies have shown that generally voluntary tax compliance increases as people’s faith in what the government is doing with their taxes increases. Voluntary tax compliance is necessary to persuade the informal sector potential taxpayers to even allow themselves to be identified made comments, suggesting for instance more effective use of the presumptive taxes stipulated in the Income Tax Act 2004,
Proposed Research Design and Methods/Procedures
The study work will be conducted through survey and analysis to study the impact of tax education on tax compliance and tax revenue collection. The research design that will used to collect perception and opinion of data will be qualitative and quantitative research designs. Primary data from questionnaires and secondary data from internet, journals and TRA tax revenue reports will be used to come up with the findings.
Sampling design and sample size
For convenience of study the sample size will be chosen from taxpayers and staff form TRA. The Simple random sampling method will be employed for data collection because it is convenient for the selection of the taxpayers and staff for interview and filling questionnaire.
Interview
This tool will be applied to taxpayers and staff as it will help to get the required information and make it easier for them to respond as they do not have time to sit and give out a more of information by using other tools.
TRA staff especially those from the Taxpayers Services and Education Department will interview to get data on because they are the one who provide the tax education to the public and they have necessary information related to the study.
Questionnaires
This tool will be used to TRA staff especially from the tax collection departments to get data on the tax revenue collection, the technique suit to collect primary data through a number of written questions basing on the focus of the impact of taxpayers’ education on tax law compliances and tax revenue collection.
Data analysis and presentation
Data that obtained from interview and questionnaires will be checked to ensure completeness and editing of the information from the respondent, will be done to give meaningful information.
Data analysis will involve both qualitative and quantitative methods to find relationship between taxpayers’ education, tax law compliances and tax revenue collection. As far as regression analysis is concerned taxpayers’ education is treated as independent variable while tax law compliances and tax revenue collection are treated as dependent variables.
Bibliography

1. Kitillya H.M (2011). Tax Administration Reforms In Tanzania – Experience And Challenges.
2. Mushi. D. & Semboja. J (2001). The evolution of tax systems in Namibia, Tanzania and Uganda '
3. World Bank (2006). ‘Local Government Taxation Reform in Tanzania: A Poverty and Social Impact Analysis (PSIS)’ (Report No.34900-Tz)
4. Fjeldstad O.H and Semboja J. (2001). ‘Why people pays taxes. The case of the development levy in Tanzania. World Development’ 29(12): 2059-2074
5. Abdul-Jabbar, H and Pope, J, 2008. “Exploring the relationship between tax compliance costs and compliance issues in Malaysia”. Journal of Applied Law and Policy. pp 1–20
6. Ongwamuhana Kibuta (2011) : Tax Compliance in Tanzania: Analysis of Law and Policy Affecting Voluntary Taxpayer
7. Faculty of Law, University of Dar es Salaam (1995) Taxation policy in Tanzania: Constraints and Perspectives: Workshop report
8. Tanzania Tax Law Reports Editorial Board (2010) : Tanzania Tax Law Reports 2002
9. Tanzania Revenue Authority website. www.tra.go.tz
10. Taxpayers Service Charter (2012). 5th Edition.

Bibliography: 1. Kitillya H.M (2011). Tax Administration Reforms In Tanzania – Experience And Challenges. 2. Mushi. D. & Semboja. J (2001). The evolution of tax systems in Namibia, Tanzania and Uganda ' 3. World Bank (2006). ‘Local Government Taxation Reform in Tanzania: A Poverty and Social Impact Analysis (PSIS)’ (Report No.34900-Tz) 4. Fjeldstad O.H and Semboja J. (2001). ‘Why people pays taxes. The case of the development levy in Tanzania. World Development’ 29(12): 2059-2074 5. Abdul-Jabbar, H and Pope, J, 2008. “Exploring the relationship between tax compliance costs and compliance issues in Malaysia”. Journal of Applied Law and Policy. pp 1–20 6. Ongwamuhana Kibuta (2011) : Tax Compliance in Tanzania: Analysis of Law and Policy Affecting Voluntary Taxpayer 7. Faculty of Law, University of Dar es Salaam (1995) Taxation policy in Tanzania: Constraints and Perspectives: Workshop report 8. Tanzania Tax Law Reports Editorial Board (2010) : Tanzania Tax Law Reports 2002 9. Tanzania Revenue Authority website. www.tra.go.tz 10. Taxpayers Service Charter (2012). 5th Edition.