ASSESSMENT ON THE INFLUENCE OF TAX EDUCATION ON

TAX COMPLIANCE
THE CASE STUDY OF TANZANIA REVENUE AUTHORITY –
KEKO BORA TEMEKE BRANCH
ASSESSMENT ON THE INFLUENCE OF TAX EDUCATION ON
TAX COMPLIANCE
THE CASE STUDY OF TANZANIA REVENUE AUTHORITY –
KEKO BORA TEMEKE BRANCH

By

A Research Proposal Submitted in Partial Fulfilment of the Requirements for

Award of Bachelor Degree in Public Sector Accounting and Finance- Tanzania
Institute in Accounting
2020
 CERTFICATION
We, the undersigned, certify that we have read and hereby recommend for acceptance
by Tanzania Institute in Accountancy, a research report entitled Assessment on the
influence of Tax education on Tax compliance. A case of Tanzania Revenue
Authority-Keko Bora Temeke branch in partial fulfilment of the requirement for the
award of the Bachelor of Public Sector in Accounting and Finance in TIA.

___________________________
Major Supervisor

___________________________
Internal Examiner

Accepted for the campus board

__________________________________________________
PRINCIPAL – DAR ES SALAAM CAMPUS
 DECLARATION
AND
COPYRIGHT

I Sikudhani H. Mmbaga declare that this research report is my own original work and
that it has not been presented and will not be presented to any other Institute for similar
or any other degree award.

Signature: ________________________________

Date: _______________________________

©2020
This dissertation is a 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, except
for short extracts in fair dealings, for research or private study, critical scholarly review
discourse with acknowledgement, without the written permission of Tanzania Institute
of Accountancy, on behalf of the author.
 ACKNOWLEDGEMENT

I would like to express my innermost heartfelt and sincere gratitude to those people who
in one way or another enabled the successful completion of the study. I would like to
thank the Almighty God for his countless blessings and love that he endowed me during
the entire period of my study. He has protected me, stood by my side and gave me
courage to go on and on. I’m so grateful and appreciate all He has done for me.

I also humbly and kindly present my sincere thanks to the Major supervisor Mr. Fadhili
Mahenge for his unexplainable assistance, constructive ideas, for his inspirations and
much time he dedicated to make this research report something so special. I have
nothing to offer back to him, but may the Almighty God bless him. I would like also to
thank Tanzania Revenue Authority – Keko Bora Temeke Branch for the opportunity
they gave to undertake my field study to realize the dream of getting a Bachelor of
Public Sector Accounting and Finance of TIA.
 DEDICATION
To dedicated my beloved Mmbaga family.
 LIST OF ABBREVIATIONS
TRA Tanzania Revenue Authority
TIN Taxpayer Identification Number
EFD Electronic Fiscal Device
 ABSTRACT

This study will intend to assessment on the influence of tax education on tax
compliance. The study objective was to assess the relationship between tax education
with tax knowledge among taxpayers, assessing the influence of tax knowledge on tax
compliance among tax pays and determining reasons why taxpayer do not comply with
paying taxes.

The study is conduct in TRA-Keko Bora Temeke where the researcher choose some of
taxpayers to be include in the study. The study is design by looking at what the study
about, why the study is conduct, type of data needed, methods of data collection and
data analysis. This study apply quantitative research approaches; the researcher-target
population was taxpayers whereby questionnaire used to collect data from respondents.
The sample size select purposively from the population elements.

Data collect analyses using SPSS version 23. Data are analyses using descriptive
statistics whereby the research describe data collect from the respondents. Chi-Square
Test used to analyse the relationship between tax education and tax knowledge.
Correlation analysis used to analyse the association between tax knowledge and tax
compliance. The researcher find that there is a positive and significant association
between tax education and tax knowledge. Further to that, the research find that there is
a positive and significant relationship between tax knowledge and tax compliance.

The finding of this study imply that it is important for TRA to educate taxpayer on the
rule, regulation, and consequence of evading to pay taxes.
 TABLE OF CONTENTS
CERTFICATION..............................................................................................................i
DECLARATION..............................................................................................................ii
AND...................................................................................................................................ii
COPYRIGHT...................................................................................................................ii
ACKNOWLEDGEMENT..............................................................................................iii
DEDICATION.................................................................................................................iv
LIST OF ABBREVIATIONS.........................................................................................vi
ABSTRACT....................................................................................................................vii
LIST OF FIGURES.........................................................................................................x
CHAPTER ONE.............................................................................................................11
PROBLEM SETTING...................................................................................................11
Introduction...............................................................................................................11
Background of the Problem......................................................................................11
Statement of the Problem..........................................................................................12
Research Objective....................................................................................................13
General Objective..................................................................................................13
Specific Objectives.................................................................................................13
Research Questions....................................................................................................13
Scope of the Study......................................................................................................14
Significance of the Study...........................................................................................14
Limitation of the Study.............................................................................................14
Organization of the Study.........................................................................................14
CHAPTER TWO............................................................................................................15
LITERATURE REVIEW..............................................................................................15
2.1 Introduction.........................................................................................................15
2.2 Definition of tax...................................................................................................15
2.3 Tax Education......................................................................................................16
2.4 Tax knowledge.....................................................................................................16
2.5 Tax Compliance Concept....................................................................................17
2.6 Tax Education and Tax Knowledge...................................................................19
2.7 Tax Knowledge and Tax Compliance................................................................20
2.8 Theoretical Literature Review............................................................................20
2.8.1 Psychology Theory........................................................................................21
2.9 Empirical Literature Review..............................................................................21
 2.10 Conceptual Framework....................................................................................23
CHAPTER THREE.......................................................................................................26
RESEARCH METHODOLOGY..................................................................................26
3.1 Introduction.........................................................................................................26
3.2 Research Design...................................................................................................26
3.3 Area of Study.......................................................................................................26
3.4 Population of Study.............................................................................................27
3.5 Sample Size and Sampling Techniques.............................................................27
3.5.1 Sample Size....................................................................................................27
3.5.2 Sampling Techniques....................................................................................27
3.6 Data Collection Techniques................................................................................27
3.6.1 Primary Data.................................................................................................28
3.7 Data Analysis........................................................................................................28
REFERENCES...............................................................................................................30
 LIST OF FIGURES
Figure 2.1: Conceptual Framework..................................................................................16
 CHAPTER ONE

PROBLEM SETTING

Introduction

This chapter introduces the problem under study, which concerns the assessment on the influence
of tax education on tax compliance. The chapter comprises of explanations on the background of
the problem, statement of the problem, objectives of the problem, research questions,
significance of the study, scope of the study, limitation of the study and organization of the
study.

Background of the Problem

Tax education program is one of the strategies of improving services delivery to the taxpayers.
Improving service delivery is critical to enhance voluntary tax compliance. Lack of voluntary tax
compliance compels revenues authorities to use costly and coercive methods for tax enforcement
(Fjeldstad, 2003). Thus, tax education is a tool designed to enhance taxpayer to understand tax
laws and procedures. There have been a number of cases about taxpayer not pay tax on time or
not pay tax at all that is, tax evasion and sometimes to use loopholes or gaps in the tax laws to
escape to pay that is, tax avoidance. This cause the government not to collect enough revenue
something that hinder development of the nation large. This due to the fact that revenue collected
leads to the development of infrastructure, provision of social services and payment of salary to
the government employees. According to Kimingu and Kileva (2007) the education component
is expected to deal with non-compliance practice among small and medium Enterprise (SMEs). It
is expected that tax education will enable the taxpayer to understand tax laws and procedures as
well as creating positive tax compliance attitude (Normala, 2007).

Achieving tax compliance and improving revenue generation is not an easy task (Kimingu and
Kileva, 2007). Tanzania Revenue Authority (TRA) officers and government at large have been
using a number of means to deal with tax non-compliance which are; preparation of tax training,
preparation of tax program is television and radios, introduction of Electronic Fiscal Device
(EFD) machine, introduction of slogan “when you buy demand a receipt and when you sell issue
a receipt” and fines and punishment to those who do not comply rules and regulations. Tax
education is very important as it play a great to the voluntary tax compliance. If taxpayer
understands why they are liable to pay tax and importance of revenue collected from them to the
economic development in t districts, regions and national at large they will voluntarily comply
with the tax rules and regulations, this I to say lack of tax education may lead to involuntary non-
compliance among taxpayer. Tax education have been provided in schools, trough tax clubs and
through different media such as radios, social networks, television, magazines, conferences and
trainings.

Unfortunately, most taxpayers seem to have little knowledge or no knowledge at all about tax.
There has been little response on trainings prepared by TRA officers, as the taxpayer tends to
ignore those trainings. In addition, some of the taxpayer do not aim fully comply with rules and
regulations as they are willing to pay tax since they see it as a burden and unfair and some do not
see the importance of paying tax. Due to lack of tax education mostly taxpayer pay tax late and
some claim high amount of tax compared to the total earn per year. Apart from that, there are
also a number of taxpayers who do not come to TRA at all to register themselves that is, to get
Taxpayer Identification Number (TIN) so that they can pay tax and hence contribute to the
country’s economy.

If taxpayers not follow the tax rules and regulations due to different reasons as outlined above,
then it is likely that the government will continue to lose tax revenue hence stuck in development
of economic activities and national development at large. In that case, the following measures
might be useful for the government to use; initiating tax education curriculum from primary
school education, insisting education on patriotism and providing punishments so that no one
dares not to comply with tax rules and regulations. Apart from that, education should be
provided by using convenient and easily accessible means so that every targeted person gets tax
education. Since tax non-compliance has been as a problem then there is a need to conduct a
study for further on the effectiveness of tax education on tax compliance among taxpayers in
Tanzania.

Statement of the Problem

Tax compliance has been a biggest concern to tax authorities and public policy makers as tax
evasion threatens the capacity of government to raise public revenue. Taxpayers will readily
accept any new system introduced if they have ample knowledge to understand the system
(Kasipillai, Norhani, and Noor, 2003). Thus, education programs organized by custom and duty
authority or education institutions are required to enhance taxpayers’ ability to understand the
importance of tax on country’s economic development and to increase their confidence in
fulfilling their responsibilities as taxpayers. According to Kimingu and Kileva (2007) the
education component is expected to deal with non-compliance practice among small and
medium Enterprise (SMEs). It is expected that tax education will enable the taxpayer to
understand tax laws and procedures as well as creating positive tax compliance attitude
(Normala, 2007).

It is clear that developing tax knowledge in taxpayers is an important element in operating a

successful tax system. Achieving an appropriate voluntary compliance level could be achieved if
taxpayers can complete the tax returns correctly and pay the right amount of taxes. Thus, to
realize the objectives of voluntary compliance, taxpayers need to be informed, well educated
(particularly in tax matters), and their tax literacy level needs to be enhanced on a regular basis
to keep their knowledge up to date and relevant. However, less attention has been directed
toward understanding precisely how education will influence tax knowledge and taxpayer’s
attitude towards tax compliance in Tanzania. Hence, this research investigates the influence of
education on tax knowledge and tax compliance attitude.

Research Objective

General Objective

The main objective of this study is to assess the influence of tax education on tax compliance
among taxpayers.

Specific Objectives

i. Assessing the influence of tax education on tax knowledge among taxpayers

ii. Assessing the influence of tax knowledge on tax compliance among taxpayers
iii. Determining reasons why taxpayer do not comply with paying taxes.
 Research Questions

i. What is the influence of tax education on tax knowledge among taxpayers?

ii. What is the influence of tax knowledge on tax compliance among taxpayers?
iii. What are the reasons taxpayers evade to pay taxes?

Scope of the Study

The study is limited to assessment on the influence of tax education on tax compliance. The
study was conducted for two months that is from September to November 2020 in order to obtain
all data that is required for the study, all the necessary information and all questions are
answered as needed. The study had a case of only one organization that is TRA-Keko Bora
Temeke branch.

Significance of the Study

The significance of this study is that, policy makers can use the findings in order to make a
sound policy in relation to providing tax education as means of reducing tax noncompliance
attitude of taxpayers. It will also serve as a future reference for researchers who need to further
investigate in this area.

Limitation of the Study

Major limitations that were encountered in the process of collecting information used preparing
this report is unavailability and unwillingness of some respondents made it difficult to get the
required data on time. The researcher had to extend time to obtain data from individual
respondents from time to time.

Organization of the Study

The researcher organized the work into five chapters. The first chapter provides the introductory
part of the research, chapter two explains literature review whereby both empirical and
theoretical review about the study were explained, chapter three provide the research
methodology, chapter four provide research findings and finally summary, conclusion and
recommendation were provided in chapter five.
 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

This chapter covers the review of literatures related to my study. It consists the definitions of
concepts of tax, tax education and tax compliance, theoretical explanation of the problem under
study and empirical literature review.

2.2 Definition of tax

Taxes are compulsory payments exacted by the state that do not confer any direct individual
entitlement to specific goods and services in return (Smith, 2015, p.4). Tax is a compulsory,
unrequited payment to general government. They are unrequited in the sense that benefits
provided by government to taxpayer are not normally in proportion to their payments (OECD,
Definition of taxes, 2015).Therefore, it can be said that, Tax is a compulsory payment made to
the government by an individual or organization that helps the government to cover its expenses
on various public functions, without and direct return or benefit to the taxpayers through public
in general derives a common benefit. All citizen is seen as the lawbreaker.

The original concept of tax was to raise money to meet expenditure need of government. Tax is
much more than collecting revenue, it is about building accountable relations between
government and citizens. Tax is a cost to the taxpayer, be it an individual or corporate body
(Olowookere and Fasina, 2013, p.146). Taxes provide the bulk of revenue at all levels of
government. The federal government relies primarily on the individual income tax, state
governments rely on income and sales taxes and local governments rely on the property tax
(McEachern, 2006).

In Tanzania, there are two types of charges of tax such as direct tax and indirect tax. Direct taxes
it includes corporate tax, withholding tax, capital gain on disposal of investment asset, single
instalment tax on transport across borders, resident individual income tax, skills and
development levy, the individual presumptive tax assessment, and depreciable assets, allowances
and the applicable rates. Indirect taxes includes value added tax, stamp duty, import duty, excise
duty, fuel levy, petroleum levy, tourism development levy, railway development levy, airport
service charges, port service charges, motor vehicle first registration, motor vehicle driving
license, export tax, restriction on exportation or domestic use of minerals, export levy, prohibited
goods, restricted goods, customs processing fee, import from east Africa community, member
state and SADC, non-tax revenue, tax refund and tax administration act (TRA, 2018).

2.3 Tax Education

Tax education is the process of giving systematic instruction about tax matters to the taxpayers.
Tax education it enables well of understanding of the tax system. Tax education covers a wide
range of activities and actors from government programs to encourage tax compliance behaviour,
to efforts by business organizations to mobilize and represent the interests of their members on
tax issues, to civil society (OECD, Building Tax Culture, compliance and citizenship; A Global
Source Book on Taxpayer Education, 2015).

Greater education is directly linked to a likelihood of compliance. Educated taxpayers may be

aware of non-compliance opportunities, but their potentially better understanding of the tax
system and their higher level of moral development promotes a more favourable taxpayer
attitude and therefore greater compliance (Chan, Troutman, & O’Bryan, 2000). Chan ET. al.
(2000) also suggested that those with a higher education level are more likely to have a higher
level of moral development and higher-level attitudes toward compliance and thus will tend to
comply more. One of the measures to increase voluntary compliance is by assuring that
taxpayers have a certain level of qualifications, ability and confidence to exercise their tax
responsibility (Adbul, 2001). Taxpayers who have attended a tax course would be expected to
have better tax knowledge and tax compliance attitude in comparison with taxpayers who have
never attended a tax course (Palil, 2010). Hite&Hasseldine, (2001) highlighting that tax authority
need to emphasize teaching tax courses because of impact of education on compliance.

2.4 Tax knowledge

Tax knowledge is an essential element in a voluntary compliance tax system particularly in

determining an accurate tax liability (Saad, 2014). Chen Loo, McKerchar, & Hansford, (2009)
suggested that tax knowledge to be the most influential factor to determine taxpayers’
compliance behavior under the self-assessment system. Furthermore, the absence of tax
knowledge may lead to noncompliance behavior among taxpayers, either intentionally or
unintentionally (Saad, 2014). McKerchar (1995) who studied small business taxpayers in
Australia postulates this. She suggested that small business taxpayers are not even aware of their
tax knowledge shortfall and this may lead to unintentional non-compliance behavior. Such
evidence was also documented among individual taxpayers in Malaysia who unintentionally
committed mistakes in their tax return forms (ChenLoo, et al., 2008). Thus, the knowledge about
tax can contribute to shaping attitudes towards compliance. Citizens with better tax education are
able to navigate complex tax system and therefore they may be more encouraged to comply
voluntarily.

2.5 Tax Compliance Concept

Tax compliance is the act of complying with the tax rules and regulation. It is the process of
fulfilling the taxpayer’s civil obligation for tax payment and filling of tax returns including the
provision of necessary documents and explanations required by the tax authority in timely
manner (Ogundele, 1999).Tax compliance may be seen in terms of tax avoidance and tax
evasion. The two activities are usually distinguished in terms of legality, with avoidance
referring to legal measures to reduce tax liability and evasion to illegal measures. While some
commentators see non-compliance only as an evasion problem, this does not seem to capture the
full nature of the problem. Clearly, tax evasion is a form of non-compliance. However, if
taxpayers go to inordinate lengths to reduce their liability this could hardly be considered
‘compliance’ either. Such activities might include engaging in artificial transactions to avoid tax,
searching out every possible legitimate deduction, using delaying tactics and appeals wherever
this might reduce the flow of tax payments and so on. ‘Tax exiles’ even seem to prefer to
emigrate rather than fulfil their obligations as citizens. Even if such activities are within the letter
of the law, they are clearly not within the spirit of the law. Compliance might therefore be better
defined in terms of complying with the spirit as well as the letter of the law.

Tax compliance is a complex behavioural issue and investigation requires the use of a variety of
methods and data sources as each instrument has strength and weaknesses. According to Alma
(1991) defined tax compliance as the reporting of all incomes and paying of all taxes by fulfilling
the provisions of laws, regulations. Another definition of tax compliance is a person’s act of
filling the Income Tax Form, declaring all taxable income accurately, and disbursing all payable
taxes within the stipulated period without having to wait for follow-up actions from the
authority. Roth explained that taxpayers need to prepare all the relevant information in the
Income Tax Form within the period given, and the form must report accurate tax liability in
accordance with the needs of laws and regulations. Those who fail to adhere to taxation laws
intentionally or otherwise shall be considered as having committed an offence. James and Alley
considers tax compliance in terms of the tax gap, which is the difference between “true”
individual income tax liability and that finally, collected on a voluntary basis or by enforcement
action. In other words, ‘tax gap’ represents the difference between the actual revenue collected
and the amount that would be collected if there were 100 percent compliance. In this case, James
and Alley (2004) state that ‘compliance’ refers to voluntary not compulsory behaviour.
Taxpayers’ compliance would not be considered voluntary compliance if they adhere merely for
fear of threats and or harassment.

Tax compliance is important for many reasons. This is because non-compliance leads to a
reduction in tax collections, which in turn affects public services received by the citizens,
including compliant taxpayers. It also requires the government to expend resources to deter
noncompliance, to detect its magnitude and to penalize its practitioners. According to Brand
(1996), it is less expensive to collect taxes through voluntary compliance than using
enforcement. Tax compliance is a tenuous concept to define. Despite there is no standard all-
embracing definition of compliance adopted across all tax compliance studies, the meaning of
compliance can be seen almost as a continuum of definitions (James and Alley, 2004).
From the economic point of view, tax compliance has been defined as compliance with reporting
requirements, meaning that the taxpayer files and pays all required tax returns at the proper time
and that the returns accurately report tax liability in accordance with the taxing system applicable
at the time the return is filed (Devos, 2005). This definition holds an important extension from
the previous definition, which is the timing issue. Late tax payments cannot be considered as
proper compliance as cash today is worth more than cash tomorrow. The rationale behind this
notion is that whenever a government does not collect tax payments on time, it would be forced
to either cut public expenditure or increases the amount it has to raise elsewhere (James and
Alley, 2004). It is further asserted that although late payments of tax fit many of the ‘tax gap’
measures, they do not represent full compliance. Tax compliance behaviour may be perceived as
a rational economic decision-making process; as a reaction to perceived fairness; as an ethical
conduct or as an action due to ignorance. Each of these factors in isolation may not by itself
contribute to particular compliance behaviour. In fact, analysis of the findings of some empirical
studies indicated that tax compliance behaviour varies widely over individual circumstances and
influenced by factors such as the desire to avoid sanction as well as being subjected to group
influence. Taxpayers may under-declare their income and would be deterred only by the chances
of detection and penalties imposed.

2.6 Tax Education and Tax Knowledge

Good tax system should satisfy the four canons of taxation (ability to pay, efficiency, equity and
simplicity). Simplifying that tax systems ensures that basics of taxation are easily understood by
the majority of taxpayers and should be easy to operate it (Kamil,2015). The system should
avoid frequent changes to the tax rates, complicated and cumbersome tax language. Ordinary
taxpayers should easily understand the language. Tax understanding encompasses tax aspects
like conversant with the tax system, knowledge of the applicable tax obligations and knowing
where relevant tax information is available (Kamil,2015). Taxpayer knowledge is concerned
with the taxpayers’ ability in understanding tax laws, the willingness to comply and the role of
taxes in national development (how tax collected by the government is utilized (Mohd,
2010).Taxpayer education activities are meant to enhance the level of taxpayer understanding of
the tax systems and empower taxpayers in fulfilling their tax obligations. Education programs
creates awareness of laws, procedures, motivates taxpayers to voluntarily comply, report correct
income, maintain a close relationship between the revenue authority & the taxpayer and instil
confidence in the tax system (Kamil,2015). Teaching tax courses should be emphasized because
of their impact on compliance (Hite and Hasseldine, 2001). Taxpayer knowledge has influence
on compliance and various researches support this argument. Knowledge is categorized on the
basis ordinary or official education received and knowledge towards the opportunity to evade tax
(Kamil,2015). Tax knowledge as one of the key factors in tax compliance has a very close
relationship with the taxpayers' ability to understand the tax law & regulations, and their ability
to comply (Singh, 2003).Taxpayer education exists to encourage voluntary compliance through
service delivery to taxpayers. Low levels of voluntary tax compliance will compel revenue
authority to use costly and coercive methods to enforce compliance (Fjeldstad and Ranker,
2003). Kimingu and Kileva (2007) says that the education component will deal with compliance
matters in the informal sector. This is premised on the possibility that non-compliance being
unintentional due to the ignorance of the law or may be intentional due to the negative
compliance attitudes.

2.7 Tax Knowledge and Tax Compliance

Knowledge of taxation is the reasoning and meaning of arrest on tax laws. The people should
have a knowledge and understanding of tax regulations, due to meet tax obligations, taxpayers
need to know about taxes in advance. Without their knowledge and understanding of the tax
rules, the public may not want to pay taxes (Kamil,2015). With their understanding of tax good,
the public will better understand the importance of paying taxes, and what benefits can be felt
directly and indirectly. With the knowledge and understanding of tax rules, the people will be
open-minded, that taxes are purely used for the needs of the nation and its people (Kamil,2015).
With this understanding of the tax, the level of corruption and fraud that may occur can be
minimized. Simultaneously, the level of compliance of taxpayers to pay taxes will increase.

Consciousness or awareness is the human element in the understanding of reality and how to
react or respond to the reality (Kamil,2015). Awareness that humans include self-awareness,
self-fellow, past, and their future possibilities. Public awareness of taxation means that taxpayers
want to pay taxes because they are not disadvantaged in the tax collection is done and not felt the
compulsion (Kamil,2015). However, tax awareness is often an obstacle or problem to collect the
taxes from the society. Many people who do not know the concrete form of compensation for the
tax they have paid. Santi (2012), in her study, shows that tax awareness has a positive and
significant impact on taxpayer compliance. Savitri, (2016) argued that the realization that the tax
is a form of participation in supporting development of the country would influence taxpayer to
pay taxes because they would know the advantage of paying taxes. He also argued that the
realization that the tax is set to legislation and can be enforced would influence taxpayers to pay
taxes.

2.8 Theoretical Literature Review

This part describes two theories namely the Psychology Theory and Economic Deterrence
Theory. These two theories will be used in this study to support the proposition that tax
education, tax knowledge has the relationship with tax compliance.

2.8.1 Psychology Theory

Psychology theory posits that taxpayers are influenced to comply with their tax obligations by
psychological factors. It focuses on the taxpayer’s morals and ethics. The theory suggests that
taxpayer may comply even when probability of detection is low. Psychology theory lays
emphasis on changing individual attitudes towards tax systems. Thus, one instrument of
changing taxpayer’s attitude tax matters is tax education (Atawodi& Ojeka, 2012).

Economic Deterrence Theory

Economic Deterrence theory is a theory under criminology and was developed by Becker (1968).
This theory is based on the concept that, if the consequence of committing a crime outweighs the
benefit of the crime itself, the individual will be deterred from committing the crime. This is
founded in the idea that all individuals are aware of the difference between rights and wrong and
the consequences associated with wrong or criminal behaviours. Proponents of deterrence theory
believe that people choose to obey or violate the law after calculating the gains and
consequences of their actions. Allingham and Sandom (1972) who extended the expected utility
model of criminal activity originated by Becker (1968) to the tax arena developed economic
Deterrence model, one of the economic based models. This model incorporates the concept of an
economically rational taxpayer who will evade taxation as long as the pay-off from evading is
greater than the expected cost of being caught (Allingham and Sandmo 1972).

2.9 Empirical Literature Review

Empirical studies related to the assessment influence of tax education on tax compliance are
numerous in literature in different parts of the world. Below are some selected studies that are
influence tax education on tax compliance.

Kasipillai, Aripin, & Amran, (2003) conducted study on to evaluates the influence of education
on tax compliance among undergraduate students in Malaysia. The survey considers existing
literature in the field of education and ascertains whether education can influence the
respondents’ compliance behaviour. The statistical findings confirm the prevalence of a
relationship between education and tax compliance. This relationship is generally consistent,
particularly so to the questions relating to general avoidance and personal avoidance. There is an
improvement in personal tax compliance among students especially among females after one
semester of pursuing a preliminary taxation course. It is suggested that universities providing
courses in social science as well as business, management and accounting studies should offer
the preliminary taxation course as a core subject to all their students.

Kamil,(2015). in his article, examines the outcome of taxpayer awareness, knowledge, tax
penalties and service tax authorities on tax compliance a survey held on the individual taxpayer
at Jabodetabek & Bandung in Indonesia. Study data was collected using the accidental sampling
method that is questionnaires were distributed to those who visited tax offices of Jabodetabek &
Bandung individual taxpayers. Result of the study indicated that, awareness of the taxpayer has a
positive and significant effect on individual taxpayer compliance. In addition to, tax knowledge
of taxpayers, also has a negative and significant relationship of taxpayer compliance. This
indicates that the level of knowledge of good tax really looking for gaps to avoid tax liabilities,
tax penalties has a positive and significant relationship to the individual taxpayer compliance
which performs at the tax office in the area. Further, the study displays that the more effective
application of tax penalties, the tax compliance rate will be higher. Service tax authorities have a
positive and significant relationship of compliance individual taxpayers‟ that performs at the tax
office in the country. Finally, the study proposes that the better the service tax authorities, the tax
compliance rate will be higher.

Berhane, (2011) conducted a study on the influence of tax education on tax compliance attitude.
The objective of this study is to examine the influence of tax education on the compliance
attitude of taxpayers. To achieve this objective, a quantitative research approach was used.
Survey data are collected using questionnaire distributed to real taxpayers. The results indicated
that tax compliance is influenced by tax education.

Wong& Lo, (2015) conducted study on whether education can improve tax compliance.
Evidence from different forms of tax education they conducted a survey related to tax
compliance among 205 students taking either a general tax course or a technical tax course in
Hong Kong. The findings suggest that sales tax compliance among undergraduate students was
significantly improved if they had been exposed to a general tax education, and income and sales
tax compliance among postgraduate students were significantly improved if they had taken a
technical tax course.

Olowookere, & Fasina (2013) examined taxpayers’ education as a key strategy in achieving
voluntary compliance in Lagos State. The objective of the study is to examine the impact of tax
education programmed on tax payment compliance behavior. A simple random sampling
technique was used to sample 250 Taxpayers in Lagos State. The Analysis of Variance for the
test of hypotheses revealed that tax education programmed focused on enlightening taxpayers on
socio-economic implications of tax evasion opportunities and the transparent and accountable
use of tax proceeds have significant influence on taxpayers’ voluntary compliance in Lagos
State, Nigeria. On this basis, the study proffered that there is need for tax education to be offered
to students pursuing non-accounting courses and not restricted to accounting students at all
levels.

The researchers outlined above shows that, tax education is very important in influencing
taxpayers to comply with the rules and regulations. Therefore, to meet high level of compliance,
many researchers suggested on the provision of tax education in all level of education from
primary to secondary schools and to all course in higher learning education.
2.10 Research Gap

Kasipillai, Aripin, & Amran, (2003) conducted study on to evaluates the influence of education
on tax compliance among undergraduate students in Malaysia. The survey considers existing
literature in the field of education and ascertains whether education can influence the
respondents’ compliance behaviour. The statistical findings confirm the prevalence of a
relationship between education and tax compliance. This relationship is generally consistent,
particularly so to the questions relating to general avoidance and personal avoidance. Little
research has been conducted on the assessment on the influence of tax education on tax
compliance. This study attempts to fill in the gap on the concept of tax education on tax
compliance at TRA to observe how tax authorities to tax payers implement tax education.

2.10 Conceptual Framework

Conceptual framework is tool that assists a researcher to develop awareness and understanding
of the situation under scrutiny and to communicate (Creswell, 2013). It is a researcher
understands of how the particular variables in the study relate to each other. It is a researcher’s
map in perusing the investigation. The conceptual framework of this study consists two kinds of
variables, which are dependent, and independent variables.

As noted above tax education is expected to influence tax knowledge. Taxpayer education
activities are meant to enhance the level of taxpayer understanding of the tax systems and
empower taxpayers in fulfilling their tax obligations. Education programs creates awareness of
laws, procedures, motivates taxpayers to voluntarily comply, report correct income, maintain a
close relationship between the revenue authority & the taxpayer and instil confidence in the tax
system (Kamil,2015). Thus, this study intends to assess the association between tax education
and tax knowledge.

Furthermore, tax knowledge is expected to influence tax compliance. Santi (2012), in her study,
shows that tax awareness has a positive and significant impact on taxpayer compliance. Savitri,
(2016) argued that the realization that the tax is a form of participation in supporting
development of the country would influence taxpayer to pay taxes because they would know the
advantage of paying taxes. He also argued that the realization that the tax is set to legislation and
can be enforced would influence taxpayers to pay taxes. Thus, this study intends to examine the
relationship between tax knowledge and tax compliance.

Dependent variable Independent variables

Tax knowledge

Tax education

Tax Compliance

Figure 1: Conceptual Framework

 CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter discusses the methodology of the research and specifies the design that was used in
collection of data. Research methodology is a way systematically solve the research problem. It
is understood as the science of studying how research is done scientifically (Kothari, 2014). The
main purpose of the study is to assess on the influence of tax education on tax compliance among
taxpayers in Tanzania. This chapter is organizing under the following parts. Research approach,
research design, area of the study, study population, sampling techniques and procedures,
sample, data collection tools methods of data collection and data analysis.

3.2 Research Design

Research design is the conceptual structure within which research is conducted. It constitutes the
blueprint for collection, measurements and analysis of data (Kothari, 2004). It is the plan in
advance data collection and data analysis that is followed in completing the research project.
Orodho (2013) defined research design as the scheme, outline or plan that is used to generate
answers to research problems. A research design can be regarded as an arrangement of
conditions for collection and analysis of data in a manner that aims to combine relevance with
research purpose. This study applied quantitative research approach, in order to collect
information related to the study. The quantitative approach is used in order gather numerical
information related to the study.

3.3 Area of Study

This study is conduct at Tanzania Revenue Authority Keko Bora Temeke branch. The reason to
select this study area, it is because the researcher did an internship and collected data from TRA
that is used for the research purpose
3.4 Population of Study

According to Kombo and Tromp (2006), population is the larger group from which sample will
be taken. It is the targeted group to be studied in a particular place that involves the total
collection of elements to which the researcher needs to obtain information of the study and
where a sample will be drawn (Krishnawami,2002). The population of this study comprises of
2465 taxpayers Temeke.

3.5 Sample Size and Sampling Techniques

3.5.1 Sample Size

Sample is a group of people or things that chosen out from larger number and is tested or asked
questions in order to get information about larger group (Kothari, 2011). Since it is impractical to
include the whole population in the study then sample must be choose. Hair, Black, Babin, &
Anderson, (2019) stated that for the study to provide a sound result it should have at least 20
respondents for each independent variable. Thus, this study has two independent variables then
the minimum number of respondents required is 40. Since the minimum is 40 respondents
according to Hair et al. (2019), the researcher decided to select the sample size of (60) taxpayers.

3.5.2 Sampling Techniques

Tromp and Kombo, (2006), states that sampling technique is a procedure which a researcher
used to gather people or things to study. It is the process of selecting a population such that the
selected group contains elements representative of the characteristics found in the entire group.

The study uses non-probability sampling techniques. In non-probability sampling purposive

sampling procedure were used whereby researcher selected sample based on a certain purpose to
obtain appropriate and details information of the study. The inclusion criteria were the taxpayers
who received training on tax from TRA.

3.6 Data Collection Techniques

Data collection is the process of preparing and collecting data (Kothari, 2004). There are many
techniques of collecting data when conducting a research. In this study, quantitative methods are
used. Kombo and Tromp, (2006) states that data collection refers to gathering specific
information aimed to providing some facts. In data collection, the researcher must have clear
understanding of what data is hope to obtain and how they hope to obtain it in a data collection.
The researcher collected primary data through questionnaire. The questionnaire use to collect
primary data because the researcher wants to assess on the influence of tax education on tax
compliance.

3.6.1 Primary Data

Primary data are collect through a questionnaire. According to Kumar (2010), defined
questionnaire as a written list of questions, the answers to which are record by respondent. In
questionnaire, the respondent reads the questions, interprets what is expected and then writes
down the answers. It is important to make sure questions are clear and are in interactive style.

The researcher administered questionnaires to the sample of taxpayers chosen. The questionnaire
consisted of well-constructed open ended and closed ended questions. Open-end questions
allowed the respondents to fill the space provided while closed ended questions provided ready-
made answers for the respondents to choose the appropriate ones. The researcher decided to use
questionnaires because it saves time and allow collection too much information within a short
moment of time.

3.7 Data Analysis

Data analysis is a systematic activity, which is an essential part of the research process. Data
analysis techniques and procedures are largely determined by the approach, design and purpose
of a specific research project, as well as research type basic or applied (Cohen, 2011).

The primary data collected was analysed using a descriptive statistics and inferential analysis.
The researcher used Statistical Package for the social Science (SPSS) version 23. Descriptive
statistics enable to descriptive (and compare) variables numerically (Saunders, et al., 2009).
Descriptive statistical analysis is present in terms frequency and percentage. Pearson correlation
was used to analyses the relationship between tax knowledge and tax compliance. Chi Square
Test used to analyse the association between tax education and tax knowledge. Pearson
correlation analysis was used because the researcher wanted to establish the magnitude and the
direction of the relationship between tax knowledge and tax compliance.

Ethical consideration

During this study, several ethical issues are take into consideration. The process of conducting
research was done by adhering to the rules and regulations for conducting a research, human
rights, values and national regulations. The researcher conducted the research after having
permission for conducting a research, whereby guarantee compliance with research ethics to
ensure that all respondents involved in the study are protect as per human rights. In addition,
there was a consent that made participants aware of the purpose of the study and why are they
choose. Hence, participation was voluntary. In addition, the researcher highlighted that their
responses would not be report, hence will only remain confidential.
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