3.6.

Method of Data Analysis

After data processing: editing, coding, classification and tabulation of collected data so that they
are amenable to analysis. For the purpose of obtaining related information about the subject
matter, the data was analyzed using descriptive statistics, and multiple linear regression analysis.
A correlation matrix was also used to examine the relationship between the dependent variable
and explanatory variables. A multiple linear regression model and t-static was used to determine
the relative importance of each independent variable in influencing taxpayer‟s compliance. The
multiple linear regressions model was run, and thus OLS was conducted using SPSS20 and
STATA 12 econometric software package, to test the casual relationship between the
independent variable and its impact on the dependent variable. In order to found answers to the
specific objective one as stated in chapter one, descriptive statistical tools such as tables,
percentages, averages, and so on were employed.

2.6. Conceptual Framework

This study assumes that the factors under discussion have a direct influence on tax compliance
among Category A tax payers in Addis Ababa. The relationship between the dependent and the
independent variables in the conceptual framework is illustrated bellow based on the literature .

Figure 1 Factors affecting compliance behaviour

Source: Kirchler (2007) and Loo (2006)

3.5. Content analysis of open-ended questions

The respondents were also given opportunities to indicate their comments on some open-ended questions and to
give general comment on the overall tax system. Accordingly theyissued several comments and mainly regarding
problems and measures that has to beundertaken. These comments were categorized and listed as below:
•

The tax system lacks fairness or equity.

•

So many business operators were not accommodated by the tax system and there ishigh prevalence of illegal trade.
•

No sufficient tax education/ lack of awareness, and poor communication between thetax authority and taxpayers.
•

No adequate provision of social services.

•

Weakness in tax collection and enforcement.

•

Absence of transparency in the overall tax system.The additional comments forwarded by the taxpayers were
generally summarized under theabove six points. The respondents also stated the possible actions that have to be
undertakenin order to bring about improvement in the tax system and ultimately ensure voluntary taxcompliance.
Based on the detail comments given by the respondents, the above points werebriefly explained below

47
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On the other hand the respondents indicated that there is no sufficient provision ofsocial services by the
government. According to their comment, the taxpayers needvarious social services from the government in return
of what they have paid as atax. If there is no provision of sufficient services, the willingness and motivation ofthe
taxpayers to pay their tax obligation in full and on timely basis may be affected,i.e. the taxpayers perceive that their
money is being misappropriated or used formeaningless purposes.


The respondents also commented that the tax authority is not effective with respectto tax collection and
enforcement. They further explain that there are severaltaxpayers who are not included in the tax bracket and large
amount of uncollectedtax exists as an arrear. Moreover, the tax authority exercises little effort in enforcingthe tax
law. This could be as result of the authority’s lack of capacity.

Finally the respondents indicated that there is no transparency in the tax system.That is, the taxpayers have no
access to information and they do not know how thetax is assessed or calculated. In other words, the procedures in
tax assessment andcomputations are not objectively understood by taxpayers or the tax authority isreluctant in
making this procedures objective, transparent, and understandable totaxpayers. To put it differently, most of the
taxpayers do not know how to determineor calculate their tax obligation by themselves.

5. Data analysis and presentation This chapter presents the results of the field survey study that was
conducted in Category A tax payers found in SNNPR, Ethiopia. Accordingly, a total of 377 questionnaires
were distributed to Category A taxpayers, of which 310 filled completely and returned. This made the
return rate around 82 %, indicating good response rate. After the data were collected, checked for
errors and completeness, it was analyzed using descriptive research techniques.
2.4 Conceptual Frame Work
A conceptual framework is used to make conceptual distinctions and organize ideas. As
indicated in the literature, it is tried to shows the determinant of tax payer voluntary
compliance like, tax rate, income level, fines and penalties, tax simplifications, probabilities
of detection, fairness of tax system, attitude toward tax, personal social and natural norms,
organizational strength of revenue authority and awareness level of tax payers etc are a
variable that identified. Therefore based on the different literatures the following conceptual
frame work had been developed to guide this particular paper.