HAWASSA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF

COOPERATIVE ACCOUNTING AND AUDITING

ASSESSMENT OF FACTORS THAT AFFECT THE

EFFECTIVENESS OF TAX COLLECTION (IN CASE OF SIDAMA
REGION DALLE WEREDA REVENUE OFFICE)

A RESEARCH PAPER SUBMITTED TO THE DEPARTMENT OF

COOPERATIVE ACCOUNTING AND AUDITING IN PARTIAL
FULFILLMENT OF THE REQUIREMENT OF BACHELOR OF
ART DEGREE (BA) IN COOPERATIVE ACCOUNTING AND
AUDITING

SUMMITED By: ABRHA ABEBE

ID No: COOPR/0044/11
ADVISOR:-HABIB
AUGUST, 2021
YIRGALEM, ETHIOPIA
 Acknowledgment
First and the most, I would like to thank my almighty GOD, not for one, two or three
things but for everything done in my life. Second, my deepest and great gratitude to my
advisor HABIB (MIS) who are very generous and intelligent with his time, knowledge,
advice and for his constructive comments. He has been well suggesting and providing
necessary corrections starting from the selection of the research title to the completion
of the senior essay. Thirdly, I would like to provide special thanks to my families for
their moral and financial support in pursuing the finding. Lastly, my thanks go to
DALLE woreda revenue office employees and manager who gave me all necessary
information I needed.

I
 ABSTRACT
This study focuses on the factors that affect the effectiveness of tax collection. The
objective of the study is assessing torsos that affect the effectiveness of tax collection
and administration policy. To attain the objectives of the study the research was
conducted by gathering information through questionnaire (open ended and close
ended questions). The questionnaires were distributed to the employees selected by
non- probability, Judgmental sampling techniques. The information was analyzed by
applying descriptive way using statically tools like, table, and percentiles. The
summery and conclusion of the finding shows that the study assessed there was good
performance evaluation system which were evaluated by the supervisors. The
researcher forwarded some recommendation as a solution that assumed to reduce
identified problems and weakness from the organization

II
 Table of Contents
Acknowledgment.........................................................................................................................................................I
ABSTRACT.................................................................................................................................................................... II
Table of Contents.......................................................................................................................................................IV
List of Tables..............................................................................................................................................................VI
CHAPTER ONE.........................................................................................................................................................- 1 -
INTRODUCTION.......................................................................................................................................................- 1 -
1.1. Background of the study..............................................................................................................................- 1 -
1.2. Statement of the problem............................................................................................................................- 2 -
1.3. Research Question.......................................................................................................................................- 2 -
1.4 Objectives of the study..................................................................................................................................- 2 -
1.4.1 General objective of the study...............................................................................................................- 2 -
1.4.2 Specific objectives of the study..............................................................................................................- 3 -
1.5 Scope of the study.........................................................................................................................................- 3 -
1.6 Significance of the study...............................................................................................................................- 3 -
1.7 Limitation of the study..................................................................................................................................- 3 -
1.8 Organization of the study..............................................................................................................................- 3 -
CHAPTER TWO........................................................................................................................................................- 4 -
LITERATURE REVIEW...............................................................................................................................................- 4 -
2.1. Definition......................................................................................................................................................- 4 -
2.2. Objectives of taxation...................................................................................................................................- 4 -
2.3. Basic characteristics of taxation...................................................................................................................- 5 -
2.4. Canons of taxation.......................................................................................................................................- 5 -
A. Canons of equity.............................................................................................................................................- 6 -
2.5. Major types of taxes in Ethiopia...................................................................................................................- 6 -
2.5.1. Direct Taxes...........................................................................................................................................- 6 -
2.5.2. Indirect taxes.........................................................................................................................................- 7 -
2.6. Tax Base and tax rate...................................................................................................................................- 8 -
2.7. Categories of tax payers...............................................................................................................................- 8 -
2.7. 1. Categories of“A” tax payers..................................................................................................................- 8 -
2.7.2. Category “B” Tax payers........................................................................................................................- 8 -
IV
 2.7.3. Category “C” Tax payers........................................................................................................................- 9 -
2.8. Effects of taxation.........................................................................................................................................- 9 -
2.9. Empirical literature reviews.........................................................................................................................- 9 -
2.10. Knowledge Gap........................................................................................................................................- 10 -
CHAPTER THREE....................................................................................................................................................- 11 -
METHODOLOGY OF THE STUDY.............................................................................................................................- 11-
3.1. Research Design.........................................................................................................................................- 11 -
3.2. Target population and sampling frame......................................................................................................- 11 -
3.3. Sample size and sampling technique..........................................................................................................- 11 -
3.4. Data type....................................................................................................................................................- 11 -
3.5. Data source................................................................................................................................................- 11 -
3.6. Data collection instruments and procedures.............................................................................................- 12 -
3.7. Data analysis tools......................................................................................................................................- 12 -
CHAPTER FOUR.....................................................................................................................................................- 13 -
Data Analysis and Presentation.............................................................................................................................- 13 -
4.1. Demographic characteristics of the respondents.......................................................................................- 13 -
4.1.1. Sex distribution....................................................................................................................................- 13 -
4.1.2. Age distribution of the respondents....................................................................................................- 14 -
4.2. Specific information of the study...............................................................................................................- 15 -
4.2.1. Factor that affecting the effectiveness of tax collection......................................................................- 15 -
CHAPTER FIVE.......................................................................................................................................................- 22 -
SUMMARY, CONCLUSION AND RECOMMENDATION............................................................................................- 22 -
5.1. Summary and conclusion of the finding.....................................................................................................- 22 -
5.2. Recommendation.......................................................................................................................................- 23 -
REFERENCES.....................................................................................................................................................- 24 -
Appendix...............................................................................................................................................................- 25 -

V
 List of Tables
Table 1- 4.2.1. Description of respondents with respect to their sex 13

Table 2- 4.2.2. Description of respondents with respect their age 14

Table3-4.2.3.Descriptionofrespondentswithrespecttotheireducationlevel …………………………14

Table 4- 4.2.1 Factors that affect tax payers 15

Table 5- 4.2.2. Performance evaluation system 15

Table 6- 4.2.4Deliveryservice 16

Table 7- 4.2.5 Efficiency of tax collection system 16

Table 8- 4.2.6 collection made on time or not 17

Table 9- 4.2.7 time range given for taxpayers 17

Table 10- 4.2.8 legal action take………………………………………………………………………..18

Table 11- 4.2.9 Ways of information provision to tax payers... 18

Table 12- 4.2.10 Employee handling system with tax payers 19

Table 13- 4.2.11 problems that tax collectors face 20

Table 14- 4.2.12 Awareness level of tax payers 20

Table 15- 4.2.13.Taxregistration……………………………………………………………………21

Table 15- 4.2.14 hindrance of revenue performance 21

VI
 CHAPTER ONE

INTRODUCTION
1.1. Background of the study

Tax history for more than many years has focused on two significant issues: - who pays and what is
taxed for most of the human history tax were paid by the poor peasants slakes colonist or confined
peoples to support the government and the wealthy. Taxation as the responsibility of free citizen is a
modern concept that originated with the emergence of constitutional developments of a country
(misrake,2008).

th
By the 18 century, England started imposing taxes on various transactions tax on imported goods

(Tariffs) assumed great importance. They said were enlarged on wide variety of commodities including
supermarket, chocolate, alcohol coffee, candles and soap, As the time paid, people become dissatisfied
with system of public finance for several reasons. First, although the English government levied some
tax on commodities consumed only by the rich class of the society, for example, which were greater
luxury at the time in general much of the taxes were on other chesses of commodities and as a result
people perceived that the burden of tax fell mostly on the poor (misrak,2008).

History of Ethiopia tax system dates back to ancient time. For example in the autocratic kingdom there
was practice of traditional taxation. The traditional taxation provided for taxes on crops livestock and
livestock production such as wool, butter and milk (Gebrie work, 2006).

Tax can be defined as an involuntary fee or precisely levied fee paid by individual or business to the
government. It may be paid in cash or in kind. A good tax system should not affect the development of
the people to work, save and invest. It will not affect the development of trade industry and the
economy (parmeswaran, (2005).

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In other words, it is compulsory payment / contribution by people to the government for which there is
no return to the tax payers. It is a symbol of sovereignty. Tax imposes personal on the people to pay tax
if they are liable to pay it (parmeswarn, 2005).

Taxation is the system of rising money to finance services and activities of the government at all level
local share and national required people and business to pay tax. One of the system activities carried out
by any government is identifying the factors that affect the effectiveness of tax collection (misrake
2008).

1.2. Statement of the problem

It is obvious that the main source of government to finance expenditure is from tax. Therefore .It is
better to have a proper plan, and study in order to have effective collection system. Government must
collect an appropriate amount of tax in order to provide essential services to public such as
infrastructure, health care, education. However, there are some factors that affect the effectiveness of
tax collection more in developing countries like Ethiopia such as contraband trade, corruption, tax
evasion, tax avoidance, fewer collection of period during financial plan, socioeconomically and political
factors, delay time during collection of tax (smith, 1776). Thus study was to assess those factors that
affecting the effectiveness of tax collection.

1.3. Research Question

 What are the factors that affect the effectiveness of tax collection?

 Are the fiscal and tax administration policy of the government affect the tax collection?

 Are the tax payers handling approaches of tax collectors influences the government tax policies and
collection systems?

1.4 Objectives of the study

1.4.1 General objective of the study

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The general objective of the study was to assess the factors that affect the effectiveness of tax collection
in case of sidama zone Dalle woreda revenue office

1.4.2 Specific objectives of the study

 To examine the fiscal and tax and tax administration approach of the government.
 To assess government handling approach of tax payers
 To assess whether tax payers pay tax on time or not

1.5 Scope of the study

The scope of the study geographically limited to the Dalle woreda and also this study conceptually, to
assess the factors affecting tax collection in revenue office of Dalle woreda. The study relies only on
factors which associated mainly with study area.

1.6 Significance of the study

If is expect that the result of this study was help the office of revue in Dalle woreda to understand the
weakness and strength of its operation in relation with collecting tax from the registered enterprise and
individuals.

1.7 Limitation of the study

When under taking of the study, there were many problems that had been encountered/ faced. While
investigating and collecting data most of the respondents were unwillingness to respond the questions, to
give enough information and also the manager was so busy due to this he was not ready for the
interview .Lack of more materials which are related to study. Existence of additional course during the
study. Shortage of enough money /financial problem/ to make scope wide

1.8 Organization of the study

This paper organized in to five chapters. Chapter one tells about introduction part including background
of the study, statement of the problem, research question, Objectives of the study, scope of the study,
significance of the study and limitation of the study, scope of the study, significance of the study and

3
limitation of the study. Chapter two deals with review of the literature. Chapter three deals with the
methodology of the study. Chapter four deals with data presentation and analyses. The last chapter deals
with conclusion and recommendation.

CHAPTER TWO

LITERATURE REVIEW
2.1. Definition
Taxation is a system of raising money to finance governments services and activities, similarly, taxation is
the most important source of revenue for modern governments and remaining deficit in revenue is bridged
from loans and borrowing. A tax is a compulsory charge imposed by the government without any expect
action of direct return is benefit. In other words a tax is compulsory payment or contribution by the people
to the government for which there is no direct return to the tax payers. Taxation can redistribute society’s
wealth by imposing leeriest tax burden on one group in order to found survival for another. It can stable
life countries economy (sisay, 2006)

2.2. Objectives of taxation

But government, expenditure pattern changed and gives services to the public more than there three basic
purposes and it restore social twice in the society by providing social (Gebrie, 2006). Initially government,
imposed taxes for three basic purposes to cover the cost of administration maintaining law and order in
the country and for defense
In general objectives of taxation are:-
Raising revenue: to render various economic and social activities government needs large amount of
revenue and to meet this government imposes various types of taxes removal of inequalities in income and
wealth.
Ensuring economic stability taxation affects the general level of contraption and production
Reduction in regional imbalances if there is regional imbalance with in the country governments can uses
taxation to remove such imbalance by tax exemptions and tax concessions to investors who made
investment in under developed regions.
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Capital accumulation tax concession or tax rebates given for saving or investment in provident funds, life
insurance, investment is shares and debentures to lad large amount of capital accumulation.

2.3. Basic characteristics of taxation

Goad tax system has the following characteristics
Tax is a compulsory contribution: - Tax is compulsory payment from a person to the government without
expectation of any direct return, as it is a compulsory contribution, no one can refuse to pay tax for the
reason that he/she does not get any benefit from certain public services the government provides.
Tax is levied by the government: - No one has the right to impose taxes only the government has right to
impose taxes and collect taxes proceed from the people.
Common benefits to all: - Tax collected by government is spent for the loan benefit of all peoples whether
they are tax payers or non-tax payers.
Attitude of the tax payers: - Is an important factor in determining the compounds of a good tax system.

2.4. Canons of taxation

Canon of taxation was the first writer attempt of a general statement based on the following principle of
the taxation (smith, 1776).
A. Canons of equity

Canons of equity is one of the basic criteria for tax structure design that is the tax system should be
equitable, that each tax payers should be made to pay his “fair share to “government expenditure. Fairness
means different things to different person. This canon takes two forms such as horizontal equity and
vertical equity.
Horizontal equality implies that the tax payers who are in equal position or with equal ability pools to pay
the same amount of tax.
Vertical equality implies that tax payers who have greater equality should pay equal amount of tax.
According to these canons every person should pay to government depending upon his Dr her ability to
pay (smith, 1776).
B. Canons of convenience
These canons states that the taxes should be due attain and in manner which is the most likely convenient
for tax payers. In other words, the period of tae payment should appropriate for the tax payers and must
5
collected but not through unnecessary harassment by the authority form the tax payers. The covariant tax
system will encourage people to pay tax and will increase the tax revenue (smith, 1776).
C. Canons of productivity
According to (F. basetable), the tax system should be productive enough. Productive activities encourage
people to work, save and invest (Misrak, 2008).
D. Canons of diversity

According to this principle, there should be diversified base of the tax. The burden of the tax should be
distributed widely on the entire people of the country so that everyone should pay according to his/her
ability. To achieve this, government should impose direct and indirect taxes of income, commodity,
capital, etc. It should not depend up on one source of the tax base (misrak, 2008).

2.5. Major types of taxes in Ethiopia.

There are two types of taxes in Ethiopia. Direct and indirect taxes

2.5.1. Direct Taxes

Direct tax is paid by a person from out of his own income, on when it is levied. In direct taxes, the impact
and incidence fall on the same person. It is born by the person on whom it I levied and cannot be passed
on the others. A changed or levied by government on the income or activity directly on personal or
corporate income, there is a direct tax (Gebrie, 2006).
Examples of direct tax are:-
Personal income tax: - every person deriving income from employment is liable to pay tax employment
income would be include any payments or gains in cash or include commission, fees benefits receive form
employment by an individual (Gebre 2006).
Business project tax is tax imposed on the income or net profit realized form enter pretrial activities.
Merits of direct tax
a. Direct taxes are certain another merit of direct tax is that they are certain, the tax payers know
much they have to pay and on what basis they are going to pay the tax to the government.
b. Direct taxes are economical:- Direct taxes are economical in the sense that the cost of
collecting these taxes for the government
6
 c. Direct taxes are elastic
d. Direct taxes are equitable

Demerit of Direct taxes

I. Direct taxes are easily evaded: - There is always possibility of tax evasion in the case of
direct taxes, since direct taxes are certain and tax payer may not show their correct income
to tax authority.
II. Direct taxes are a popular: - Because they are directly supposed to be on self-assessment
and they are required to be paid in one lump sum which is in convergent to the tax payer
(Misrak, 2008).
III. Direct taxes are inconvenient: - Direct taxes are inconvenient in nature, because tax paper
has to submit the statement of his total income along with the sure of income from which it
is derived.

2.5.2. Indirect taxes

Indirect tax is a payment made by the assess to the tax authority on the sale proceeds or production or
imports etc. Based on the value or quantity as may be directed by the authority. For example when the
excise duty is levied on the manufacture of goods, import duty on import of raw material or other material
is included in the selling price while selling them to the next buyer. The impact and incidence of tax fall
on different person generally the tax incidence of indirect tax is on ultimate consumer (Gebre, 2006)
Example of indirect taxes is:-
Value Added taxes is:-
Turn over tax (Tot)
Excise Tax
Merits of indirect taxes
A. Indirect taxes are convenient and popular: - one important merit of indirect taxes is that they are
less inconvenient and less burdens than direct taxes.
B. Indirect taxes cannot be evaded:- It is difficult to avoid indirect taxes by the buyers in the market
C. Indirect taxes lead to social welfare
D. Indirect taxes can be elastic
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 Demerits of indirect taxes
a) Indirect taxes are uncertain
b) Indirect taxes promote inflation
c) Indirect taxes regressive in effect
d) Indirect taxes results in high administrate costs
e) Indirect taxes permits inflation
f) Indirect taxes discourage saving

2.6. Tax Base and tax rate

The tax base defines the way in different forms of income and expenditure and other factors that
determine what is to be taxed. The tax rate on the other hand determines the proportion that is taken in the
form of tax. The base of each tax has to be defined legally and it is quantified for the purpose of
determining the tax liability of all incidental tax payers. A tax base may have time dimension (HI Bhatia,
2003).

2.7. Categories of tax payers

The federal Inland Revenue authority categorized tax payers in to three categories category A, Category B
and category C.

2.7. 1. Categories of “A” tax payers

Any company, registered partnership, entity incorporated under foreign law resembling a company or
registered partnership or any public enterprise or public financial agency in corporate or recognized under
law in fore in Ethiopia or where any foreign body business agent doing business in Ethiopia whose
income is above 500,000 birr should declare and pay tax authority at the end of budgetary year within four
months of completion of the budget year. Categories “A” tax payers shall at the end of the year submit to
the tax authority the balance sheet and profit and loss statement and details at the manner in which it is
computed (misrak, 2008). The categorization of the expenses is: General and administrative expense,
depreciation and provisions and reserves

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2.7.2. Category “B” Tax payers
Category “B” tax payers are those whole annual income lies above 100,000, but below 500,000 birr. They
should declare and pay tax at the end of budgetary, within two months of completion of such budgetary
year completion. Category “B” tax payers shall at the end of the year, submit profit and loss statement to
the tax authority (Misrak, 2008).

2.7.3. Category “C” Tax payers

According to proclamation 286/2002 article 66, any assess whose annual income is below 100,000 birr,
should pay tax after the budgetary year within one month. Categories “C” tax payers pay tax on standard
assessment schedule 1 and schedule 2 (Misrak, 2008).

2.8. Effects of taxation

Now a days’ revenue is rising as not the old purpose of taxation. In welfare state taxation has been used as
a tool of monitory policy to achieve socio economic effect of trade cycle and regulating the production
and consumption. Thus, in modern context the effect of taxation is on production, equitable distribution of
wealth, economic development and economic stabilization.

2.9. Empirical literature reviews

In this section, the empirical studies focus on prior academic researchers concerning determinants of tax
revenue. Accordingly, the following studies were selected other countries and from Ethiopia.
Sinbo and Muibi (2013), attempts to examine the most relevant macroeconomic determinants tax
revenue in Nigeria. The study uses secondary data from Nigeria economy for the period to 2011 and
adopted the error correction mechanism to establish both the long run and short run relationship among
the variables. The main findings from the analysis level and the growth of economy actively impacted
positively on tax revenue in Nigeria and that exchange depreciation and inflation rate have adverse effect
of tax revenue. Trade liberalization policy seems not have adversely affected the tax revenue and rather it
has positively stimulated revenue generation contrary to expectation. External debt burden also has
negative effect on the amount of tax revenue the government can generate. The general conclusion is that
macroeconomic instability and level of economic activities are the main drivers of tax buoyancy and tax
effort in Nigeria.

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Belay (2015) investigated the determinants of tax revenue performance in Ethiopia federal government by
using time series data from 1992-2013. The study reveals that the gross domestic product, public debt,
foreign direct investment, and openness have significant positive relationship with tax revenue
performance. But, foreign aid is negatively related to tax revenue performance.

Workinsh (2016) examine the major determinants of tax revenue in Ethiopia for the period ranging
from 1975-2013, using Johansen maximum like hood co-integration approaches. The result revealed
that GDP per capital income, foreign and industrial value added share of GDP positively and significant
determinants affects tax revenue. However, inflation exerted a negative and significant influence.
Whereas, agricultural value added share of GDP and education are not significant determinants of tax
revenue in long run. In the short run result shows the real GDP per capital income and inflation have
negative and significant effect on tax revenue and industry value added share of GDP is positive and
significant effect on tax revenue (Daniel, 2017).

Generally, in Ethiopia there are some studies available to find determinants of tax revenue however, the
result conflicting and need further investigation to identify determinants of tax revenue in Ethiopia.
Moreover, previous studies in Ethiopia did not incorporate some variables with the implication social,
political ,cultural, economic and institutional factors, therefore the present study fulfill the gap in the
literature and address this issue in-depth both the problems faced by the tax payers and the collecting
Authorities in dale wereda revenue office.

2.10. Knowledge Gap

In addition to different researchers study about the factor that affects Assessment of tax collection, I
would like to study different factors that affect Assessment of tax collection in Dalle wereda study area.

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 CHAPTER THREE

METHODOLOGY OF THE STUDY

3.1. Research Design

The study would used the descriptive research design and to describe the situation of factors that affects
the effectiveness of tax collection which was happen in theoretical with practice.

3.2. Target population and sampling frame

The target population of the study 67 employees and manager in revenue office of Dalle Wereda were
used. Among of the total population 50 were male and the remaining 17 were female.

3.3. Sample size and sampling technique

The sampling technique that was implemented for the study was non-probability, judgmental sampling.
The reason for using this method was that it is the most important technique to find convenient peoples
that provide the necessary data for the researcher to get accurate and sufficient information. It is also
less costly and less time consuming. By using this technique, from 67 total employees of revenue office
who were believed to have sufficient knowledge and familiarity with the revenue office 17 employees
were selected as sample size from the total employees of revenue office.

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3.4. Data type

To conduct the study the researcher applied the research design through quantitative and qualitative
type of data which are useful and suitable for the achievement of the study.

3.5. Data source

The study would use both primary and secondary source of data. Primary sources are sources which
used to obtain information from individuals secondary sources are sources which are gathered from
published and unpublished materials of the study case area.

3.6. Data collection instruments and procedures

The study would use both questionnaire and unstructured interviews to collect primary data. Primary
data was collected by using open ended and close ended question. Open ended questions, help
respondents to write their opinion about the factors that affect the effectiveness of tax collection. Close
ended questions is important that requires relatively short period of time to collect data.

3.7. Data analysis tools

The data which collected from employee were analyzed and presented using statistics such as
percentiles, tables, etc.

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 CHAPTER FOUR

Data Analysis and Presentation

This chapter is concerned with the characteristics of sample size presentation as well as analysis of the
data gathered through questioners .the data collected through questioner was analyzed and presented in
the graph, table and it seems appropriate to interpret each data which are presented in the table form and
graph this part is concerned with major findings of the study which is analysis of the result. The
questionnaire was distributed 8 regular employees. All employees were responses possible to researcher
to get on the required question

4.1. Demographic characteristics of the respondents

4.1.1. Sex distribution

Sex distribution was one of the respondent’s characteristics that indicate male and
female.

Table 1- 4.2.1. Description of respondents with respect to their sex

No Item No of respondent Percentage

1 Male 11 64.7%
Female 6 35.3%
Total 17 100%

As it indicated on the table above, 11(64.7%) of the respondents of the revenue office in this were
males and 6(35.3%) of the respondents were females. In general male percentages that operate revenue
office were dominated over the females

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4.1.2. Age distribution of the respondents

Age is also one of the respondent’s characteristics that indicate the proportion of people by dividing
into different age groups or sections such as youth, adults and old .it is important to identify proportion
of working age.

Table 2- 4.2.2. Description of respondents with respect their age

No Item No of respondent Percentage

1 18-21 5 29.4%
2 22-35 10 58.8%
3 Above 36 2 11.8%
Total 17 100%

As indicated above table 4.2.1, the age of the respondents with percentage of 5(29.4%) were found
between age 18-21, 10(58.8%) were found between age 22-35 and the remaining 2(11.8%) were found
to be above 36. From this the researcher found that most of the respondents were between the ages of
22-35.

4.1.3. Educational Background of the respondents

Education is the way changing illiterate people to literate and tool of fighting backwardness from
people .education helps to develop one country economically

, politically and others .therefore, education plays a vital role for change of every country

Table 3- 4.2.3. Description of respondents with respect to their education level

No Item No of respondent Percentage

3 Certificate 0 0%
Diploma 6 35.3%
Degree 11 64.7%
Total 17 100%

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As indicated above table 4.2.3 6(35.3%) were diploma holders and 11(64.7%) were degree holders.
This implies that the worker of the organization education level was almost degree and tax collection
activities are well performed by them.

4.2. Specific information of the study

Questions were asked the respondents about how they define the tax have got so many answers. Some
of their answers were discussed below.

Tax is a compulsory contribution by the tax payers to the government .the people whom the tax is
levied cannot refuse to pay the tax .once it is levied they have to pay it. The amount of tax received
from the people is used for the general and common benefit of the people as a whole.

Tax is a legal collection. It can be levied only by the government both federal and regional.
Generally, respondents well defined tax as their own aspects, oven their wording seems different their
main idea is similar which encompassed as tax is a compulsory charge imposed by the government
without any expectation of direct return in benefit.

4.2.1. Factor that affecting the effectiveness of tax collection

Table 4- 4.2.1 Factors that affect tax payers
No Item Yes No Total
1 Is there any factor that affects tax 17 0 17
Payers?
Percentage 100% 0% 100%

As indicated in the above table 4.2.1 all of the respondents for warded Yes, in full manner as there is a
factor that affects tax payment on the payer's side. Some of the factors forwarded

were payers un awareness about essence and role of tax to growth and development of the country
handling approach or initiation from the collectors was not well advisable meaning some government
employees have bad conduct, duration of tax collection (payment) period is not well related with the
income period of the payers and etc.

Table 5- 4.2.2. Performance evaluation system

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 No Item Respondents Percent
Age
2 Is there any performance evaluation in your
Organization?
Yes 17 100%
No 0 0%
Total 17 100%
3 Who is (are) evaluator(s)?
Supervisor 17 100%
Self-evaluator 0 0%
Peer co-workers 0 0%
Immediate subordinator 0 0%
Total 17 100%

As indicate in the above table 4.2.2 all of the respondents replied that there is a performance evaluation
in the organization and evaluation was given by supervisor. This means the supervisor evaluate the
performance of the employees according to their responsibility and position that have in the
organization.

Table 6- 4.2.4 Delivery service

No Item No of Percentage
respondents
4 Does your organization set clear cut
Standard to deliver services?
Yes 10 58.8%
No 7 41.2%
Total 17 100%

As indicated in the above table, most of the respondents answered that the organization set clear cut
standard for collection and delivery service is needed for effective tax collection.

Table 7- 4.2.5 Efficiency of tax collection system

16
 No Item No of Percentage
respondents
5 Is the tax collection system of your
Organization is efficient?
Yes 5 29.4%
No 12 70.6%
Total 17 100%

The above table shows that, most of the respondents 12(70.6%) were respondent that the collection
system of not organization is not efficient.

Table 8- 4.2.6 collection made on time or not

No Item No of Percentage
respondents e
6 Do you believe that the collection1o8f
The tax is made on time?
Yes 6 35.3%
No 11 64.7%
Total 17 100%

Regarding the above table, as for the timely non-collectable of the tax is concerned, more respondents
11(64.7%) forward that there is no timely collection of the tax in the Bona revenue office. They also
mentioned the reason for the occurrence of such as, tax payer’s unwillingness to pay their duties in well
manner, the tax payers are not intended to pay in tax

Payments period as tax payers not remember it.

Table 9- 4.2.7 time range given for tax payers

No Item No of Percentage
respondents

17
 7 Is there favor time range given for
Tax payers to pay tax?
Yes 17 100%
No 0 0%
Total 17 100%

Regarding to the above table, all of the respondents answered that there is a favorable time range given
for tax payers to pay tax payers. The time range given to tax payers is based on tax slogan or its
different level is called category. Time range for category "A" tax payers run form July up to October
30, category "B" run July up to October 30.
Table 10- 4.2.8 legal action taken

No Item No of Percentage
respondents
8 Does the organization take legal action
for those who are not pay tax
On time?
Yes 17 100%
No 0 0%
Total 17 100%

From Table 4.2.8 respondents responded that there is action taken by the organization to those who fail
to pay tax on time, even the revenue office provide favorable time range to the tax payers, the tax
payers are almost try to expand the time of paying by different reasons, As far as the law concerned the
office will punish any tax payers who fails to pay tax on the

stated time schedule of the revenue authority.

Table 11- 4.2.9 Ways of information provision to tax payers

No Item No of Percentage
respondents

18
 9 In what way your organizations inform
About the tax to the tax payers before
undertaking the collection activities?
Panel discussion 7 41.2%
Work shop 0 0%
Pamphlets and fliers 0 0%
All 10 58.8%
Total 17 100%

The above table shows, the way that the organization uses to inform its customers about tax before
under taking tax collection activities. 7(41.2%) and 10(58.8%) respondents respond panel discussion
and all of the above mentions respectively that the organizations uses to inform for its tax payers.

Table 12- 4.2.10 Employee handling system with tax payers

No Item No of Percentage
respondents
10 How about your
organizations employees
handling system with tax
Payers?
Very great extent 0 0%
Great extent 7 41.2%
Moderate extent 8 47%
Negatively 0 0%
Not sure 2 11.8%

Total 17 100%

As indicated in the above table, 7(41.2%) and 8(47%) of the respondents replied that the organization
employee handling approach to payers is greater extent and moderate extent, respectively. The
remaining of them responds as they are not sure.

19
 Table 13- 4.2.11 problems that tax collectors face

No Item No of Percentage
respondents
11 Are there problems that tax collectors
Face when undertaking the collection?
Yes 11 64.3%
No 6 35.3%
Total 17 100%

As indicated on the above table, 11(64.7%) of the respondent that there are factor that tax collectors
face during tax collection. Some of the factors are in voluntarism of the tax payers, lack of suitable
work accesses, geographi
cal variation by the tax payers, nonpayment of tax on time etc.
Tax collectors handle or resist those problems mentioned above by providing awareness, approaching to
them with well behavior, punishing either prison or money and etc.

Table 14- 4.2.12 Awareness level of tax payers

No Item No of Percentage
respondents
12 What is the level of tax payers
Awareness about the tax?
Great extent 5 29.4%
Moderate 6 35.3%
Negatively 1 5.9%
Not sure 5 29.4%
Total 17 100%

As indicated in the above table, 6(35.3%) and 4(29.4%) of the respondents replied that educating tax
payers on tax payment is moderate extent and great extent respectively and 29.4% of them answered
that they are not sure about education level of tax payers.

20
Table 15- 4.2.13. Tax registration

No Item No of Percentage
respondents

13 What type of tax registration does

Your organization uses?

Obligatory 3 17.6
Voluntary 7 41.2%
Both 7 41.2%
Total 17 100%

As indicated on the above table, 3(17.6%) and 7(41.2%) of the respondents responded that
the organization uses both (obligatory and voluntary) types of tax registration respectively.
Table 16- 4.2.14 hindrance of revenue performance

No Item No of Percentage
respondents
14 Is there the hindrance of revenue
Performance?
Yes 17 100%
No 0 0%
Total 17 100%

As indicated in the above table, all respondents responded in full confidence as there are hindrances of
revenue performance. All the respondents for warded the reason behind this are even though the degree
of problems shows variation in the different aspects of the work. The main difficulties in the past
revenue performance are small tax base, poor documentation incomplete tax coverage, difficulties with
tax assessment, collection inefficiency, problems related with to the payment procedure, lack of
enforcement mechanisms, administrative inefficiency, absence of proper tax valuation and assessment
methodology, lack of awareness of tax payers, out dated tariff rates that have served for many years and
lack of service charge rate methodology, lack of commitment etc

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 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

The chapter presents the summary, conclusion the finding and recommendation form
chapter four of the study based on the objective of the study.

5.1. Summary and conclusion of the finding

The study assessed there was a good performance evaluation system which was
evaluated by the supervisors.
The organization used different methods to inform to its customers about the role and
essence of the tax to the country's before undertaking tax collection activities. These
include panel discussion, workshop and pamphlets and fliers etc.
Educating the tax payers was one of the factors that positively create influence on the
effectiveness of the collection.
Organization used different methods to handle its customers. The good customer
handling approach makes the revenue authority to generate the needed amount of the
revenue. From the finding the researcher concluded that there was a good customer
handling system in the organization.
Organization of the revenue set clear cut standards to deliver service for the society that
enhanced payer’s motivation to pay taxes. Therefore, delivery of the service is needed
for effective tax collection.
Finally, the favorable time period arranged by the office for the tax payer’s motivated
payers to pay their duty within given time period.

22
5.2. Recommendation

 At the end of the research, the researcher for warded some recommendation as a
solution that assumed to reduce identified problems and weakness form the
organization. These are as follows. Provide the better education and understanding
those tax payers. It is better if revenue office use adequate information technology
to accelerate their collection speed and service provision for the payers. The office
should advice taxable time period with income period of the tax payers to pay tax
in proper manner even if it might be somewhat difficult and complex job burden
for the office. But as far as the payers service and satisfaction must be concerned.
 The organization should implement good and effective tax collection and
administration policy to increase the government revenue form taxes that helps the
country to very on domestic source of revenue.
 Organization should make award payers by educating appropriates of timely
payment of revenue than strongly penalizing them. It should put strong limit and
slight penalty on those who are not paying their duty on the tax payment period
that stated by the office is also appreciated.
 As much as it can, the organization should alleviate difficulties of revenue
performance like small tax base, poor documentation, in complete tax coverage,
collection inefficiency, payment procedures, absence of proper tax evaluation, out
data tariff rates and etc. by using necessary measures with respect to their essence.

23
 REFERENCES

1 Adam smith, (1776), the wealth of nations, 7th edition

2 Gebrie Work, (2006), Tax accounting in Ethiopia Context, 1st edition, Addis Ababa

3 HL-Bhatia, (2003), public finance, 18th edition, India

4 Misrak, T. (2008), Ethiopia tax accounting theory and practice, 1 st edition, Addis

Ababa.

5 Parmeswarn, (2005), Tax accounting, 1st edition, India

6 Sisay Asefew, (2006), Taxation of direct in come in Ethiopia, 1 st edition AAU,

Ethiopia.

7 Bernand P. Herber modern public finance (5th edition).

8 Dr BL. Bhatia, 2003 public finance 24th revise edition).

9 Dr Ramaswani parames warn Nov, 2005 public finance

10 Gebrie worku 2008, tax accounting in Ethiopia context 2nd edition.

11 Gebrie Worku (MSc) 2006, tax accounting in Ethiopia context 1st edition

12 Misrake Tesfaye, 2008, 1st edition. Ethiopia tax accounting theory and practice

24
 Appendix
Hawassa University

College of Business and Economic

Department Accounting

The purpose of questionnaire is to collect data on tax assessment and collection problem in
sebeta town and regarding confidentiality it is required only for academic purpose and your
respective response will be kept in confidentiality.

1 sex Female Male

2 Age 18-21 22-35 above 36

3 Education level

Certificate Diploma Degree

4 Is there any factor that affects tax Payers?

Yes no
5 Is there any performance evaluation in your Organization?
Yes no
6 Who is (are) evaluator(s)?
Supervisor self evaluator
Peer co worker immediate subordinator
7 Does your organization set clear cut Standard to deliver services?
Yes no
8 Is the tax collection system of your Organization is efficient?
Yes no
9 Do you believe that the collection of the tax is made on time?
Yes no
10 Is there favor time range given for Tax payers to pay tax?
25
 Yes no
11 Does the organization take legal action for those who are not pay tax On time?
Yes no
12 Does the organization take legal action for those who are not pay tax On time?
Yes no
13 In what way your organizations inform about the tax to the tax payers before
undertaking the collection activities?
Panel discussion Work shop
Pamphlets and fliers All
14 How about your organizations employees handling system with tax Payers?
Yes no
15 What is the level of tax payers Awareness about the tax?

Great extent Moderate

Negatively Not sure

16 What type of tax registration does your organization uses?

Obligatory Voluntary Both

17 Is there the hindrance of revenue Performance?
Yes no

26