WOLAITA SODO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS
FACTOR AFFECTING TAX REVENUE MOBILIZATION: (THE
CASE STUDY OF KORE WOREDA, WEST ARSI ZONE)

A Senior Essay proposal Submitted to the Department of Economics in partial

Fulfillment of the Degree of the requirement for Bachelor Art in Economics

By: JemalHasan

ID number: CBE/R/200/07

Advisor: Mamo (MSc)

January, 2017

Wolaita sodo, Ethiopia

ACKNOWLEDGEMENT.
Above all give thanks to my god. First and for most i would like to express my
appreciation to my advisor Mammo.E (MSC). For his unreserved and valuable
guidance and constructive suggestions, comments and critics on the research help
to me to come up with this paper. I got strong courage and overall help to continue
my study of each level of education from my father SaanWariyo and my mother
Bujaa Boqa and my uncle son Osman Wako. Those are the basic one for success
of each time place. I do not forget theirs care advice, love, patience and strength.
Osman Wako truth he is a great man , I do not forget him throughout my life. God
bless you. also my dippiest and special thanks goes to tullu lenco and
sullemanwako who helped me financially support at each year higher education
level.

Finally yet importantly, I would like to my sincere gratitude to all my family

relatives and friends who helped me in advance economically morally and pray
throughout my stay in wolaita sodo university.
ABSTRACT
Revenue is a states annual income from which public expenses are met revenue is
mobilized from different sources like tax revenue, non tax revenue and capital
receipts. notable tax revenue is one of the most influential things for the
development of country and local government of country uses this to provide
different services and infrastructure to society. In order to achieve this proper
mobilization of tax revenue is a crucial one. However tax revenue mobilization is
no efficient mobilized in the most developing country. Hence,this paper aimed to
study the factors which affect tax revenue mobilization in kore woreda. To achieve
this objective primary data was collected by using questionnaires. A sample
random sampling technique was used to collect from 50 individual.descriptive
analysis was used to analyse factors affecting tax revenue mobilization. The results
indicated that education, income, corruption, quality of services, informal sectors
,and satisfaction of tax payer are major determinant enhancing and improving the
individual income and wealth by creating good marketing condition, providing
quality essential infrastructure and different services introducing more
sophisticated online records and computerize all records through massive
government for education opportunity which may result increase awareness of
society about function of tax collection and enhancing the informal sectors to
formal sectors by giving specific area where they can perform their works are
major recommended policy to increase tax revenue mobilization in kore woreda.
Abbreviations and Acronyms
UN-United Nation

GDP-Gross Domestic Product

FDRE- Federal Democratic Republic of Ethiopia

SSA-Sub-Sahara Africa

CSA-Central Statistical Agency

IMF-International Monetary Fund

NGO-Non-Government Organization

EU-European Union

VAT-Value Added Tax

MFED-Ministry of Finance and Economic Development

CHAPTER ONE

INTRODUCTION

1.1Backgroud of the study

Revenue is a state's annual income from which public expenses are
met.Government revenue is money received by the government like any other
Economic unit a government needs funds to finance its activities.Revenue is the
amount of money that a company actually receives during a specific period,
including discounts and deductions for returned merchandise. Tax revenue is
income that's gained by government through taxation. It is an important tool of the
fiscal policy of government and opposite factor of government spending (Gupta-
metal,2008 )

Government across the world earn"public revenue"from the tax revenue, non-tax
revenue and capital receipts.specifically revenue earned by government is received
from sources such as tax taxes and non tax revenue.Tax is a financial charge
Imposed on individual by state in different forms like direct tax paid directly by
individuals. Indirect tax collected by intermediaries and deposited to government
like sales tax.Taxation pays an important role in the process of revenue generation
and to run various activities in an economy levied on the income,and death
accumulation of individuals and corporations and on the goods and services
produced exports and imports from the country (IBID).

In Ethiopia tax revenue mobilization policies that were applied during the last
regime of central planning system which almost out date tax bases and rates
which are the main constraints for effectiveness and efficiency of revenue
mobilization.while to improve factors affecting tax revenue mobilization of
Ethiopia to ensure the affective,efficient and optimum collection of taxes,penalties
and interest to the state ,ensure that all amounts collected by the revenue agencies
are paid into the consolidated fund unless otherwise provided by an enactment,
initiate and sustain programmers for the public education on tax payment (
Demirew,2004).
In Korea Woreda tax revenue mobilization are face lower as compared to other
woreda due to inefficient tax collection. While a number of studies have
documented the financial incapacities of koreworeda, they have been much
inhabited the financial to articulates the discrepancies and deficiencies that link
financial to serve delivery. It is interesting to know what the driving factors in this
case kore town administration financial documentation and system shows were the
main function laid not on the core financial management efficiencies in revenue
collection of koreworeda. In present day tax revenue mobilization in korea woreda
various factors affect tax revenue collection Is inadequate accounting system,poor
planning, database management lack of awareness by taxpayers,and lack of skilled
manpower ( Berhanu,2008).

1.2 statement of the problem

In the recent year there is rapid urbanization and globalization which raises the
issues of competitiveness and sustainable development was revealed by achieving
socio-economic development,improving good governance and services.this can be
achieved by effective tax revenue mobilization ( Hl Bhatia,2007).

In order to give quality service with qualified infrastructure government should

have to raise revenue in efficient manner.However,tax in developing countries is
not well mobilized and it's a challenging topic and which attracted increasing
attention in the last two decades.as different empirical studies reveals social and
economic factors contributed to low level of revenue mobilization .For instance
research conducted by Nandini,et al (2012) in many SSA countries, the task of
moralizing more fiscal revenue is complicated by increased mobility of tax bases
resulting from trade liberalization and the mobility of investment and capital
income,tariffs, and other trade ( IBID).

Finally according to demirew ( 2004 ) Ethiopia as any other developing countries

faces difficulty in raising tax revenue to the level required for promotion of
economic growth and experiencing a consistent surplus of expenditure over
revenue for most of time.Even through different researcher were conducted by
using different methodologies regarding the factors affecting tax revenue
mobilization in case of koreworeda.they concerned only at national level and
works only koretown.But previous researcher not focused on the factors affecting
tax revenue mobilization in kebales and some others small city town in korea
woreda.therefore researcher intends to fill this gap and solve the factors affecting
tax revenue mobilization in previous time and the researcher identify factors
affecting tax revenue and describe method of solve this factors affecting tax
revenue mobilization in case of kore woreda.

1.3 Objective of the Study.

1.3.1 General Objective of the Study.

The general objective of this study is to assess factors affecting tax revenue
mobilization in Kore woreda.
1.3.2 Specific objective of The Study.
- To identify factors affecting revenue mobilization of Kore woreda.

- To evaluate the status of tax revenue mobilization in Kore woreda.

1.4 Basic research questions.

To conduct this study the research has tried to answer the following research
questions.

1 what are factors affecting revenue mobilization in Koreatown?

2 what are the relevant policy options?

1.5 Significant of study
The main relevance of this lies on the fact that increases the awareness of custom
and revenue authority in kore woreda regarding tax revenue mobilization by
providing information for the save holders. In addition it recommends the possible
option for the identified problem. Lastly the study is a stepping stone in the area
and a good input for future researchers to study the topic by including wider
geographical area as well wider concepts.

1.6 Scope of the study

The geographical coverage of study was limited tokore woreda. Theoretically the
study is mainly focused on identifying the factors affecting tax revenue
mobilization of koreworeda.

1.7 limitation of the study

while conducting this research in addition to time and financial problem problem
the researchers faced unwillingness and un interest to give fact information from
some respondents on undertaking the study and shortage of related literature on the
issues under especially empericalliteracture is very few in the developing countries
like Ethiopia concerning tax revenue mobilization practices.
 CHAPTER TWO

2 REVIEW OF RELATED LITERATURE

2.1 Theoretical literature review

2.1.1. Definition of tax revenue
Government needs to perform various functions in the field of political, social, and
economic activity to maximize social and economic welfare. In order to perform
these duties and function government require large amount of resources. Tax
revenue is the income that's gained by government through taxation. It is an
important tool of fiscal policy of government and the opposite factor of
government spending. Revenue earned by government are received from sources
such as taxes levied on the income and wealth accumulation of individual and
corporation and on goods and services produced export and import from
country.Non- taxable source such as government owned corporation income,
Central bank revenue, and capital receipts in the form of external loan debts from
international financial institutions. Mobilization tax revenue is always for
government owned operation to create fiscal space provide essential public service
and reduce foreign aid single resource dependence (UN, 2005).

The needs for additional revenue is substantial in many developing countries. But
improving tax revenue mobilization has importance beyond that. Requirements for
relieving poverty and improving infrastructure are substantial achieving the MOGs
for instance; many require low income countries to raise their tax GDP ratios by
around four percent points (IBID).
2.1.2 Major source of Revenue for local government
Public revenue consists of tax revenue from administration activities fines, fines,
gift and grant.public revenue classified in two types:- tax revenue and non-tax
revenue.
Direct taxes,
such as income Non-tax revenue
tax, corporate
Source of
Includes, fees,
taxes, tax on revenue final penalty,
property, etc. mobilization surplus from
public enterprise,
etc

In direct taxes
like turnover tax,
excise tax, etc.
2.1.2.1 Tax revenue

Tax revenue is the first and most source of public revenues.Taxes are compulsory
payments to government without expecting direct benefits of return by tax
payer.Taxes collected by government are used to provide common benefits to all
mostly in the form of public welfare service ( HLB,Latia,2007 ).

Types of tax revenue

A Direct tax

Direct taxes are a tax paid directly to the government by person on whom it's
imposed. It also levied directly by tax player was received the income and paid
either directly by tax player to authority system like payroll tax where the tax is
deducted by employee from wage,salaries,wealth tax and corporate tax (
Musgrave, 2005 ).

A corporate tax:-Refers to direct tax leived on the profits made by companies or

associations and often includes capital gain of company.

B transfer tax:- tax on passing to tittle of property from one person to another.

C Personal income tax:-Every person driving income from employment in any

government or other private organization or non governmental organization and
income from employment including any payments or gain in cash or linked which
he/she received from employees.

D Business income tax:-Tax imposed on business enterprise, professional or

vocational activity on any other activity reorganized as trade pays tax based on
their profit.
B Indirect taxes

On other hand,indirecttaxesare these which are demanded from one person

unexpected that he shall identity himself at the expense of other ( Beatable, 2003 ).
It includes:-

A Value added tax (VAT ):- Is a sales tax based on the increase in value or price
of product at each stage in its manufacture and distribution and the cost of the tax
in added at the final price and eventually paid by consumers on purchasing price of
15%.

B Sales tax:- Consumption tax charged at the point of purchase for certain goods
and services. The tax amount is usually accumulated by applying a percentage rate
to the taxable price of a sale.

C Excise tax:- This tax is imposed on selected goods, such as luxury goods and
basic goods which are demand in elastic. Tax on gasoline and the other fuel and
tax on tobacco and alcohol.

2.1.2.2 non tax revenue

The revenue obtained by the government from a source other than tax is called
non-tax revenue.The source of non tax revenue are

A Fees: Are other important source of revenue for government. A fees are charged
by public authority for rendering service to citizens in like tax there is no
compulsory involved case of face. The government provides certain fees for them.
For example fees charged if passport,driving license ( HLB latia,2007 ).

B Fine( penalty ): Are imposed as a form of punishment for break of law or non-
fulfilment or certain condition or for failure to observe some regulation like
tax,fine are compulsory payments. While taxes are generally imposed to collect
revenue fine are imposed as a form of punishment or to people from breaking the
law ( HlB latia,2007).

C surplus from public enterprise: the government also gets revenue by way
surplus from public enterprise( HLBlait,2007)
D Transfer revenue from other source:

Regardless of what revenue sources are made available to local government.

Transfer from central to local government undoubtedly continue to constitute an
important feature of local government finance. Intergovernmental revenue account
for all revenue received from federal,state or other local government sources in the
forms as grants or shared revenue. There are a wide variety of structures for
intergovernmental transfer.some government give local municipal governments a
specified portion of national tax revenue. Other national governments distribute
funds not by the normal, but through annual appropriation approved by national
legislative. A third variation of intergovernmental transfers is when central
government provide funds under specific categorical programs that can be used
for the specific types of projects ( Aloysisus,2006 ).

In practice transfer may be in the form of sub charges or revenue sharing were by a
local government receives s share of revenues from particular taxes collected by
the central government within its jurisdiction. The main mechanism for
intergovernmental transfer in Africa however is conditional and unconditional
grants from central to local governments. Moreover, in countries for instance in
South Africa municipalities are also given the right to borrow to finance
investment in local infrastructure.Especially in developing countries most of the
local government are dependent on the transfer of revenue in the form of grants
from the higher level of government organ ( IBID ).

In other words of allocation received from the federal government the states must
insure that local governments receive their allocations on the basis of factors such
as minimum responsibility of government ( equality of rural governments).
Population and social developments factors ad by primary school enrollment
internal revenue efforts ( Accidence,2002 ).

In Africa most of local government revenue drives from two categories the local
own revenue which includes taxes. User fees and license where as second one also
transfers from the central government to the regional levels and even to welfare
this is usually in the form of grants and revenue sharing. In some other countries,
municipalities are also allowed to borrow money especially for capital investment
in infrastructure. In the case of Ethiopia revenue sources indicated in different
aspects such as federal democratic republic of Ethiopia provide exclusive revenue
resource under the federal power of taxation and state power of taxation. In
general, the division of the revenue resources raising power in Ethiopia is mainly
structured according to the categories of tax players or particular things as a source
of revenue. There Venue source are assigned by FDR constitution for two tries of
government such as federal and local government. Some revenue resources of
Ethiopia is including tax,capital gain tax,excise tax and value added tax,charged
and fees tax are examples of large revenue sources most local administrators in the
country ( Solomon, 2008 ).

Income tax: income tax is one of the most important sources of revenue for the
government every person having income as defined in the proclamation shall pay
income tax in accordance with this proclamation number 286/2002. Income taxable
under this proclamation shall include,but limited income from employment,income
from business activities, income from the alienation of property,interest paid by a
resident registered of property, etc ( Solomon, 2008 ).

Capital gain tax: capital gain which is profit realized from the transfer of capital
asset is taxed in Ethiopia. The tax forms part of the income tax system and it's
found under schedule of the income tax ( proclamation number 286/2002).

Excise tax: excise tax in Ethiopia is imposed and payable on selected goods such
as luxury goods and basic goods with are demand inelastic. Moreover, it provided
that imposing the tax on goods that are hazardous to health and which are cause to
social problems would reduce the consumption such good ( IBID ).

Value added tax (VAT): value added tax is a recent addition to the tax region in
Ethiopia. For every taxable transaction by registered person every imported goods
other than an exempt imports and an export of service 15% of value should be
applied as value added tax (IBID).

In case of Ethiopia over 1999/2000-2010/2011 period revenue and grants stand out
as the most important source of expenditure financing. During this period
government revenue on average covers over 61% of government expenditure. In
government revenue tax income accounts for 73% while non-tax account 27% over
11 years period covered in the study the government's tax income has grown
dramatically from 2000-2004 the tax revenue are remained stable. The largest tax
revenue (% GDP) shows fluctuation pattern. The growth of tax revenue
(%GDP)throughout the study period was through was not steady over the period.
The largest growth was seen in 1998/99. This high growth in tax revenue was
observed before tax policy revision. The lowest growth was observed in
2009/10(Anware,2013).

Year Tax revenue Tax revenue Growth rate of tax

perGDP revenue per year
2002/03 0.065252 43489.95 8.9
2003/04 0.072877 4957.6 2.1
2004/05 0.071788 4778 0
2005/06 0.071195 2228 3
2006/07 0.086267 7476 37.6
2007/08 0.079523 8467 3.1
2008/09 0.07367 9698 2.7
2009/10 0.076853 12186 7.2
2010/11 0.067599 16785 5.2
2011/12 0.057065 19139 8.3
2012/13 0.074195 28412 45.4
2013/14 0.071782 36692 8.6
Source:-Ethiopia custom and Revenue Authority and MOFED(2013)

Table 2.2 Trends of regular tax revenue in case of kore town 2000-2007

Year Plan Actual In percent

2000 4153434 5230356067 125.93
2001 5832100 6358954 109.03
2002 8597883 8635354 100.52
2003 68559984 85855949 124.4
2004 1801303 15126936 112.7
2005 111269249 9118769.76 135.9
2006 10057970 5757756 90.6
2007 12622323 14272542377 113.6
Source-Kore administration revenue and customs authorities
2.1.4 Tax revenue administration
In most developing countries there is substantial potential for increasing tax
revenue yield from local tax and challenge through implementing improvement to
local tax revenue administration.these improvement may include reforms to
property tax law and system to raise more revenue from delinquent tax pays by
collecting more efficiently which is introducing improved methods of identical
,registration and collection depending a comprehensive inventory of all land
process and building characteristics to be used in valuation improving devising
better systems for monitoring collecting and enforcing ( Lewis lb,2005).

2.1.5 The impact of tax revenue

Strengthening domestic tax revenue bases is key to create fiscal space for Africa
development need (Gupta el al, 2008).

Aid financed project give rise to additional spending such as operation and
maintenance which would need to cover a list party.If not wholly from domestic
resources. The country must generate sufficient tax revenue to finance this
expenditure or the productivity of aid financed projects would suffer ( Gumpta et
al,2008 ).

Strengthened tax revenue mobilization contributes to economic stability,

particularly in countries dependent on external finance. Rising domestic tax
revenue not only creates additional fiscal space for supporting high priority
spending. It also allows a country to maintain spending consistent with these policy
priorities when aid is placed out. Increased domestic tax revenue can also help a
country's verging all variability and uncertainty in aid flows which can complicate
budgetary management ( Bulir and Hamsu,2007 ).

Expanding domestic tax revenue could also help African address the challenges
arising from globalization. These countries are feeling the pressure to further
liberalize their spending regimes because their average tariff rate is higher than in
other regions also tariffs rates in sub- saharan Africa are expected to fall as a result
of the formation of free trade areas and customs union with in the region as well as
a result of the formation of the other regional trading block,including the European
Union ( keen and mansour,2008 ).

The reliance on tax domestic tax revenue reduces the risk dutch disease which
occurs when the exchange rate appreciates a result of capital inflows making the
country's export less competition. A key challenge in managing sealed up external
inflows in the potential impact on the real exchange rate exports and
competitiveness ( Abed and Gupt,2002).

Taxation increase incentives for public participation in the political process and
improved efficiency of government spending. It Forster awareness to limit rent
seeking in the public policy by interest group. Taxation also creates an incentive to
the government to upgrade their institution for tax collection and administration
and provide more public services (Moore,2007).

2.2 Empirical Literature Review

2.2.1 Factors affecting tax revenue mobilization

Carlo(2011) there are many factors that are influencing the tax revenue
mobilization activities: especially in Ethiopia the tax revenue mobilization
performance indicates weak because of weak tax administration,informal
sector,lack of awareness by tax player and limited revenue base. Additionally, all
else being equal a higher income per capita level is likely to lead to higher revenue
from all taxes(Tanzi and zee,2000).

Also empirical evidence show that corruption reduces tax revenue ( Abed and
Gupt,2002 ). Based on these studies public finance literature has provided general
recommends to raise tax revenues recommending such as institutional reforms as
reinforcing the role of judiciary to limit corruption.

Therefore, the government tries to reduce the factors affecting tax revenue
mobilization through creating awareness for tax players and collectors, identifying
the main revenue base by giving incentive for tax collectors and heavy fair tax and
reduce corruption.

A level education of tax payer

As education of an individual increase their level of income also increase then they
pay high tax for government which is turn increase tax revenue mobilization

B Awareness of tax player

Awareness of local player is another factor which affects tax revenue collection.
Most local tax players lack of sufficient knowledge on what types of tax
concerned. In some cases local tax players do not aware about the payment and
even amount to be paid (HlB latia,2007).

C Income

Income is a proxy for overall development of the economy and its expected to
good indicator of the overall level of economic development and sophistication of
the economic structure. So a higher per capita level is likely to lead to higher
revenues from all taxes(Tanzi and zee,2000).

D contribution of investor

Domestic revenue needs to be raised in and economically efficient manner that

does not impose under burdens on investment and economic growth tax revenue
mobilization is affected by the structural economic, demographic and political
characteristics of its administration. Beyond that if the number of investors
increase the level of income and pay high tax for government (IMF,2011).

2.2.2 Factors Determine tax revenue

A Gross Domestic Product

Causing(2007),analyze the impact of the size and profitability of the corporate

sector on revenues from corporate tax. The impact index of tax revenue over 27
development countries and use annual data for 2002-2006 periods found at GDP
per capita is positive. According to claussing (2007),found that several structural
factors like per capita GDP share of agriculture in GDP and trade openness are
statically significant and strong determinant of tax revenue performance.

B Inflation

Tanzi and zee(2000),in their research examines the determinant of total revenue
share by two different measures of trade liberalization. Using the risk measure of
trade liberalization,although per capital income is not significant, agricultural
shares,industrial shares, government consumption, and the term of trade all expert
a positive effect. However, using the second measure they find a different pattern
of results.
C Unemployment

Along with the growth of GDP comes the growth of revenues from corporate tax.
Inflation also have a similar effect conversely, higher unemployment leads to a
decrease of revenue from corporate tax. The cyclicality of the economy is therefore
an important factor affecting influencing the revenue from taxation of corporation
(IBID).

2.3 Conceptual framework

Tax revenue is influenced by different factors.The concerned body needs to
understand what influence the top tax revenue mobilization. The challenge
includes level of bureaucracy and corruption, level of education of tax
player,conflict among society, tax policy and tariff control and stability within
government and others. These factors are divided in to Economical, political,
demographic and social factors. Decreasing these problems important by using to
link the conceptual framework with research objective.

Demog Econo
lo raphic mic
factors
factors;
Economy
Low life
depression
expectancy
Challenge of Inflation
Immigration rate
Interest rate
Emigration rate tax revenue
mobilization

Social factors
Conflict with society
Level of education
Demographic Political
factors
Instability
Corruption
Trade and tariff
control
Level of bureauracy
CHAPTER THREE

3 RESEARCH METHODOLOGY
3.1 Description Of The Study
The study will be carried our in kore woreda which is one of the woreda in oromia
region of Ethiopia. This woreda is bordered on the south by the kofale, On the
south west by shashamane zuria, On the north west by ArsiNegele,On the north by
Arsizone,and on the east by Gedeb Asasa.According to the 2007 national census
reported a total population for this woreda of 103,734 of the total 53538 will men
and 52196 will women ,5393 or 5.2 percent of its population will urban
dwellers.The altitude of kore woreda ranges from 2000 to 3050 meters above sea
level:MountDuro is the highest point.The weather condition of kore woreda is
woina dega and Dega
3.2 Data type and Source
To complete the data study with relevant and adequate information the researcher
was used primary source.

3.3 Method of data collection

To research was collected data by individual by using both open ended and closed
ended questionnaires
3.4 Sampling Technique and sample size
The population size of kore woreda to pay tax revenue is 530 out of 103734 (in
2016) inhabitants. Based on this number of population the researcher used the
following formula to determine the sample size as follows.

n=N/1+N(e)2 where N= Total population n=sample size

530/1+530(0.10)2=84

Therefore, the required target population of the study is 84 out of this. For
successful completion of the study the researcher take 50 respondents due to
financial and time constraints.

The technique that were used in this research was probability sampling methods.
Among the probability sampling the researcher was used simple random sampling.
The reasons why the researcher develop this sampling is each citizen is
responsible to pay tax for the government. So simple random gives each citizen
under study an equal chance of being selected.

3.5 Data Analysis and Interpretation

The researcher develops descriptive for data analysis to look factors that determine
tax revenue mobilization in koreatown.
3.5.1 Descriptive data analysis
Descriptive data analysis was used to present data in the form of table ,frequency
and percentage. So,the researcher was analyzed collected data by descriptive
analysis

3.6 Method of data presentation

After the collection of data analysis was done by descriptive methods of data
analysis and it was expressed in terms of table, percentage . Researcher was used
for analysis purpose. Descriptive analysis will utilize the element of quantitative
and qualitative research methodologies.
 CHAPTER FOUR

DATA ANALYSIS AND DISCUSSION

The researchers describe that from the total number of sample(84) 50 respondents
were selected to hold successful research out of total respondent 50 questionnaires
were distributed randomly for tax players then 50 questionnaires were filled and
returned to researcher so, the questionnaires were prepared together necessary data
from the concerned bodies of woreda that days the objective of the study. Finally
the response rate was 100%for questionnaires. Thus this section of data analysis
and discussion part the researcher present that result of data analysis obtained from
respondent using frequencies and percentages.

Table 4.1 Age structure of taxpayers.

Age group Male Female Total percentage

frequency
Below 30 5 - 5 10
31-39 15 7 22 44
40-49 12 3 15 30
50-59 4 1 5 10
Above 60 2 1 3 6
Total5 38 12 50 100
 Source: survey,2009

According to above table 4.1 most of tax payer where at the age between 30-39
that means in percentage 44%. This implies most of tax payer age between this
active to work and opportunity to get work is high between this age. Because of
that age between 30-39 are active to farming, trading and other work and this
group are engaged in different business types or sector in the study area. But most
the age between below 30 are not their own works and not desire to work.

Table 4.2 marital status of respondent.

Marital status Respondent Percentage

Single 17 34
Married 26 52
Divorced 4 8
Windowed 3 6
Total 50 100
Source: own survey,2009

As above table 4.2 marital status of respondent shows of respondent shows 52%
are married,34% are single, 8% are divorced and the rest of the respondents are 6%
were windowed. This implies according to study area most of single person have
not their own business, but working hand to mouth this implies in terms of tax pay
to government is low, income gets single person have not high pay tax because
there is more consumption to fulfill basic needs and find a new job. 52% are
married respondent that are most of tax payer for government because of needs to
fulfill the basic needs of family and most married people have their own of land,
house and other property, Because of that married person are high pay tax other
than marital status.
Table 4.3 Educational level of respondent.

Respondent of education Frequency Percentage

Illiterate 10 20
1-8 grade 2 4
9-12 grade 6 12
Certificate 9 18
Diploma 11 22
Degree 12 24
Total 50 100
Source: own survey,2009

As above table 4.3 shows, 20% respondents are Illiterate,4% are educated 1-8
grade respondents, 12% of respondent where 9-12 grade educated and 18% are
certificate holder, the remaining 22% and 24% are diploma and degree
respectively. This implies 20% of respondents are illiterate means in study area
there is not more educated person. This implies most of respondents were not
know the awareness of tax, but thinks like paying tax is decreased income. But
diploma holder are income gets are not high when compared to degree holder
income gets is medium pay tax depends on income. 24% of respondents were
degree holder the income of degree holder is high according to study area paying
tax is like income gets high, pay tax for governments are high.

Table 4,4 socio-economic data for respondent and their contribution.

Occupation frequency percentage Contribution of tax

Business man 15 30 36
Government 13 26 43
employee
Non-government 9 18 16
employee
Self-government 13 26 5
Total 50 100 100
Source: own survey,2009.

As above table 4.4 indicates from total 50 respondents,30%are business man and
their contribution 36%, 26% are government employees and their contribution is
43%, 18 are NGOs and their contribution is 16% and 26% are self-employed and
their contribution is 5%. As above table most of respondent business man is not
contribution of tax greater than government employees. This implies that business
men are paying wage/salaries for laborers/employees, at that time income of
businessman are decrease and sometimes business is affected by risk, less profit,
and etc. Because of that not more contributed tax for government than government
employee. Non-government is like business man affected by economic risk and
profit are some times less. In this case for NGOs government can not create work.
Because of that NGOs employees are not satisfy to contribute tax for government.
From this researcher concluded that the contribution of government employee is
higher than the other employee. Because of tax payment of government employees
is highly regulated than other sectors.

Table 4.5 license for work respondent.

License for work Number of respondents Percentage

Yes 38 76
No 12 24
Total 50 100
Source;own survey,2009.

According to survey 2009 EC 76% of respondent have license for own work and
24% of respondent were do not have license for work. This implies that in study
area day of marketing there is somebody selling cows, sheep and horse and other
commodities and somebody are buying these, if these buying and selling can not
query license, But those respondents are paying tax.sometimes paying tax is not
query license. 76% are having license this implies 76% respondents to gets license
from organization of trade, drives license, hotel, supper market, auto garage, agro-
chemical, cement shop retails, automobile oils, mobile, computer soft ware,
building material and so on. All of this license have are paying tax for government
high tax pay.

Table 4.6 total number of respondent pay tax for government .

Do you pay tax for Total number of Percentage
government respondent
Yes 38 76
No 12 24
Total 50 100
Source: own survey,2009EC.

More over out of 100% respondents 76% respondents are paying tax, while the left
24% respondents are not paying tax for government. From this evidence researcher
concluded that out of total respondents 24% are engaged in an informal sectors (
NGO). This implies not mean that informal sectors are not pay tax, despite the
sector indirectly contributed some significant amount of the fiscal revenue through
VAT. Simply the presence of informal sectors in the economy has negatively
impact on tax revenue.

Table 4.7 types of tax respondent pays.

Types of tax Number of respondents Percentage

Income tax 15 30
Sales tax 11 22
Property tax 18 36
Other tax 6 12
Total 50 100
Source: own survey ,2009 EC

According to survey,2009 total number of respondents 30% are paying income tax
, 36% respondents are paying tax, like housing, land , car ,building and other taxes
, 22% of respondents are sales tax, and 12% are paying other taxes like
fine(penalty) that means imposed as a form of punishments for break of law and
non-fulliflement or certain condition or for failure to observe some regulation and
fees charged of driving license. In study area most of respondent are paying
property types of taxes for land, house, car and etc.

Table 4.8 awareness of tax payer.

Awareness of tax Number of respondent percentage
Yes 24 48
No 26 52
Total 50 100
Source: own survey,2009 EC

To identify the awareness of tax payer the researcher asked question how the
respondent aware about the necessity of tax collection. As indicate above table out
of 100%respondents, 48% have awareness and 52% have no awareness that means
from total respondent more than have sample population do not aware why the tax
revenue collected. 52% 0f respondents are awareness of tax in the case of study
area, that implies most of people in rural area in the case of the study area not
knowing the important of tax but pay tax in terms of tax collectors are collected tax
went collected have to kebale and small city and other method to collect tax each
of them finding at the place of marketing, assembly for wedding and other places.

Table 4.9 number of respondent satisfy to pay tax or not satisfy tax.

Frequency Percentage
Number of respondent satisfy 31 62
pay tax
Number of respondent not 19 38
satisfy pay tax
Total number of respondent 50 100
Source: own survey, 2009 EC
As above table 4.9 total number of respondents 100%, 62% of respondents are
satisfy(happy) to pay tax revenue to government ,38% of respondent are not
satisfy(happy) to pay tax revenue for government. This most of 38% of
respondents are think like paying tax for government are decrease income and
government collect form rural area community to collect tax and the develop only
urban area. This events apply in rural infrastructures are not goods. Because of that
infrastructures in rural area is negatively affect tax revenue. If infrastructures is
expanded in rural people are satisfy to pay tax revenue for government.

Table 4.10 total number of respondent pay tax on time.

Number of respondents Total number of Percentage.

pay and not pay on time. respondent.
Pay on time 24 48
Do not pay on time 26 52
Total 50 100
Source:-own survey,2009 EC

According above survey 2009 total number of respondent 48% are pay on time and
52% of number of respondents are not paying tax on time. This implies 48% of
number of respondents are paying tax on time this is implies respondent are fully
knowing the awareness of tax revenue. 52% are not paying on time because of lack
of money, less profit, economic risk, far from tax authority place is the main
reasons for the respondents.
CHAPTER FIVE
5 CONCLUSION AND RECOMMENDATION
governmentthrought the worid especially in the developing countries seeks to raise
revanue from different sources ( tax and non tax ). Ethiopia as avt other developing
countries faces difficulty in raising tax taxrevanue to the level required for
promotion of economic growth and experiancing a consistent surplus of
expendictureoverrevanue for most of time. However, the tax revanue which is
failing to collect actual tax revanue to estimated budget in the recent years. Thefore
the aim of this study is to acces factors affecting tax revanuemobalization in the
woreda. Accordingly, the descriptive statistics was employed to look factors
affecting tax revanuemobalization in kore woreda. Empericalinvestion revealed
that education level, informal sector, satisfication revenge equality of services and
corruption are important factors that determine tax revanue collection. As well as
satisfication of tax payer, informal sector,awerness of tax payer are negative effect.
This implies that tax payer are not satisfied with paying tax for government
because of kore woreda have have no well developed infrasturacture which initiate
individual pay tax and people of kore woreda are not knowing the importance of
tax revanue to government are the main factors affecting tax
revanuemobalizationrespectively.Thestuy also shows that kore woreda face lack of
coefficient tax revanuemobalization can revealed by poor quality of
infrasturacture.

5.2 RECOMANDATION.
Based on the result of the study the researcher that suggested for improving tax
revanuemobalization the individual income and wealth creating good marketing
condition ,facilitate and encourangeacess to employement better job rellated
training and education for low skilled would help to provide quality
essientialinfrasturacture and different services like road, communication services
and the like to get intersted tax payer, government can improve tax revanue.
Accordingly to overcome the problem of corruption the government should have
not introduce more sophisticated online recoeds and computerize all recoed
through massive government campany in all departement and tries his best
minimize un fairness which come tax investory by using more experancied tax
payer.more over since revanue increase with leve of education government should
create conductive sittuation to citizens for education opportunity which may result
increase in awarness of society about function of tax collection. Finally, changing
the formal sector to formal sector by giving specific area where they can perform
their works are major reccomanded policy to increase tax revanuemobalization.

References

✔ Abde George E and Gupta (2002): governance, corruption, and economic

performance (Washington DC: International monetary fund).
✔ Aloysius E and Olaop (2002): Fiscal federation and local government finance
in republic of American un organization groups.
✔ Anderson k and Bulir M (2004) performance monitor: The opportunity costs of
revenue management palgrave-Macmillan publisher.
✔ Anwar Mohammed (2013),Determinant of tax performance in Ethiopia:
Jimma,Ethiopia.
✔ Berhanulegesse (2008),Note on fiscal federalism service delivery and capacity
building: Addis Ababa, Ethiopia.
✔ Beatable C (2003) public finance: Newyork,USA.
✔ Bulir Ales and A, Jollier human,volatility of development aid: An update, IMF
staff papers,voll 54,No 4 pp 724-734.
✔ Carlo C (2003) Revenue mobilization in developing countries prepared by
Fiscal Affairs Department.
✔ Carroll E(2011) Taxing Ghana's informal sector: The Experience of women
occasional paper No 7 Christian Aid:Ghana, Accra.
✔ Desiree Getachew (2004):Tax reform in Ethiopia: Addis Ababa, Ethiopia.
✔ Eambon (2006):Taxation in developing countries: Case study of Cameron
research paper Nov/2006.Helsink institute for development economic
research.
✔ Gupta Sanjev,Gerd Schwartz, and shamsudi Tariq (2008):Fiscal
management of scaled up Aid (Washington: IMF).
✔ Hl Bhatia (2007),public Finance 5th edition india,New Delhi.
✔ International monetary fund (2011).
✔ Lewis LB madon (2004): Research on internal organization process and
management.
✔ Milkesell (2002): Determinant of tax revenue effort in developing countries:
IMF Working paper washigton DC.
✔ Moore mick( 2007 ) "How Does Taxation Affect The Quality Of
Government ? " Institute of development studies working paper 208 (
Bright,united kingdom: Institute of development studies).
✔ Musgrave R.A and Musgrave P.B ( 1999 ) Appendix.
 APPENDIX
WOLAITA SODO UNIVESITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTEMENT OF ECONOMICS

Research thesis for requirement of BA Degree in economics

Dear Respondents
The aim of this questionnaire to obtains information about the factors affecting tax revenue
mobilization in Kore woreda. The researcher is graduating student at Wolaita Sodo University in
economics departments and kindly requests you to provide necessary information for the
question below. Please give the appropriate responses for the questions.
 Thanks you for cooperation !!
1. What is your sex? A male B female

2. What is your age? A below 20 B 20-30 C 30-40 D 40-50 E Above 50

3. What is your status? A Single B married C Divorced D Windowed

4. Educational level of respondent? AIlliterate B Primary (1-4) C Secondary (4-10) D

Preparatory (11-12) E Certificate F Diploma G Degree H Other specify

5. What is your occupation? A business man/women B government employee C non-

government employee D self- government E Other specify

6. If you are working your own works do you have license for your work?

A Yes B No C Other specify

7 If your answer is yes for question number 6 when and from which authority you have get
license A date you got your license ………………………………………………………………

B The organization that give your license ……………………………………………….

8 If you are voluntary can you show as your license?......................................................................

9 If you are not show as your license why please reasons out? ........................................................

10. Do you think investment is well practicing in kore woreda compared to the other woreda
A Yes B No C Other specify

11. If your answer for question number 10 what is contribution of investor of the woreda on the
revenue? A very high B high C Medium D L0w

12. Do you pay tax for government? A Yes B No D Other specify

13. If your answer is yes for question number 12 what types of tax do you pay?

A Income tax B sales tax C property tax D all E if other specify

14. If you are paying income tax how much income tax do you pay per monthly or per yearly?
A Monthly-------------------------------------------- B Yearly-----------------------------------------

15. If you are paying sales tax how much sales tax do you pay per monthly or per yearly?
A Monthly…………………………B Yearly……………………………

16. If you are paying property tax do how much property tax do you pay monthly or per yearly?
A Monthly……………B Yearly…------------.
17. If you are paying property tax what types of property tax do you pay?

A House B Land C Car D Building E Other specify

18. Do you know the awareness of the importance of paying tax to the government?

A Yes B No

19. If you are yes question number 17 what purpose do government collect tax?

A For better services B for good infrastructure C For good security services
D for all E for other specify

20. If agree on above question number 17 and 18 explain degree of your agreement on
government revenue mobilizationis important

A Stronger agree B Some extent agree C Agree D Disagree E other specify

21. Are you satisfy (happy) with tax you paying A Yes B No C Other specify

22. Do you pay tax revenue pay on time?

A Revenue mobilization does not be for required services.

B There is no better infrastructure in Kore woreda.

C Revenue collected is not fairly allocated in Kore woreda.

D If other specify.

23. Do you pay tax revenue pay on time? A Yes B No

24. If your answer question number 23 is NO why reasons? A Lack of money B Less profit C
Economic risk D Far from tax authority place E Other specify

Questionnaires for Tax Administration

1. How many people are paying tax for government? ----------------------------------------------------
----------------------------------------------------------------------------------------------------------------
2. People of Koreworeda are paying tax for government effectively and efficiently?

A Yes B No

3. In question number 2 above is NO answer. Why reasons out -----------------------------------------

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4. In yearly how many people of kore woreda pay income tax for government?---------------------
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5. In yearly how many people of kore woreda pay sales tax for government ?------------------------
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6. In yearly how many people of Kore woreda pay property tax for government ?-------------------
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7. If people of Kore woreda pay other types of tax specify which types of tax paying ?-------------
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8. What is the purpose of collect tax from the people ?---------------------------------------------------

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9. If there is investment is well practicing in Koreworeda how many tax pay for government?-----
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