GREAT LAND COLLEGE

SCHOOL OF GRADUATE STUDIES

MASTERS OF BUSINESS ADMINISTRATION

ASSESSMENT OF FACTORS AFFECTING TAX PAYERS’

COMPLIANCE BEHAVIOR IN AYIRA WOREDA, WEST
WOLLEGA ZONE, OROMIA.

A MASTERS THESIS SUBMITTED TO GREAT LAND COLLEGE, DEPARTMENT OF

MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE OF MASTER OF BUSINESS ADMINISTRATION

BY

EDOSA GUDINA

Advisor: DINKISA KENO (PhD)

July, 2021
Nekemte, ETHIOPIA
 STATEMENT OF THE AUTHOR

I declare that this thesis entitled “Determinants of tax payer’s compliance behavior in case of Aira
Woreda Revenue Authority Branch” is my work and that all sources of materials used for this
thesis are appropriately acknowledged. This thesis is submitted in partial fulfillment of the requirements
for Master of Business Administration at Great Land College. I sincerely declare that this thesis is not
submitted to any other institution anywhere for the award of any degree or diploma.

Name: Edosa Gudina Signature: Date:

Place: GREATLAND COLLEGE, CENTER: AIRA

July, 2021

Nekemte, ETHIOPIA
 Certificate of thesis

I, undersigned, declare that this thesis is original work and prepared by Edosa Gudina under my
guidance. All sources of materials used for the thesis have been duly acknowledged. I further
confirm that the thesis has not been submitted either in part or full to any other higher learning
institution for the purpose of earning any degree.

Major Advisor Signature Date

Dinkisa Keno (PhD) _ 21/07/2021

 Approval
The undersigned certify that they have read and hereby recommend to Great Land College of
Business And Economics Department of Business Administration to accept the thesis submitted
by Edosa Gudina entitled with, to investigate Determinants of tax payer’s compliance behavior in
case of Aira Woreda Revenue Authority Branch. The thesis is Sub-mitted in Partial Fulfilment of
the Requirements for the Degree of Master in Business Administration

Name of Research Advisor ……….………………..Signature………….. Date…………….

Name of Internal Examiner ………………………..Signature……………Date…...……….

Name of External Examiner ……………...……….Signature……………Date….…………

Name of Department Head …………………..……Signature……..……Date…………

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 ACKNOWLEDGMENTS

First of all, I would like to thank the almighty God for giving me the encouragement and
patience to complete this piece of work.

Next, I would like to thank my advisor Dinkisa Keno (PhD) for his advice and direction on this
thesis. His comments were of a great importance for successful accomplishment of this research
thesis. I also extend my thanks to my family for their love, care, prayers, and for their
encouragement. Finally, I would like to express my great gratitude to GreatLand College for giving
me this chance.

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 ACRONYMS AND ABBREVIATIONS

TVC : Tax voluntary compliance

ERCA : Ethiopian Revenue and Customs Authority
OECD : Organization for Economic Co-operation and Development
IMF : International monetary fund
FDRE : Federal democratic republic of Ethiopia
VAT : Value add tax
DEMOG : Demographic factor
INSTIT : Institutional factor
POLOTI : Political factor
ECONO : Economical factor
SOCIO : Social factor
INDIVID : Individual factor

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 Table of Content
Table of Contents Pages
STATEMENT OF THE AUTHOR.................................................................................................1
Certificate of thesis..........................................................................................................................2
ACKNOWLEDGMENTS................................................................................................................i
ACRONYMS AND ABBREVIATIONS........................................................................................ii
Table of Content.............................................................................................................................iii
LIST OF TABLE............................................................................................................................vi
LIST OF FIGURE.........................................................................................................................vii
ABSTRACT.................................................................................................................................viii
CHAPTER ONE..............................................................................................................................9
OVERVIEW OF THE STUDY.......................................................................................................9
1. INTRODUCTION....................................................................................................................9
1.1. Background of the Study.......................................................................................................9
1.2. Statement of the Problem....................................................................................................12
1.3. Objectives of the study........................................................................................................13
1.3.1. General Objectives.......................................................................................................13
1.3.2. Specific Objectives.......................................................................................................13
1.4 Research Question................................................................................................................13
1.5. Significance of the study.....................................................................................................14
1.6. The scope of study..............................................................................................................14
1.7. Organization of the study....................................................................................................14
CHAPTER TWO.........................................................................................................................15
2. LITERATURE REVIEW.......................................................................................................15
2.1. Theoretical Literature review..............................................................................................15
2.1.1. Definition of Tax and Taxation....................................................................................15
2.1.2. Purpose of Taxation......................................................................................................15
2.1.3. Kind of Taxes...............................................................................................................16
2.1.4. Tax Avoidance and Tax Evasion..................................................................................17
2.1.5. Principle of Taxation....................................................................................................17

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 2.1.6. Problems of tax collection............................................................................................18
2.1.7. Taxation of Theories....................................................................................................18
2.1.8. Ability to Pay Theory...................................................................................................19
2.1.9. Procedures for tax collection........................................................................................20
2.1.10. Efficient and Effective Tax System............................................................................21
2.1.11. Tax administration......................................................................................................22
2.2. Empirical literature review..................................................................................................23
2.3. Conceptual frame work.......................................................................................................25
CHAPTER THREE.....................................................................................................................27
3. RESEARCH METHODOLOGY...........................................................................................27
3.1. Description of the Study Area.............................................................................................27
3.1.1 Climate of the study area...............................................................................................27
3.1.2 Population of Aira town................................................................................................27
3.2. Research Design..................................................................................................................29
3.3. Research Approach.............................................................................................................29
3.4. Target Population of the study............................................................................................29
3.5. Sample and sampling design...............................................................................................30
3.6. Sample Size Determination.................................................................................................31
3.6. 1. Sample and sample Size determination.......................................................................31
3.7. Data Type and Methods of Data Collection......................................................................33
3.8. Method of Data Analysis....................................................................................................33
3.9. Reliability............................................................................................................................34
3.10. Validity..............................................................................................................................35
3.11. Ethical Consideration........................................................................................................35
CHAPTER FOUR.......................................................................................................................36
RESULT AND DISCUSION......................................................................................................36
4.1. Introduction.........................................................................................................................36
4.2. Respondents Demographic Information.............................................................................36
4.2.1. Category of tax payers..................................................................................................36
4.2.2. Gender of tax payers.....................................................................................................37
4.2.3. Age of tax payers..........................................................................................................38

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 4.2.4. Education level of tax payers.......................................................................................39
4.2.5. Business type of tax payers..........................................................................................39
4.3. Descriptive Analysis of the variables..................................................................................40
4.3.1. Reliability of the Instrument.........................................................................................41
4.3.2. Validity of the instrument.............................................................................................41
4.3.3. Test of Normality / Test for normal errors...................................................................41
4.3.4. Document Review........................................................................................................42
4.3.5. Response from interview related to Factors that influence tax payers’ voluntary
compliance with tax system...................................................................................................42
4.3.6. Response from questionnaire related to factors that affect, tax payers compliance
behavior with tax system........................................................................................................44
4.3.7. Demographic factors....................................................................................................44
4.3.7.1. Institutional factors that, affect tax payers’ compliance behavior with....................48
4.4. Inferential statistics.............................................................................................................59
4.4.1. Correlation statistics.....................................................................................................59
4.4.2. Multicolinearity statistics.............................................................................................62
4.4.3. Regression....................................................................................................................62
4.4.4. Model Result................................................................................................................63
4.4.5. Discussion of the findings............................................................................................65
CHAPTER FIVE.........................................................................................................................68
SUMMERY, CONCLUSION AND RECCOMENDATION...................................................68
5.1 Summary of Major Findings................................................................................................68
5.2. Conclusion..........................................................................................................................72
5.3. Recommendations...............................................................................................................73
REFERENCES............................................................................................................................78
APPENDIXES..............................................................................................................................83

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vii
 LIST OF TABLE

Table 1.Determination of sample size from each category by applying formula....................23

Table 2: Reliability Statistics...................................................................................................31
Table 3.Age of respondents do you pay tax on time that expected to you Cross tabulation...35
Table 4.Gender of respondents do you pay tax on time that expected to you Cross tabulation35
Table 5.Education level of respondent why do you pay taxes Cross tabulation.....................36
Table 6.Demographic factors that affect tax payers’ compliance behavior............................37
Table 7.Institutional factors that affect tax payers’ compliance behavior with tax system.....39
Table 8.Political factors that affect tax payer’s compliance behavior with tax system...........41
Table 9.Economical factors that affect tax payers’ compliance behavior with tax payers......43
Table 10.Social factors that influence tax payers’ voluntary compliance with tax system.....45
Table 11.Individual factors that affect tax payers’ compliance behavior with tax system......47
Table 12.Correlations statistics................................................................................................49
Table 13.Multi Co linearity Statistics......................................................................................51
Table 14.Model Summary.......................................................................................................52
Table 15.Coefficient model.....................................................................................................53

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 LIST OF FIGURE

Figure 1.Tax payers’ category of respondents.............................................................................27

Figure 2 . Gender of tax payers.....................................................................................................27
Figure 3. Ages of tax payers..........................................................................................................28
Figure 4. Educational level of respondents....................................................................................29
Figure 5. Business type of respondents........................................................................................30

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 ABSTRACT

The objective of the study was assessment of the problem of Tax Collection practices on
Category of “A” Tax Payers in case of Aira Woreda Revenue Authority Branch. The issue of
complying with the existing tax system has predominantly been dealt with in several developing
countries. The situation is also the same for Ethiopia. This study has been conducted to evaluate
the status of tax compliance and factors affecting the compliance behavior of business tax payers
in Aira district. The study has applied a mixed methods approach to investigate the problem of
tax compliance. Samples for this study were selected using a stratified random sampling
technique through purposive targeting of business tax payers in Aira district. Data collection
was made through interviews, structured questionnaire. Qualitative analysis of data was
through narrations while quantitative techniques were applied using frequencies, percentages,
tabular presentations, graphs and other descriptive techniques. For the analysis of factors
affecting tax compliance behavior of the respondents, among the problem affecting the tax
compliance behavior of respondents in the District, knowledge of taxation, probability of
detection for noncompliance and complexity of the tax system were found to have a significant
effect on tax compliance behavior. As a conclusion of the study, knowledge of taxation does not
necessarily lead to compliance but may sometimes lead to noncompliance due to the nature and
interest of the tax payer in relation to utilizing the knowledge. At the end of the study, it was
recommended that the Aira Woreda revenue office should introduce modern technologies that
could help in the identification of noncompliance thereby simplifying the current tax system in
the Aira woreda.

Key words: Tax compliance, Tax System.

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 CHAPTER ONE

OVERVIEW OF THE STUDY

1. INTRODUCTION

Ethiopia, like any other developing countries, faces difficulty in raising revenue to the level
required for the promotion of economic growth. Taxation has increased in importance not only
as a tool of raising revenue for the traditional roles but also for accelerating the economic growth
and ensuring social justice. This chapter deals with background of the study, statement of the
problem, research questions, and objectives of the study, scope of the study, significance and
organization of the study.

1.1. Background of the Study

The challenges of tax collection in Developing countries are many. The growing concern of tax
administrations throughout the world is on how to simplify the tax assessment system to
encourage voluntary compliance, and improving taxpayers’ attitude towards taxation. (Sarker,
2003) identified that the main impediments as the lack of tax education among the taxpayers
followed by poor public relation activities and inadequate penalty provisions for errant
taxpayers. Taxation is one of the important elements in managing national income, especially in
developed countries and has played an important role in civilized societies since their birth
thousands years ago (Lymer and Oats, 2009). Taxes are important sources of public revenue.
Public goods such as roads, power, municipal services, and other public infrastructures are
normally supplied by public agencies due to their natures of non-rivalry and non-excludability
(Joseph, 2008). Government intervention in the supply of public goods is therefore inevitable
and can only be done if the public pays taxes for the production and supply of such goods
(Fjeldstad, 2004).

Ethiopia, like any other developing countries, faces difficulty in raising revenue to the level
required for the promotion of economic growth. Taxation has increased in importance not only
as a tool of raising revenue for the traditional roles but also for accelerating the economic growth

11
and ensuring social justice. The goal of this research is to study tax assessment and collection
problems of category “A” medium taxpayers found in Addis Ababa medium taxpayers No. 2
branch office. To achieve this objective, the researchers used both primary and secondary
sources to collect data. And also the researchers used probability and non-probability sampling
techniques. The information gathered witnessed that there exist inefficiency and insufficient
number of tax office employees in Addis Ababa medium taxpayers’ No. 2 branch office. There is
a big problem for system connection due to this many taxpayers does not get the service as they
came to the tax office. Moreover, there is lack of tax knowledge by taxpayers. Due to this, delay
in tax payment, do not pay the proper amount they should pay and negligence are taken by
taxpayers as solution to escape from payment of taxes. To create effective and efficient
employees, the tax office should offer continuous training for their employees by allocating
enough money to training center. The tax office should employ or recruit sufficient number of
employees to avoid work influences by one employee. For better tax administration, the
authority should be put better technology which is the network system is fast, huge capability of
storage and perform the work without any obstacle. To have effective tax collection the tax
office should be solve the administration (Evans, 2003, Wellela, 2016).

Category “A” business profit tax payers includes, whose annual turnover is 1,000,000 birr and
above ,Category “B’’ tax payers includes ,whose annual sales is 500,000-below 1milion and
Category “C’’ tax payers whose annual turnover is estimated by tax authority as being below
500,000 birr. According to Misra K (2008) the collection of tax on category ‘‘A” ‘B’’&“C” has a
lot of problems. Those tax collection problems are, In Ethiopia, the Imposition of tax couldn’t
still bring the required result due to a number of reasons such as lack of clear understanding
about the tax system by the tax payers, tax evasion, tax payers don’t comply with their tax
obligation, hostility between the tax payers and tax officials, economical factors, negative
attitude of tax payer towards the tax system, that is, understating their taxable income by
significant amount and related. For these reasons, the actual amount of tax couldn’t be collected
properly (Tadele, 2010).

The tax collection problems are from both the weakness of tax collection system and various
challenges exerted by the tax payers as well. Investments opportunities created by the federal
government encourage vast number of new individuals to be emerged in the business
continuously. Yet the activity of tax authority in terms of increasing staff numbers, expansion,
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and training facility is not that much promising to handle the increasing number of the firms. As
tried to describe earlier, tax is a blood vessel of a country. So the problems around this tax
collection need a close attention. Therefore, the study wasfocus on singling out what exactly
these problems are; what their root causes might be; and how the tax authority is tackling these
problems (Anteneh and Ashenafi, 2014).

Kangave(2005), discussed tax administration in Uganda’s context. It then discussed Uganda’s

tax structure, the problems faced in administration taxes, and it gave possible solutions to the
problems the author identified in his research. The author, in his research, identified corruption,
tax evasion, and inadequate resources for tax Collection poor quality of audits and inadequate
support for tax administration as problems or challenges of tax collection that have weakened the
ability to achieve desired revenue targets. The author did not purport to address all of the
problems. Neither does it set out to address in detail the causes of these problems. Instead, it
points out the problems. Besides, the author recommendations for solving the tax administration
problems were adopted from the Canadian tax administration system. The researcher do not
believe that the tax Canadian tax administration system should not be taken as standard for
measuring the performance of tax administration system. In addition to this, the author used
Interview with the tax officials and relied on secondary sources. However, author could have
also gathered responses from the target taxpayers to get additional information for his research.

James (1999) examined issues affecting the formulation of tax policy through the development
of actual thesiss by tax policy-makers. This was done taking account of the possibility that too
narrow an approach to this process can produce misleading conclusions and that thesiss for tax
reform may be inappropriate when the wider context of the tax system as a whole and the
environment in which it has to operate are considered. Two issues ware used to illustrate the
situation - tax compliance and tax simplification. The paper concluded that in developing tax
policy it is important to ensure that the wider context is taken into account and it also outlines a
practical approach to achieve this aim.
Therefore, the researcher’s objective is to assess the tax collection practices problem on category
‘A’ in Aira Revenue authority West Wollega zone.

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1.2. Statement of the Problem

Taxation is a system of raising money to finance government. Without taxes to funds its
activities, government could not exist. Currently, in Ethiopia revenue collected from tax is
increasing due to improvement in tax collection methods and decrease evasion. Besides, tax
administration system in Ethiopia is still facing many problems. Poor countries, like Ethiopia, at
this time are highly facing problems related to tax collection practices. The tax system in
developing countries imposes high expenses on the society. Low efficiency, high collection
charges, waste of time for taxpayers and the staff, and the low amounts of received taxes and the
deviation of optimum allocation of resources are some of the features of such systems (Farzbod,
2000). Taxation in developing countries is a challenging topic and has attracted increasing
attention in the last two decades. During this period, many problems observed like poor
administration, failing to collect sufficient tax revenues, lack of government and economic
stability (Vadde & Gundarapu, 2012).

In Ethiopia category “A” taxpayers has higher compliance cost burden than category “C”
taxpayers (Wellela, 2016). Evidently the compliance cost burden rises with business size while
the relative cost burden is remarkably higher for small businesses. Therefore, as already stated in
the literature (see Evans, 2003) for a literature review), the compliance costs of taxation are
mainly a problem for small businesses. Currently, Wollela Abehodie and Odd- HelgeFjeldstad
(2016) conducted research on Business Peoples View of Paying Taxes in Ethiopia based on data
obtained from business tax payers in Addis Abeba. The study finds a statistically significant
relationship between tax compliance and factors such as the perception of probability of audit,
corruption, satisfaction with tax administration, peer influence, gender and education.

As per the study of Esay Solomon (2014) on Factors Affecting fairness of taxation on Category
‘‘A’’ tax payers in Hawassa city and the study only relies on the levels of tax administration
system on fairness of taxation, taxpayers perception and impacts of level of education on
taxpayers perception. Another study conducted by Redae Berhe and Shailinder Sekhom (2015)
on Taxpayers Knowledge and Tax Compliance Behavior in Ethiopia: A study of Tigray State
focuses on individual basis by identifying different factors that can potentially tax payers’ tax. A
study conducted by Netsanet Bibisso (2014) on Assessment of Tax Audit Practice: In case of
Hawassa city Administration. Tries to focus on types of audit frequently used, tax audit

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selection; factors hinder effective tax audit program and performance of tax audit. As per the
study of Asamnew Gebresilasse (2012), on Tax Assessment and Collection Problems on
Category ''A'' taxpayers in the case of Yeka Sub city studied about taxation from the point of tax
collection problems and describes factors affecting tax administration system but it lacks
performance measurement criteria of tax administration system either it is strong or weak. Based
on the above research gap to the knowledge of the researcher even a hand full of researchers has
worked different factors affecting tax administrations system.

So, this general phenomenon in this country does have direct reflection, in this Aira district of
West Wollega Zone’s Revenue Authority Office. Therefore, this study was intended to identify
and assess tax collection problems and provides necessary recommendation for Aira District
Revenue Authority offices

1.3. Objectives of the study

1.3.1. General Objectives
The general objective of the study is to identify and analyze the category “A” tax collection
practices in West Wollega Zone, Aira Woreda Revenue Authority Office.

1.3.2. Specific Objectives

The specific objectives of the study are:
 To assess the tax payer’s compliance behavior in the Aira woreda Revenues Authority
Branch Office

 To identify the factors affecting tax payer’s compliance behavior in the Aira woreda Revenues
Authority Branch Office

 To determine the effect of variables (economic, social, institutional, individual, demographic and
political factors) on tax payer’s compliance behavior in Aira woreda Revenues Authority
Branch Office

1.4 Research Question

The major questions that; this study is tries to address are:
1. What are the Tax payers knowledge and awareness level about taxation?
2. How effective and efficient is tax assessment and collection procedure for category ’A’
tax payers in Aira Woreda Revenue Authority Office?

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 3. What challenges are there which impede tax assessment and collection procedure at Aira
Woreda Revenue Authority Office?

1.5. Significance of the study

The findings of this study might give clear understanding of what problems are there and how
those problems were handled by both tax payers and tax officer .Thus, the government would be
able to adopt a comprehensive strategy, and minimize the observed tax collection problems to
increase tax revenue .At the end of the study a clear picture was emerge showing the tax
assessment and strategies concerning tax collection is taking place. The revenue Bureau may use
this finding to revise its strategies concerning tax assessment and collection. Furthermore the
results of findings wasserve as a reference for other researchers on this area. Finally it was
significant for the researcher in partial fulfillment of MBA degree in business administration.

1.6. The scope of study

This study was delimited to Aira Woreda revenue Authority in West Wollega; specifically on the
tax collection problem. It is difficult to cover the whole tax payers in the case study. Because, the
study is delimited to only category A tax payers, tax collection problem in West Wollega Zone,
Aira Woreda Authority. The Data collection wasaddress 211 category ‘A’ tax payers in the study
area. And also the study delimited on the three Variables which are assessing the awareness or
knowledge of tax payers and tax employee’s office about taxation, identifying factors affecting
tax collection system, investigating the Cause of the problem of tax collection and provide
necessary recommendation

1.7. Organization of the study

The study would be organized in to four Chapters. The first chapter deals with Introduction part
(Background of the study, Statement of the problem, Objectives of the study, Research
questions, Significance of the study and scope of the study. The second chapter would present
related literature review. The third chapter was explains type and Sources of data that would be
used for the study, sampling techniques used to determine the sample size, method of statistical
data analysis tools and collection. The chapter four would present result and discussion and the
chapter five and the last chapter of this research would present summery, conclusion and
recommendation of the research.

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 CHAPTER TWO

2. LITERATURE REVIEW
2.1. Theoretical Literature review

2.1.1. Definition of Tax and Taxation

Tax administration refers to the identification of tax liability based on the existing tax law, the
assessment of this liability, and the collection, prosecution and penalties imposed on recalcitrant
taxpayers. Tax administration, therefore, covers a wide area of study, encompassing aspects such
as registration of taxpayers, assessments, returns processing, collection, and audits (Kangave
2005). The primary objectives of tax administrations are to ensure compliance with tax laws and
improve customer service satisfaction for taxpayers and an improved understanding of taxpayer
behavior (and attitudes to taxation) can help tax administrations to develop stronger and more
effective compliance risk treatments (Walsh, 2012).

Tax is a financial charge or other levy imposed on individuals or legal entity by the Governments
for its expenditures. Tax is a primary source of Government revenue. Government uses tax
revenue to pay to soldieries and policy, to build dams and roads, to operate schools and hospitals,
to provide foods to the poolers and medical care to the elders and for many other purposes
(Gebrie, 2006). Taxation is refers to assessment, collection, administration and management of
taxes. It deals with raising public revenue, managing public expenditure and public debt. The
General idea behind taxation is the provision of public goods and services. However the Benefits
received by taxpayers from the government are not related to or proportionate to the tax paid
(Odongo, 2011).

2.1.2. Purpose of Taxation

According to Odongo (2011), taxation is an important source of government revenue and an
economic policy tool by government to attain economic growth. The importance of taxation
therefore arises from debate of whether government should interfere in the operations of the
market mechanism. Taxation has increased in importance not only as a tool of raising revenue
for the traditional roles but also for accelerating the economic growth and ensuring social justice
(Odongo, 2011).

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The primary objective of taxation in underdeveloped countries is not related to stability of
income and expenditure. These countries face a number of problems of insufficient savings and
capital accumulation, which calls for a need to promote specific products to fill both the supply
and demand gaps. It is the problem of growth that covers a number of aspects; the tax system has
to be designed to help the economy. As in all other countries, one of the purpose of taxation in
Ethiopia is the raising of as much revenue as possible to meet the ever-expanding public
expenditure for supply of public goods and services which otherwise would not be available to
the general public by the market. The central aim of the tax system in Ethiopia is to collect
sufficient money to finance the administrative machinery of the government as well as to finance
the Fulfillment of basic infrastructures like roads, telecommunication, electricity and other basic
social services like education, health and water supply facilities (Odongo, 2011).

The tax system in Ethiopia in not only meant to raise revenue for current expenditures but
also aims at directing economic agents to the development goals foreseen by the
government through the incentive schemes embedded within the prevailing tax laws
(Ethiopian chamber of commerce, 2005).

2.1.3. Kind of Taxes

Taxes are commonly described as “Direct” and “Indirect”. This distinction is from administrative
point of view convenient although it may not always be correct.
1. Direct Taxes: These are paid by persons or organizations on their incomes, profits,
consumptions, etc. and the impact and incidence are on the same persons or organizations, e. g.
income tax or entertainment tax.
The advantages of this form of taxation are: Incidence and yield are easy to determine, the
taxpayer knows with certainty what he is expected to pay, yield increase automatically as wealth
and population increase, and direct taxes are in general progressive.
Direct taxes have the following disadvantages: the cost of administration involved is very heavy
and the effect on incentive, enterprise and saving in case of those with large incomes may be
considerable (Ethiopian chamber of commerce, 2005).
2. Indirect Taxes: These are levied on persons in the expectation that the taxes was shifted or
passed on to others. Here the impact and incidence are on different persons. They are called
Indirect Taxes because the administering authorities the Customs and Excise Service, which levy

19
the taxes on goods, do not collect the taxes from the consumer but indirectly through importers,
manufacturers or other intermediaries. The shifting or passing on is effected by embodying the
amount paid in taxes in the selling price of the commodities taxed to consume (Ethiopian
chamber of commerce, 2005).

2.1.4. Tax Avoidance and Tax Evasion

A. Tax avoidance: _ is the legal utilization of the tax regime to one’s own advantage, in order to
reduce the amount of tax that is payable by means that are within the law. In contrast, tax evasion
is the general term for efforts to not pay taxes by illegal means. The term tax mitigation is a
synonym for tax avoidance. Some of those attempting not to pay tax believe that they have
discovered interpretations of the law that shows that they are not subject to being taxed: these
individuals and groups are sometimes called tax protesters.

B. Tax Evasion: Tax evasion on the other hands is the general term for efforts by individual
firms, trust and other entities to evade taxes by illegal means. Tax evasion usually entails
taxpayers deliberately miss inter presenting or concealing the true state of their affairs to the tax
authorities to reduce their tax liability, and includes, in particular, dishonest tax reporting (such
as declaring less income, profits or gains than actually earned)

2.1.5. Principle of Taxation

Misrak has also tried to see some canon’s principle of taxation on his book. He noted that rather
than Adam Smith Some writers on Public Finance have formulated four other important
canons/principles of taxation. They, in brief, are as follows:
1. Principle of productivity: The Principle of productivity indicates that a tax when levied should
produce sufficient revenue to the government. If a few taxes imposed yield a sufficient fund for
the state, then they should be preferred over a large number of small taxes which produce less
revenue and are expensive in collection ( MisraK (2008)
2. Principle of elasticity: Principle of elasticity states that the tax system should be fairly elastic
so that if at any time the government is in need of more funds, it should increase its financial
resources without incurring any additional cost of collection. Income tax, railway fares, postal
rates, etc., are very good examples of elastic tax. The government by raising these rates a little
can easily meet its rising demand for revenue (MisraK (2008).

20
3. Principle of simplicity: Principle of simplicity implies that the tax system should be fairly
simple, plain and intelligible to the tax payer. If it is complicated and difficult to understand, then
it wilts lead to oppression and corruption ( MisraK (2008).

4. Principle of diversity: Principle of diversity says that the system of taxation should include a
large number of taxes whish are economical. The government should collect revenue from its
citizens by levying direct and indirect taxes. Variety in taxation is desirable from the point of
view of equity, yield and stability (MisraK (2008).

2.1.6. Problems of tax collection

Lawal (1992) cited in Chinyere (2000) posits that the following are problems of tax collection:
 Inadequate staff or manpower to carry out the assignment efficiently and thus has
contributed to the low revenue generated for the state.

 Mismanagement of tax collected: taxes collected were not been utilized for the purpose
for which it was collected thus makes tax payers not give out their wealth for the state.
 Bribery and corruption: in this day, tax collector personal interest has over ride their
official interest in the performance of their duties consequently affects revenue
generation for the state.
 Lack of voluntary compliance from tax payers these attitudes of tax payer causes tax
avoidance evasion and delinquency.

 Poor accounting records, most business traders professional do not keep proper records
of their income and expenditure.

 Inadequate facilities: The facilities like motor vehicle, motor cycle to carry out the
assignment effectively is inadequate.

2.1.7. Taxation of Theories

Several theories of taxation exist in public economics. Governments at all levels (national,
regional, and local) need to raise revenue from a variety of sources to finance public –sector
expenditures. Adam Smith in the wealth of nations (1776) wrote.
‘’Such things as defending the country and maintaining the situations of good government are of
general benefit to the public. Thus, it is reasonable that the population as a whole should

21
contribute to the tax costs. It is also reasonable to demand certain other things of a tax system.
For example, that the amounts of the tax individuals pay should bear some relationship to their
abilities to pay. Good taxes meet four major criteria .They are Ability to pay, certain rather than
arbitrary, payable at times and in ways convenient to the tax payers and cheap to administer and
collect.
In modern public –finance literature, there have been two main issues: Who can pay and who can
benefit .Influential theories have been the ability theory presented by Arthur cecil pigou and the
benefit theory developed by Erk Lindah.
Under the benefits theory, tax levels are automatically determined, because taxpayers pay
proportionately for the government benefits they receive.
Two models adopting the benefit approach are discussed: The Lindahl and Bowen model
1. Lindahl’s model: tries to solve three problems
 Extent of state activity
 Allocation of the total expenditure among various goods and services
 Allocation of tax burden
2. Bowen’s model
Bowen’s model has more operational significance, since it demonstrates that when social goods
are produced under conditions of increasing costs, the opportunity cost of private goods is
foregone.

2.1.8. Ability to Pay Theory

Slade K. (1939) came up with the theory of ability to pay which considered tax liability in its
true form, compulsory payment to the state without quid pro quo. It does not assume any
commercial or semi-commercial relationship between the state and the citizens. According to
this theory, a citizen is to pay taxes because they are able and his relative share in the total tax
burden is to be determined by his relative paying capacity .This doctrine has been in trend for at
least as long as the benefits theory. This theory was bound to be supported by socialist thinkers
because of its conformity with the ideas and concepts of justice and equity. However, the
doctrine received an equally strong support from non-socialist thinkers also and became a part of
the theory of welfare economics. The basic principle of this theory is that the burden of taxation
should be shared by the members of society on the principles of justice and equity and that these

22
principles necessitates that the tax burden is apportioned according to their relative ability to pay
theory.

2.1.9. Procedures for tax collection

It is expected that people’s tax payments should be in line with their income and they are
required to pay a tax in proportion to their level of income. On the other part of the tax
collectors, collection of tax should be time conscious and convenient and the cost of collecting
the taxes should not be high to discourage business. Alternatively, this means that the ideal tax
system in developing countries should raise essential revenue without excessive government
borrowing and should do so without discouraging economic activity and without deviating too
much from tax system in other countries (Tanzi, 2001). The procedures undertaken by tax
authority to ensure compliance are discussed as follows.
1. Identification and registration of taxpayers
Tax Identification Number (TIN) is used to identify taxpayers. Every taxpayer has a unique TIN,
which he or she is supposed to use in all his or her correspondence with the tax authority, and no
taxpayer should have more than one TIN. In countries like Uganda, they issue TIN free of charge
upon the taxpayer completing a TIN application form (Kangave, 2005).
2. Filling returns
Taxpayers are requiring filing returns within specified months of the end of their tax accounting
year. The return should be filed in quadruplicate and should contain all the particulars of the
taxpayer. All documents respecting taxation should be presented to the tax authority office where
the taxpayer has their file (Kangave, 2005).
3. Return processing
Upon receiving a taxpayer’s return, the tax authority officers examine the accuracy of the return by
determining whether the return is properly completed, whether tax has been properly computed, and
whether there are any penalty payments to be made by the taxpayer. The officer then allocates an
assessment number to the return and issues the taxpayer with a Bank Payment Advice Form, stating the
tax payable (Kangave, 2005).
4. Payment of taxes
Taxes are due on the due date of the submission of the self-assessment returns. Tax should be
paid to an authorized bank, using the bank payment advice form (Kangave, 2005)..
5. Audit and examination

23
The role of tax audits and examinations is to check the accuracy of the information that taxpayers
provide to tax authorities. The audits range from simple field and desk audits to Comprehensive
audits (Kangave, 2005).
6. Collection and enforcement
When the taxpayer has not made payment on the due date, and does not object to the tax assessed, tax
authority can enforce payment in a number of ways. The commissioner may bring a suit against the
taxpayer or request a person owing or holding money for the Taxpayer to pay the money on a
specified date or institute distress proceedings against the Taxpayer’s moveable property. In a
wider context, the issue of enforcement includes Offences committed by the taxpayer, and the
penalties for these offences. (Kangave, 2005).

2.1.10. Efficient and Effective Tax System

Efficiency is doing things right and relating them to input and what a manager does. To be
efficient, one must therefore attend to the input requirements of the job to clarification of
objective, planning, direction and control. It is making the most economic use of resources.
Efficiency in Domestic Tax Division relates the travel cost, allowances to staff and other
administrative cost, cost of application of tax laws such as garnishment and prosecution and staff
performance as a result of tax collection. Measuring efficiency is percentage resources actually
used over the resources that were planned to be used. Measuring productivity relates to process
output to input. Measuring quality involves customer satisfaction, implementing objectives and
determining whether designs, systems and solutions to problems are meeting requirements
(James, 1999).
Management is about ensuring the effective use of resources by exercising management skills to
produce results to which value can be added to satisfy customer needs. In order to be effective,
management must give attention to output of the job to perform in terms of such factors as
obtaining best possible results in the important attainment of the aims and objectives of the
organization. Effectiveness must be related to some purpose, objective or task to the performance
of the process of management and the execution of work. A criterion for assessing the
effectiveness is in terms of measuring the result. Also important is how this result is achieved
and the effect on the people and the organization. This may influence effectiveness in the longer
term. Management effectiveness results from a combination of personal attributes and
dimensions of the job in meeting the demands of the situation and satisfying the requirements of

24
the organization. Personality which is extraversion or introversion, agreeableness,
conscientiousness, emotional stability or instability, openness or close-mindedness is powerful
determinants of manager’s effectiveness (James, 1999).
Stewart (1985) suggests that effectiveness is more important than efficiency because one must be
doing the right kind of work, only then does it matter whether the work is done efficiently.
However, it must be noted that managers who want to improve should review both their
efficiency and effectiveness. Effectiveness is measured by Actual Output divided by Expected
output multiplied by one hundred.

2.1.11. Tax administration

Tax administration refers to the identification of tax liability based on the existing tax law, the
assessment of this liability, and the collection, prosecution and penalties imposed on recalcitrant
taxpayers. Tax administration, therefore, covers a wide area of study, encompassing aspects such
as registration of taxpayers, assessments, returns processing, collection, and audits (Kangave,
2005). Since taxes are an involuntary payment for government services, taxpayers have a strong
inventive to minimize their tax liabilities either through avoidance (legal) or through evasion
(illegal). Tax administration, therefore, has to secure compliance with the laws by applying an
array of registration, assessment and collection procedures. Based on the discussions so far, the
following sub section present the tax administrative issue in detail (Parameswaran, 2005).

I. Efficiency of Tax Administration

The key precondition for efficient tax administration is tax structure with minimizing distortions,
strictly tax exemptions and elimination of the differences in tax treatment of particular parts of
economy. Badly conceived or unnecessarily complicated tax structure greatly complicates the
operating function of the tax administration, while simple and transparent tax structure could
affect it in the opposite way. So, the increase of efficiency of the tax administration could be
attributed mainly to the simplification of the tax system (Mansfield, 1990).

In developing countries, tax administration can be organized respecting the functional principle
(collecting, recording, auditing, and enforcement) according to the type of taxpayers; the type of
taxes; and type of enterprises in economy. Tax administration should develop around activities
(such as recording or auditing) rather than according to the type of tax and taxpayers. More

25
generally, tax payment needs to be assessed, collected and recorded more efficiently (Mansfield,
1990).
II. Tax administration challenges
The efficiency of a tax system is not determined only by appropriate legal regulation but also by
the efficiency and integrity of the tax administration. In many countries, especially in developing
countries, small amounts of collected public revenue can be explained by either incapability of
the tax administration in realization of its duty, or with some degree of corruption. Regardless of
how carefully tax laws have been made, they could not eliminate conflict between tax
administration and tax payers. Tax administration with a skilled and responsible staff is almost
the most important precondition for realization of "tax potential" of the state. It is generally
known that tax laws and tax policy are as good as good is the tax administration (Kaldor, 1980).
Tax administrators face a formidable number of challenges in every country. In many developing
countries tax administration reforms are needed simply to achieve macroeconomic stability. In
countries with economies in transition there is a need to establish a tax administration that can
respond to the demands of a growing market economy and the resulting increase in the number
of taxpayers.

Human resource is essential in tax administration. Trained personnel are what actually most
developing countries lack and this forced them, for instance, to organize their activities under the
existing tax administration structure. During the past decade, diverse developing countries have
introduced radical reforms in their collection of taxes. In more than 15 countries, traditional tax
departments have been granted the status of semiautonomous revenue authorities, which are
designed with a number of autonomy-enhancing features, including self-financing mechanisms,
boards of directors with high-ranking public and private sector representatives, and generic
personnel systems (Robert, 2003).

2.2. Empirical literature review

Kangave (2005), discussed tax administration in Uganda’s context. It then discussed Uganda’s
tax structure, the problems faced in administration taxes, and it gave possible solutions to the
problems the author identified in his research. The author, in his research, identified corruption,
tax evasion, and inadequate resources for tax Collection poor quality of audits and inadequate
support for tax administration as problems or challenges of tax collection that have weakened the

26
ability to achieve desired revenue targets. The author did not purport to address all of the
problems. Neither does it set out to address in detail the causes of these problems. Instead, it
points out the problems. Besides, the author recommendations for solving the tax administration
problems were adopted from the Canadian tax administration system. The researcher do not
believe that the tax Canadian tax administration system should not be taken as standard for
measuring the performance of tax administration system. In addition to this, the author used
Interview with the tax officials and relied on secondary sources. However, author could have
also gathered responses from the target taxpayers to get additional information for his research.

James (1999) examined issues affecting the formulation of tax policy through the development
of actual thesiss by tax policy-makers. This was done taking account of the possibility that too
narrow an approach to this process can produce misleading conclusions and that thesiss for tax
reform may be inappropriate when the wider context of the tax system as a whole and the
environment in which it has to operate are considered. Two issues ware used to illustrate the
situation - tax compliance and tax simplification. The paper concluded that in developing tax
policy it is important to ensure that the wider context is taken into account and it also outlines a
practical approach to achieve this aim.

Amsale Ayalew (2010), from Addis Ababa University, in her 2010 research paper on assessment
of VAT Implementation in the case of bole sub city found out different challenges towards the
tax administration practice. In her study she criticizes problem of registration for VAT, failure of
issuing invoices and keeping book of accounts, fraudulent filling of credits, and weak auditing
and enforcements are the major challenges that hinders the growth of the implementation of tax.
Despite of all these problems which we also consider them as main challenges, her study is only
limited in recommending to get registered all businesses with threshold of over Br. 500,000
however. Moreover, her findings are basically described using statistical measures like skew of
the data. Such description needs a thorough statistical knowhow for that it leaves a wonder that
how many tax payers of our country especially on sub city levels are aware of statistical
measures. One of the significance of any research must create awareness to the stakeholders that
this research paper neglect the taxpayer’s capacity to understand measure of dispersion.

Revenue collection is essential issue for every government in the world as it enables the
government to acquire assets which are not liable to debt and which the government uses to

27
develop its economy. Tax administration therefore, should aim at improving on laws regarding
the registration, assessment, collection revenue, and exploiting fully taxation potential of a
country (World Bank, 1991).

The tax system in developing countries imposes high expenses on the society. Low efficiency,
high collection charges, waste of time for taxpayers and the staff, and the low amounts of
received taxes and the deviation of optimum allocation of resources are some of the features of
such systems (Farzbod, 2000).

Taxation in developing countries is a challenging topic and has attracted increasing attention in
the last two decades. During this period, many problems observed like poor administration,
failing to collect sufficient tax revenues, lack of government and economic stability (Vadde &
Gundarapu, 2012).

As stated by Vadde and Gundarapu, any developing countries, like Ethiopia, has faced difficulty
in raising revenue to the level required for the promotion of economic growth. Hence, the
country has been experienced a consistent surplus of expenditure over revenue for sufficiently
long period of time.

In Ethiopia , the Imposition of tax couldn’t still bring the required result due to a number of
reasons such as lack of clear understanding about the tax system by the tax payers, tax payers
don’t comply with their tax obligation, tax evasion, hostility between the tax payers and tax
officials, economical factors, weakness of tax collection system, being resistance to register for
VAT ,negative attitude of tax payer towards the tax system, that is, understating their taxable
income by significant amount and related. For these reasons, the actual amount of tax couldn’t be
collected properly (Tadele, 2010).

2.3. Conceptual frame work

The Researcher believes only identifying the problems do not worth (use) as finding the main
causes for those problems. In fact no single research can solve the vast national or universal
problems all alone. Problems and challenges can further be emerged and the existing ones are not
even exhaustively be addressed due to the purpose of using research, depends on the subject
matter who need their own specific information.

28
 Therefore, this research would not only identify the problems of the tax collection (Tax
compliance behavior) West Wollega Zone, Aira Woreda Revenue Authority, but also the cause
of these tax collection problems. Because the researcher believes that identifying the root cause
of the problems is the best ground to provide appropriate solution.

Independent Variable Dependent variable

Demographic factors

Institutional factors

Political factors Tax compliance behavior

Economic factors

Social factors

Individual factors

Source: own construct [2021]

The variable in the rectangle at the right side tax compliance behavior with tax system) is
dependent variable and the other variables such as (economic, social, institutional, individual,
demographic and political factors) that listed in the rectangle at left side are independent
variables. Those variables are specifically Gender ,age ,education level of tax payers,
occupation of tax payers, Tax rate ,tax knowledge ,perception on the government
spending ,political stability , tax audit, income level of tax payers , awareness of offence ,
simplicity of tax system , efficiency of tax authority, peer influence and perception on equity .

29
 CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1. Description of the Study Area

Aira town is found in Oromia national region state, West Wollega Zone Aira district, Ethiopia. It
is located at the distance of 504 km west of Addis Ababa city (WOFEC 2009). Aira is
circumscribed by Yubdo district in the north, Gulliso in the West,Ganji in the south and
northeast side and Harosebu and Dale Wabara district in east side. Aira town is one the old towns
in Ethiopia, established in the mid 19 th century. Now a day’s Aira is a woreda town established
as separate administration town in western Ethiopia. It is located west Wollega zone of Oromia
region (Oromia 1997) the town first emerged as administrative capital of empire in 1921, and
Aira District then continued to serve as political, cultural, social and economic center of Wollega
in its history (Alemu2002). Emergence of modern systems in education, health and other urban
services can be considered as tangible evidence. furthermore contraction of stone paved roads,
expansion of modern school, health facilities and introduction of telecommunication, postal and
motorized transport service in the first half of the 20th century laid important foundation for Aira
town growth.

3.1.1 Climate of the study area

Based on local climatic classification Aira district is grouped under Sami-humid climatic zones,
as meteorological data has shown that the annual mean average temperature of the town for
consecutive for five years in around 200c and the maximum temperature reaches up to 31.50c in
February .the amount of rainfall recorded in the town varies from one month to other. Generally,
June, July, August and September are months which receive high rainfall in a year. Agriculture is
the mainstay of the economy in the district; hence, it provides the largest share of the livelihood
for the population. (WOANR, 2009 E.C).

3.1.2 Population of Aira town

The total population of Aira district is 61,370 of which male population and female population is
26,799 and 34,571 respectively. As the population data source of the district indicates, about

30
7261 is male headed households MHHs, while 560 female headed households (FHHs which is
about 7821 total households (ADAO, 2010).
Figure 3.1 Map of the study

Source: Ethiopian Geographic Information System (1984)

31
3.2. Research Design

Research design is the arrangement of conditions for collection and analysis of data in a manner
that aims to combine relevance to the research purpose with economy in procedure (Kothari,
2004). Descriptive research is concerned with describing the characteristics or functions of
particular respondents, phenomenon and pattern of the study. To reach on appropriate conclusion
about the issue and in order to answer research questions the necessary data would be collected
through both qualitative and quantitative approaches. Qualitative approach would allow the
researcher to give more information, whereas, quantitative approach would allow the researcher
to determine and evaluate statistical data.

3.3. Research Approach

In general there are two research approaches. These are quantitative and qualitative research
approaches. Quantitative research approach involving numerical or statistical data and emphasis
is on the quantifiable observations of the research which is mainly objective. Whereas,
qualitative research approach is an approach to gather non-numerical data in which Words and
observations are used to express the reality as a narration where 'getting close to the data' and an
'in-depth' approach are key concerns. This type of research is mainly subjective (Abiy Z.,
Alemayhu W., Daniel T., Melese G.&Yilma S., 2009). In current study the researcher was
employed both quantitative and qualitative approaches.

As it is clearly indicated in the objective part, the main objective of the theses is studying the
factors that affecting tax compliance behavior of business tax payers with tax system in case of
Aira district. The main assignment here is discussing about the factors that affect tax compliance
behavior with tax system. Regarding such type of investigation, the best design is descriptive and
explanatory research.

3.4. Target Population of the study

The study was investigating the factors that affect tax compliance behavior of business
with tax system in the Aira district. Here, to deal with such assessment, an appropriate
population is determined. Accordingly, the researcher has identified that the total

32
population size is the total number of business tax payers of the district. In addition, 5
staff management body in this office are among those from which data was collected
through interview. With regard to the total population, out of 417, tax payers up to
February 2021. This study was focuses on the target population focusing on the
category A,B and C tax payers at Aira district. Category A taxpayer 47, category B
taxpayer’s 30 and category C taxpayers are 340. So, the total target population of this
research was 417.

3.5. Sample and sampling design

Accordingly, the researcher was used both probability and non-probability methods of sampling.
Then, the researcher considered three categories of taxpayers as clusters. Among the probability
sampling methods, the researcher employed the simple random, sampling using random lottery
method out of each three clusters to reduce the inadvertent introduction of sample bias. The
researcher was used lottery method list of all taxpayers name for category A tax payer with
number from 01-33 ,for category B tax payer with number from 01-37 and for category C tax
payer 001-403 then was prepare numbered thicket equal to the number of the population after
this thoroughly mix up the thicket and then draw amount of sample size thicket from the total
population of each category of tax payers.

The non-probability sampling methods, was again employed in the case of selecting tax authority
employees for an interview purpose only. Here, it is logically and practically impossible to
collect data from significant number of staffs through interview. Rather, the best way is to
concentrate on those who are very potential in providing explanatory responses to the questions.
Therefore, the purpose of the researcher in getting the accurate data is the initiative factor in
selecting the interviewee. It is therefore judgmental or purposive method of sampling or expert
sampling involves selecting person with known experience or expertise in an office authority
therefore the researcher was selected from Aira district revenue authority 5 top management
body of the office whose acquaint about the tax payer voluntary compliance.

33
3.6. Sample Size Determination
3.6. 1. Sample and sample Size determination
The sample size is taken from the total taxpayers of A, B. and C category of Aira district
Administration. Accordingly, Yamane (1967) has introduced a formula in which sample
can be determined from a finite population. In addition, researchers have selected the
degree of precision and level of confidence that would be preferred. And as a result the
researcher would like to be confident about 95% and that tolerated sampling error
should be only 5%. The formula the researcher use was selected and obtained from
Yamane (1967) for sample determination from tax payers only not from the tax office
authority staffs but to share their opinion through interview in the factors that influence
business tax payer voluntary compliance.

To design the sample, setting the size of the population and the target population for
the research purpose is essential. Accordingly, it is clearly indicated in the above
sections that the target population is the number of tax payers in the district and those
employees of the office. But, the question here is how many of these are enough to give
explanation for or respond so that the research questions are adequately answered. It is
known that samples should be delegate so that the conclusion to be reached can be free
of any hasty generalizations and biased nesses. Therefore, an appropriate formula has
to be taken to minimize the risk of the above two. Accordingly, Yamane (1967) has
introduced a formula in which sample can be determined from a finite population.

Where n= the sample size

34
 N= the population (473)
e= an error (0.05)
N
n=
1+ N ( e2 )
473
n= 2
1+ 473(0.05 )
n= 194
Table 1.Determination of sample size from each category by applying formula

No Sampling cluster Population of each Sample size of

category based on
each category Sampling
stratified sampling
method

1 Category A tax payer 37 37/473*194=15 Probability

2 Category B tax payers 33 33/473*194=14

3 Category C tax payers 403 403/473*194=165

Total 473 194

4 Airadistrict revenue 5 5 Non-

authority top management probability

Source: Primary data, June 2021

According to table 1 total population of this study is 473 and sample size are 194 how every
Category A taxpayer are 37 from this population size sample size is 15, category B taxpayer are
33 from this population size sample size are 14 and category C taxpayer are 403 from this
population size sample size are 165 and office top management 5.

3.7. Data Type and Methods of Data Collection

With regard to primary data gathering methods, the researcher was employed both interview and
questionnaire surveys. With regard to interview technique, the researcher employed personal

35
interview as it is helpful for the researcher to communicate and handle the data and to control or
manage the responses to be obtained from respondents. Here the researcher used structured
personal interviews for Aira district revenue authority top management body.

By other side questionnaire survey was used very intensively as it is clear that significant data
may be obtained through surveys. Here the researcher used questionnaires for target respondent
which are all category of Aira district business tax payer’s. Contents of the questionnaires were
sophisticated and verified based on a pretest that individuals engage in tax pay before embarking
into the formal survey. The questionnaire was prepared in both Afan Oromo and English
languages that helps to reduce language understanding barriers. The questionnaire was designed
to generate data on some social, institutional, economic, individual and political variables and
input output data. Based on the rationale, reputation to relate duties, social acceptance, and
knowledge of the tax payer’s category, educational background and communication with local
language used to recruit two enumerators who are assigned to all tax payer categories. They were
trained thoroughly about the objectives and the contents of the questionnaire and how to
administer it. The researcher was collected secondary data by reviewing document from revue
authority at Aira district, journal, books, articles and other research carried out on tax.

3.8. Method of Data Analysis

Qualitative and Quantitative data was collected from primary and secondary sources. The Data
gathered from close-ended questionnaires was feed into the statistical package for social science
(SPSS-Version 21) computer program with excel spread sheet and analyzed using both
Descriptive and inferential Statistics with Likert scale quantitatively. Data was described or
summarized using descriptive statistics such as frequency, percentage, and table which helped in
meaning fully describing the distribution of responses.

Various inferential statistics was used to infer population characteristics from the sample.
Pearson’s correlation coefficient was used to establish relationships between variables. A
multiple linear regression model was used to predict tax compliance behavior of tax payers using
the six category of independent variable in the study: demographic factor, institutional factor,
economic factor, political factor, social factor and individual factor. In addition the β coefficients

36
for each independent variable generated from the model was subjected to a z-test in order to test
each of the hypotheses under study. The regression model used to test is shown below:

Y=α+β1X1+ β2X2+ β3X3+ β4X4+ β5X5+ β6X6

Where Y -Tax noncompliance behavior
α -constant
β1, β2, β3, β4, β5, β6, -coefficient indicating rate of change of tax noncompliance as
demographic, institutional, political, economic, social, and individual.
X1 -Demographic factors
X2 -Institutional factors
X3 -Political factors
X4 -economic factors
X5 -social factors
X6 -individual factors
ε -error term
All the above statistical tests were analyzed using the statistical package for social science
(SPSS) version 21. All test was two tailed .significant levels were measured at 95% confidence
level with significant differences recorded at p<0.05.

3.9. Reliability

Reliability of data was checked by applying cronbach’s Alpha tests which measures internal
consistency or average correlation of items to judge its reliability. The reliability analysis was
used Cronbach’s alpha to evaluate internal consistency of the questionnaire. According to
(Kothari, 2004) a measuring instrument is reliable if it provides consistent results. If the quality
of reliability is satisfied by an instrument, then while using it we can be confident that the
transient and situational factors are not interfering.

3.10. Validity

Validity is the strength of the conclusions, inferences or propositions. It involves the degree to
which the researcher are measuring what are supposed to, more simply, the accuracy of
measurement (Adams, Khan, Raeside, & White, 2007). Certain procedures, while Qualitative
reliability indicates that the researcher’s approach is consistent across different researchers and

37
different projects. The researcher was determined the validity of conclusions through an
accurate measurement process, matching the items to the research questions and triangulating
data sources.

3.11. Ethical Consideration

This study was guarantee confidentiality and secrecy to the whole participants. The names of all
the informants was coded to conceal their identity and to maintain confidentiality.
The researcher was followed appropriate way of data collection without violating cultures and
values of respondents/informants.

38
 CHAPTER FOUR

RESULT AND DISCUSION

4.1. Introduction

This part of the paper presents and analyses the data collected to seek appropriate answer
for the questions raised to respondents, to assess the factor that affecting tax compliance
behavior with tax system in Aira district. To that end, data collected from primary sources
through interview of 5 (five) management bodies and questionnaires distributed to 194 tax
payers. Secondary data collected from the sector’s strategic document was also used to
compliment the responses found through the questionnaire. The responses to the questions were
framed in a way that basic research questions are answered. The first section presented the
demographic information of the respondents. Questions were distributed to a sample of 204
from a target population of 473. From 194 questionnaires distributed 174(90%) Questionnaires
were collected back. The result obtained and the analysis of the response to questions is
presented below.

4.2. Respondents Demographic Information

This section describe respondents demographic and their tax back ground including age,
gender ,education level, business type and their tax category. Also demography of taxpayer’s
affecting tax compliance behavior with tax system.

4.2.1. Category of tax payers

According to the federal income tax statement number 979/2016 business income taxpayers are
categorized into three categories, namely category A , B , and C based on their volume of sales
and form of business. There are three category of tax payers; category A, category B, category C
in the district.

39
 percent
category A category B category C

9%
8%

83%

Source: Primary data, January 2021

Figure 1.Tax payers’ category of respondents

The researcher shows that on the above figure 1 from 174 respondents (15) 9 % of the
respondents are from Category A taxpayers, (14) 8% of respondents are from Category B tax
payers, while (145) 83% were Category C tax payers. Those respondents were selected from
each category according to the ratio of the total employee they have. From the study most of
Aira District tax payers are category C tax payers.

4.2.2. Gender of tax payers

Male and female are participating in the business; based on this both male and female
may pay or evade tax.

percent
Male Female

24%

76%

Source: Primary data, January 2021

Figure 2 . Gender of tax payers

40
As shown in the above figure 2 From174 respondents (132) 76 % of respondents is male and
(42) 24% of respondents are female. Hence, majority of the respondents are male. This high
ratio of males reflects the structure of income earners in the study area. Female participation in
the business activity was low during study period. That is in most developing countries
including Ethiopian husbands and single males are responsible for the earning of income and
providing money. Ethiopian husbands and single males are responsible for the earning of
income and providing money for wives to purchase goods and services. And may be due to the
cultural influences that Females are not capable of running a business; their participation in
different business sectors are very minimum as compared to the participation of
males(Niway,2017)

4.2.3. Age of tax payers

Age is one of the demographic factors that determine tax payers’ compliance behavior with tax system.

percent
less than 30 year old 31-49 year old 50 year old and above

18% 15%

67%

Source: Primary data, January 2021

Figure 3. Ages of tax payers

As indicated in the above figure 3, from 174 respondents 27(15 %) of the respondents are
grouped under the age   of less than 30 year 116(67 %) of the respondents are under year

41
category of 31-49 years. Also 31 (18%) are grouped under 50 years and above Thus, from
this result the researcher conclude that majority of respondents are youth and younger.

4.2.4. Education level of tax payers

Education level of tax payers is one of the demographic factors that determine tax payers’
compliance behavior with tax system.

percent
60%

50%

40%

30% percent

20%

10%

0%
illiterate elementary school High school Diploma and
degree holder

Source: Primary data, January 2021

Figure 4. Educational level of respondents

From the above figure.4 the researchers’ categorized respondents according to their educational
background. Accordingly, 22 (13%) of the respondents are illiterate men, 92 (53%) of them are
elementary school educated men, 47 (27%) of the respondents are High school level educated
men, while 13 (7%) diploma and degree holder. From these, researcher s conclude that most of
the respondents have elementary and high school level of educated men.

4.2.5. Business type of tax payers

According to income tax regulation number 78/2002 there are three type of business in Ethiopia.
Those are merchandizing, manufacturing and service givers.

42
 percent
service giver merchandising manufacturing

14%
21%

65%

Source: Primary data, January 2021

Figure 5. Business type of respondents

From the above figure 5: The researchers categorized respondents according to their type of
business background. Based on the above figure Aira district tax payers type of business, (114)
65% of the respondents are merchandizing business, (24) 14% are manufacturing and (36) 21%
of them service givers business men

4.3. Descriptive Analysis of the variables

In order to answer the research questions factor that affects taxpayers’ compliance behavior with
tax system was taken into consideration to design the questionnaires and analyze the response of
employees of selected businessmen. For each variable, the researcher has managed to design
questions to better represent the variable from different directions. The respondents' level of
agreement represents by five point Likert scale that is strongly disagree(SD)=1,disagree(D) =2
neutral(N)=3 agree(A)=4 and strongly agree(SA)=5 and researcher used for frequency also %
for percentage. Finally, all the questions under the variables have been analyzed and interpreted
accordingly. In addition, the qualitative result gained through open ended question and document
review was added to supplement the result of quantitative part concurrently.

43
4.3.1. Reliability of the Instrument

To test the internal consistency of response to variable, reliability of the questionnaire has
been tested by using Cronbach’s Alpha Reliability Statistics. According to Nunnally and
Bernstein (1994) stated in Sixholo (2011), Cronbach’s Alpha is used to test the reliability of the
quantitative questionnaire for internal consistence. An alpha value with a lower limit of0.7 and
upper limit of 0.9 was considered acceptable

Reliability of the questionnaire

Table 2: Reliability Statistics

Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items

.878 .878 38

Source: Primary data, January 2021

According to table 2.This coefficient was found to be 0.878 Hence, the tool is reliable because
the reliability coefficients>0.7. Therefore, as it can be observed from the table above, the result
Cronbach’s Alpha of the items is beyond (α≥0.7).Hence, this result proved that the study has
very good reliability.

4.3.2. Validity of the instrument

From district tax payers 174 respondents and 5 revenue authority top management of Airadistrict
are assigned. The questionnaires were evaluated for the clarity and to avoid any inconsistency of
the instrument. The participants were getting the chance to edit the questionnaire in more
appropriate way that every respondent can internalize. And to avoid a language bias for
interview the English version of questionnaires were translated to Afan Oromo.

4.3.3. Test of Normality / Test for normal errors

Normality test of data is applied to determine whether a data is well modeled by a normal
distribution or not and to compute how likely an underlying random variable is to be normally
distributed .These are graphical (histogram and dot plot) .By looking graphs from the following

44
the researcher has realized that the histogram looks symmetric and the normal p-p plot showed
fairly consistent with that of the line and the residuals are normally distributed.

Graphical representations like histogram and p-p provide no hard evidence on how much the
fitted values deviate from the normal values (degree of non-normality). It is also mandatory to
see on the non-graphical tests of normality which are usually used by different researchers.

4.3.4. Document Review

According to secondary data gathered by researcher from Aira district revenue authority due to
tax noncompliance behavior of tax payers and inefficiency of the tax authority the amount of tax
that planned for collection at the year not collected. From the Aira District 2019 annual report
the authority planned to collect 21,289,126 but collect 15,605,518 (73%) only. According to tax
authority top management interview because of no mutual trust between tax payers and tax
collecting authorities, tax payers can be forced to comply using tax enforcement mechanisms
such as penalties and fines. Tax payers fail to comply with tax system and regulations
unintentionally due to lack of tax knowledge and poor tax awareness. From Aira district annual

45
report most of tax payers that voluntary comply to tax system and report and pay their tax at time
are those tax payers whose female and educated tax payers. According to report of the office
report political factors (political stability), economical factors (perception government spending,
tax rate), social factors (peer influence), individual factors (knowing about tax) and institutional
factors (efficient and fairness of revenue office) are positively related with tax voluntary
compliance

4.3.5. Response from interview related to Factors that influence tax payers’
voluntary compliance with tax system

The main reason of the low revenue collection performance is due to factors that affect tax
payers’ voluntary compliance with tax system at Aira district .Among the critical problem
identified from interview were the researcher asked District revenue authority top management
‘did you know why tax payer negatively voluntary compliance with tax system and what are the
challenges that face the tax payers to voluntary compliance with tax system?’ Interview with
Aira district revenue authority top management mentions that affecting tax compliance behavior
were social factors, economical factors, political factors, institutional factors, individual factors
and demographic factors.

Main reasons for the tax gap is non-compliance of taxpayers and potential factors is one of the
causes for noncompliance has been demonstrated to be economic factors are positive perception
of business tax payers on the government spending , country economic growth and income
level ,economic program and trade system and tax rate. For these reason positive perception of
business tax payers on the government spending on public service that comparable social service
from government. Tax rate refers to the rate at which a business or person is taxed on income
and it also refers to the rate of tax on goods and services. This implies that a tax rate which is
supposed as serious, equitable, and fair encourages taxpayers to comply with the tax rules and
regulations. Nation economic growth and income level of tax payers also affect tax payers’
compliance behavior with tax system. Low income level tax payers are evaded or avoid tax by
use of different system. These come from low income level tax payers are not use cash register to
audit to control tax payers. Based on the result when we upgrade the income level of tax payers;
tax payers comply with tax system.

46
Social factors are society culture and peer influence. Appreciable culture in term of tax
voluntary compliance in society was influence tax voluntary compliance. ; Peer influence means
Tax payers’ friend or relatives affect to tax compliance. Institutional factors are operational
strangeness of tax authority and simplicity of tax system; these introduce operational strangeness
of tax authority and increasing of tax affect tax payers’ compliance behavior with tax system.
Also unfairness of tax authority in term of tax assessment and tax collection affect tax
compliance behavior of business tax payers. Individual factors; tax Knowledge are factors that
affect tax payers’ compliance behavior with tax system. Most of tax payers pay tax by fearing of
penalty or fines. Most of Aira district taxpayer has awareness of penalty but not tax system. Also
the challenge that faces tax payers was political instability at the year. Since there is no good
condition working effectively for the people due to this the business men couldn’t get profit as
much as possible. It is not as such easy to convince all taxpayers to comply with the tax system.

The result of the researcher interviewed with top management of Aira District revenue Authority.
Demography of taxpayers are one of the factor that make tax compliance that explained by elder
taxpayers are more compliance than younger and youth one, educated men are more compliance
than uneducated person, female tax payers are more compliance than male tax payers.

4.3.6. Response from questionnaire related to factors that affect, tax payers
compliance behavior with tax system

In this particular section of the paper, the data related with the study was presented and
analyzed in a very detailed way. Therefore, the data which was collected from interview,
document analysis and questionnaires in relation to the title under study were
presented and discussed. For the convenience purpose, the presentation and analysis is
categorized in to six major categories: Demographic factors, institutional factors,
political factors, economical factors, social factors and finally individual factors.

4.3.7. Demographic factors

Demographic factors like age, gender, education level and type of business
are factors that determine taxpayers’ compliance behavior with tax system. With concerning the
relation of those factors with tax compliance behavior finding are difference along the different

47
studies. On the other hand the interview participants obviously recognized that tax payers
voluntary compliance was determined based the tax payers demography. Accordingly educated
tax payers were know why they pay tax and report and pay their tax according to tax system also
elder tax payers are more tax compliance than younger one.

Age is demographic factor that determine the level of tax compliance or tax non-compliance
behavior of individual taxpayers. There is a significant relationship between the level of tax
compliance and the age of the tax payers. Elder tax payers are more compliance than younger
taxpayers’. Gender was one of the important demographic factors that determine tax payers’
voluntary compliance with tax system; when studying the determinants of tax compliance level
of tax payers.

Education level was issue that has to be dealt while examining the factors affecting tax
compliance behavior of tax payers. According to interview done with revenue authority top
management type of business of tax payers has no relationship with tax voluntary compliance or
Occupation was not significantly determining compliance attitude of taxpayers. Type of business
of taxpayers has no correlation with tax voluntary compliance Kanbiro (2018).

Table 3.Age of respondents do you pay tax on time that expected to you Cross tabulation

do you pay tax on time that expected Total

to you
Yes No
% %
less than 30 7 26 20 74 27
Age of
31-49 48 42 68 58 116
responder
s 50 year and 16 52 15 48 31
above
Total 71 41 103 59 174
Source: Primary data, January 2021

Table.3. show that the question of “Do you pay or report tax on time the amount that expect to
you” is less than 30 year old respondents answer from 27 respondents 20 (74%) of them
replied “No” and 7(26%) of them answer by “Yes” we pay tax at time that expected to us. Also
31-49 year old from 116 respondent 48 (41%) of them answered by “Yes” we pay at time that
expected to us; and 68(59%) of them replied “No” But with 50 above year old respondents from

48
31 respondents 16 (52%) of them replied “Yes” we pay on time that expected to us and 15(48%)
of they said “No”. These results indicate that elder taxpayers are more tax compliance than
younger or youth taxpayers.
Table 4.Gender of respondents do you pay tax on time that expected to you Cross tabulation

Do you pay tax on time that expected to you? Total

Yes No
% %

Gender of male 47 35 85 64 132

respondents female 23 55 19 46 42

Total 70 40 104 60 174

Source: Primary data, January 2021
Table 4 above show that question for “did you pay or report tax on time the amount that expected
to you” explained from 132 male respondents 47(36%) of them said “Yes” we pay or report tax
on time that expected to us; and 85(64%) of respondents replied “No” these indicates male tax
payers are has no voluntary to pay tax at time amount expected to them.

But from 42 female respondents 23(55%) of them said “Yes” we pay or report tax on time that
expected to us and 19(45%) of them replied “No”. This indicates female tax payers were
reporting and paying tax on time and paying amount that expected to them is tax compliance. For
this reason, most of female respondent agreed to the question and female tax payers are more
compliance than male taxpayers. Female tax payers have positive tax compliance behavior than
male taxpayers.

Table 5.Education level of respondent why do you pay taxes Cross tabulation

Why do you pay taxes Tot

to avoid in the there is no it is an Don’t al
disturbance anticipatio opportunit obligation know
n of public y to evade towards the
service government
% % % % %
Illiterate 2 9 6 27 1 5 2 9 11 50 22

49
 elementary school 25 27 31 34 24 26 2 2 10 11 92
High school 3 7 36 77 2 4 4 8 2 4 47
diploma and degree holder 1 8 12 92 0 0 0 13

Total 31 18 85 49 27 16 8 4 23 13 174

Source: Primary data, January 2021

Table 5 above show that from 22 respondents of illiterate men only 6 (27%) of them were
answered the question “why you pay tax” by “in the anticipation of public service.” These
indicates all illiterate tax payers do not know why they pay tax; for these reason uneducated tax
payers was not know why they pay tax.

But, from 92 of Elementary school level only 31(33.6%) of them answered with “anticipation of
public service” and 61(66.4%) of them or most of them do not know why they pay tax. From
these result uneducated tax payers were not report or pay their tax at time. Also from 47
respondents of high School level 36 (76.5 %) replied “in the anticipation of public service.” Also
from 13 diploma and degree holder 12(92.3) of them replied by “in the anticipation of public
service”. This indicates those educated people know why they pay tax and more compliance
than uneducated tax payers. Education level of tax payers is positively related with tax
compliance. These means education level of tax payers has relationship with tax payers’
compliance behavior with tax system. In relation with the above results, the interview discussion
reveal that educated person has know about tax and it available also understand about nation
building in term of economy.

Table 6.Demographic factors that affect tax payers’ compliance behavior

Frequency Percent Mean Std

deviation
Strongly agree 17 9.8
Elder tax payers are more tax Agree 18 10.3
compliance than young Disagree 81 46.6 3.83 1.268
taxpayers strongly disagree 58 33.3
Total 174 100.0
Educated person are more tax Strongly agree 13 7.5

50
 Agree 22 12.6 3.86 1.228
compliance than un educated Disagree 80 46.0
person (illiteracy) taxpayers. strongly disagree 59 33.9
Total 174 100.0
Strongly agree 11 6.3
Female tax payers have positive Agree 30 17.2
tax compliance behavior than Disagree 76 43.7 3.79 1.246
male taxpayers strongly disagree 57 32.8
Total 174 100.0
Strongly agree 22 12.6
Your tax compliance behavior Agree 29 16.7
with tax system was related Disagree 79 45.4 3.54 1.363
with your business type (type strongly disagree 44 25.3
of business) Total 174 100.0

Total 3.75
Source: Primary data, January 2021

Table.6. above indicates there is Elder tax payers are more tax compliance than young taxpayers
accordingly, 139(80%) of respondents replied that Elder tax payers are more tax compliance than
young taxpayers but, 35 (20%) respondent replied disagree. Similarly, 139 (80%) of the
respondents agreed that Educated person are more tax compliance than uneducated person
(illiteracy) taxpayers. Where 35 (20%) of the respondents disagreed. Accordingly to question
that Female tax payers have positive tax compliance than male taxpayers 133(76%) of
respondent replied agree and 41(24) of respondents replied disagree. From the result female tax
payers are more tax voluntary complying than the male tax payers. Similarly 123(71%) of
respondents agree to question of your tax voluntary compliance with tax system was related with
your business type and 51(29) replied disagree. According to the tax payers answer and the study
result business type of tax payers affect tax payers’ compliance behavior with tax system. Based
on the result demography of tax payers with mean value 3.75 determine tax payers’ compliance
with tax system.

4.3.7.1. Institutional factors that, affect tax payers’ compliance behavior with tax system

Without institutional simplification that enables tax payers to accomplish their responsibilities
more effectively, even the most complicated service accessible to tax payers by the tax

51
administration would be lost in a sea of confusion, waste, and extensive disregard of the tax
system. A simpler tax constitution wasmake it easier for tax payers to assess their tax legal
responsibility and thus comply more fully with tax system. So the institutional factors that affect
tax compliance behavior with tax system were lack of organizational efficiency of revenue
authority and complexity of tax system is categorized in the study. From the result of interview
done with Aira district revenue top management; institutional factors were main factors that
affect tax payers compliance behavior with tax system that no efficient and effectiveness of the
revenue authority affect tax payers compliance behavior with tax system .At district level there
is problem institutional weakness in term service giving to tax payers.

Organizational weakness of the tax authority can be taken as one factor which can affect
tax compliance behavior of tax payers.

Not serving taxpayers to complete the tax returns accurately the tax authority need to have a
simple, but insufficient tax return. Because of complexity of tax system; taxpayers not report and
pay tax at time and affect taxpayers ’compliance behavior with tax system.

Table 7.Institutional factors that affect tax payers’ compliance behavior with tax system

Frequency Percent Mean Std.

deviation
Strongly agree 9 5.2
Un Fairness of tax authority is Agree 37 22.3
affect your tax compliance Disagree 85 48.9 3.67 1.209
behavior with tax system strongly disagree 43 24.7
Total 174 100.0
Not Working strongly revenue Strongly agree 9 5.2
authority regarding of service Agree 36 20.7 3.67 1.198
delivery, awareness creation and tax Disagree 87 50
collection efficiency affect your strongly disagree 42 24.1
voluntary compliance with tax
Total 174 100.0
system
Not Trust in the tax system, Strongly agree 15 8.6 3.47 1.306
assessment, and collection Agree 43 24.7

52
 Disagree 78 44.8
strongly disagree 38 21.8
procedures has affect your tax
Total 174 100.0
compliance behavior with tax
Strongly agree 16 9.2 3.46 1.315
Agree 42 24.1
Un Automation of tax system affect Disagree 78 44.8
tax payers compliance behavior with strongly disagree 38 21.8
tax system 174 100.0
Total

Total 3.56
Source: Primary data, January 2021

Table.7. above indicates there is Not Working strongly revenue authority regarding of service
delivery, awareness creation and tax collection efficiency affect your compliance behavior with
tax system Accordingly, 129(74%) of respondents replied that weakness of the tax authority
affect tax payers compliance behavior with tax system but,45 (26%) respondent replied agree.
According to the result weakness of revenue authority in term of awareness creation and tax
collection efficiencies was affect tax payers compliance behavior with tax system. Similarly, 128
(73.6%) of the respondents agreed that unfairness of tax authority is affect your tax compliance
behavior with tax system. Where 46 (26.4%) of the respondents agreed Not Working strongly
revenue authority regarding of service delivery, awareness creation and tax collection efficiency
affect tax compliance behavior with tax system. The result of the interview done with top
management of revenue authority, approved that the weakness of tax assessment and events of
tax collection, building of awareness, and enforcement of the tax system by revenue authority
affect tax compliance behavior of business tax payers.

As summarized in table 7 above 116 (67%) of the respondents have agreed and strongly agreed
as Not trust in the tax system, assessment, and collection procedures has affected their tax
compliance behavior with tax system. But 58 (33) of respondents replied as disagree. These
indicate complexity of tax system affect tax compliance behavior of business tax payers. The
respondents were asked Not Automation of tax system affect tax payers’ compliance behavior
with tax system. According to their response 116(67%) of respondents confirmed agree and
strongly agree as Automation of tax system affect tax payers compliance behavior with tax

53
system, while 58(33%) of the respondents replied disagree on whether Not Automation of tax
system affect tax payers compliance behavior with tax system.

The result of the interview done with revenue authority top management; complexity of tax
system by revenue authority was affect tax payers compliance behavior with tax system.
Complexity of tax system is positively related with tax compliance. From the above result, it is
possible to conclude that complexity in tax system in revenue authority affect the amount tax
collected by government for the development. According to interview done with revenue
authority top management categorized that one of the tax payer service strategy is tax
simplification. But most tax administrations agree that complex policies and procedures greatly
un facilitate tax compliance. Based on the above result with mean value of 3.55 institutional
factors is positively affect tax payers compliance behavior with tax system.

4.3.7.2. Political factors

Tax compliance relies not only on the enforcement effort but also on the inherent factors that
exist between individual and government. The level of enforcement also determines the level

of tax compliance. When political instability occurs, business organization challenged by

environment such as lack of security and people protest disturb working condition of business
men which makes decrease ones profit. For this reason they come to evade or avoid tax. They
assumed corruption of countries political bodies is contented to affect the voluntary and
willingness of tax payers to comply with the tax payment. Not good political system was affect
tax payers’ compliance behavior with tax system. If taxpayers were to perceive that their
interests are not well represented in political institutions and their revenue is put into not well
utilization, tax compliance behavior was decrease.

Table 8.Political factors that affect tax payer’s compliance behavior with tax system

Frequency Percent Mean Std

Deviation
Un Stable political system was Strongly agree 10 5.7
affect your attitude towards the Agree 24 13.8 3.86 1.170
tax system Disagree 86 49.4

54
 strongly disagree 54 31.0
Total 174 100.0
Strongly agree 14 8 3.44 1.261
Agree 43 24.7
Since Politics were stabile occur
Disagree 86 49.4
you are report and pay tax on
strongly disagree 31 17.8
time to revenue authority
Total 174 100.0

Total 3.65

Source: Primary data, January 2021

Table 8 above show that 140 (80%) of the respondents have agreed and strongly agreed
as a unstable political system was affect your attitude towards the tax system, but 34
(20%) of respondents replied as disagree to a unstable political system was affect your
attitude towards the tax system. From these result when politics of the country was
unstable tax payers was not pay and report their tax at time voluntarily.

The respondents were asked “Since Politics were stabile occur you are report and pay
tax on time to revenue authority”. According to their response 117(67%) of respondents
confirmed agree and strongly agree as when the country Politics was instable you
evade or avoid tax. While 57 (33%) of the respondents replied disagree on When the
country Politics was stable tax payers report and pay tax on time. Political instability of
the nation is affects tax compliance behavior of tax payers. As interview done by
researcher at the district the most tax noncompliance were challenged by political
instability of the nation these come from business men was challenged by security and
unavailable condition which come from disturbance. Based on the above result political
factors was affect tax payers compliance behavior with tax system with mean value of
3.65

4.3.7.3. Economic factors

Economic factor is relation to tax compliance behavior submit to actions which are
related with the costs and benefits of performing the events .Also economic factors the

55
factors that affect taxpayers’ compliance behavior with tax system are tax rates,
economic program, economic growth and income level and perceptions of government
spending.

Income level of taxpayers was factors determining tax compliance in current study; it classified
as economic factors because income earning capability of a person or corporate citizen is
depending on economic features of citizen .These studies examine that the higher income group
report and paying tax at time rather the lower income group; because of for lower income group tax
rate determination and tax audit not available. Low- income countries differ from their high-income
counter parts in their formal tax structures and tax collection capacity. Low-income countries
(LIC) tax bases tend to be quite narrow, reflecting the smaller share of the formal sector in
employment and business activity.

Table 9.Economical factors that affect tax payers’ compliance behavior with tax payers

Frequency Percent Mean Std

Deviation
People are getting comparable Strongly agree 13 7.5
social services from the Agree 42 24.1 3.48 1.253
government for the tax payer Disagree 86 49.4
was made tax compliance strongly disagree 33 19
behavior Total 174 100.0
Strongly agree 17 9.7 3.46 1.315
Your negative perception on tax Agree 40 23
rate was affect your tax Disagree 80 46.0
compliance behavior strongly disagree 37 21.3
Total 174 100.0
strongly agree 21 12.1
Do you agree that tax payers Agree 35 20.1 3.41 1.317
including you may commit tax
Neutral 1 .6
compliance where there is
Disagree 86 49.4
country economic change
(growth) and your income level? strongly disagree 31 17.8
Total 174 100.0
Do you agree that tax payer’s strongly agree 41 23.6 2.60 1.364
attitude including you toward Agree 69 39.7

56
 Neutral 1 .6
Disagree 45 25.9
strongly disagree 18 10.3
the general level of taxation and Total 174 100.0
tax compliance is depending on
attitudes about the desirability
of the nation economic program
Total 3.237

Source: Primary data, January 2021

According to the above table 9, the respondents were asked “if People are getting comparable
social services from the government for the tax payer was made tax compliance behavior”
119(68%) of the respondent agreed while 55(32%) of respondents replied disagree to people are
getting comparable social services from the government for the tax payer was made tax
voluntary compliance. These indicate those tax payers compliance with tax system was
determined by government spending or social and economic service from the government for the
nation. Question of “Your negative perception on tax rate was affect your tax compliance
behavior” were 117(67%) was strongly agreed and agree, while only 57(33%) of respondents
were disagreed. This result indicates that tax payer dislike when the amount if their tax rate is too
high based on their income.

Country economic growth and income level related questions were asked to know the idea of the
respondents; “Do you agree that tax payers including you may commit tax compliance where
there is country economic change (growth) and your income level?" accordingly, 117 (67%) of
the respondents have replied strongly agree and agreed respectively that “tax payers voluntary
compliance with tax system country economic growth and income level were high.” On the other
hand, 56 (32%) of respondents were disagreed. These results indicate economic growth and tax
payers’ income level has relationship with tax compliance behavior.

Also, 110(63%)of respondent agree and strongly agree for question of Do you agree that
tax payer’s attitude including you toward the general level of taxation and tax
compliance is depending on attitudes about the desirability of the nation economic
program and trade system” 63(36%) respondent replied disagree. Based on the result

57
taxpayers compliance behavior with tax system was affected by nation economic
program and trade system.

Decrease in income level of taxpayers and national economy growth is affect tax
compliance behavior with tax system. According to interview done with the revenue
authority top management tax payers income level determine tax voluntary compliance
of tax payers. When business men get good profit from their business they come to
compliance with tax system unless otherwise they evade or avoid their tax. Based on
the above result and discussion economic factors affect tax payers compliance behavior
with tax system with mean value of 3.1975.

4.3.7.4. Social factors that affect tax payers’ compliance behavior with tax
system

The Tax (non-) compliance issue is not only a question of state-society relations but also
a question of relationship between people and/ or groups of people within local
communities. Factors that affecting tax compliance behavior, culture and Peer or
referent group categorized to social factor by the researcher. Also from interview done
social factors are factors that determine tax payers’ compliance behavior with tax
system. That was Culture is considered to be a powerful environmental factor that
affect the taxpayer’s compliance behavior. Different social norms and ethical values
wascreate different incentives for tax compliance. The study conducted indicates that
culture of the taxpayers has an impact on taxpayer compliance efforts. In countries with
a tradition of high compliance with tax law; few tax payers would attempt tax evasion
strategies.

The peer influence is reflected in an individual’s expectations in relation to the sanction or

dissatisfaction of tax noncompliance behavior of tax payers. Compliance conduct and manner
towards the tax system is influenced affected by the behavior of an individual’s reference group
such as relatives, neighbors and friends.

58
Table 10.Social factors that influence tax payers’ voluntary compliance with tax system

Frequency Percent Mean Std.

Deviation
Strongly agree 2 1.1
As the culture of paying tax in a Agree 22 12.6 4.13 1.006
society is low, the level of your
Disagree 78 44.8
compliance behavior with tax
strongly disagree 72 41.4
system is also low
Total 174 100.0
Do you agree that cultural Strongly agree 5 2.9 4.15 1.048
differences have a direct impact on Agree 18 10.3
ethical values and moral   Disagree 74 42.5
development and ultimately effect strongly disagree 77 44.3
tax compliance decisions Total 174 100.0
Strongly agree 42 24.1 2.36 1.245
Your friends’ and relatives’ action Agree 86 49.4
affect your decision to voluntary Disagree 33 19.0
compliance with tax system strongly disagree 13 7.5
Total 174 100.0
You evade tax if everyone is doing Strongly agree 51 29.3 2.36 1.326
it Agree 74 42.5
Disagree 33 19.0
strongly disagree 16 9.2
Total 174 100.0
Total 3.25

59
Source: Primary data, January 2021

Table.10 above shows that when respondents were asked a question related to “As the culture of
paying tax in a society is low, the level of your voluntary compliance with tax system is also
low” 150 (86%) of them have agreed while 24 (14%) of them was disagreed. As the culture of
paying tax in a society is low, the level of tax compliance is also low.

For the question “Do you agree that cultural differences have a direct impact on ethical values
and moral   development and ultimately affect tax compliance decisions” out of 174 respondents
151(87%) of the respondents were strongly agree and agree affect your voluntary compliance
with tax system but 23(13%) of the respondent replied strongly disagree and disagree. Culturally
even though death and taxes are two things certain in life, most individuals become reluctant
when it comes to paying tax in the right amount, and time. The opinion of the Airadistrict
revenue authority top management interviewed also support this finding. In culture Positive
perception on fairness of the tax system is an important factor that is likely to influence
individuals’ tax compliance decisions

Also according to above table shows 46(26%)of respondents have disagreed and
strongly disagree for the question of “Your friends’ and relatives’ action affect your
decision to voluntary compliance with tax system” idea whether while 128 (74%) agree,
“Your friends’ and relatives’ action affect your decision to voluntary compliance with
tax system” of the respondents were confirmed the idea. The result indicates that
referent group or friend action was affect tax payers compliance behavior.

In addition 49(28%) of the respondents were reacted disagree and strongly disagree that
“You evade tax if everyone is doing it” while 125(72%) of the respondent reacted to
question agree. Based on interview done with revenue authority top management and
the above result social factor have relationship with tax voluntary compliance. Based
on the above result social factors is affect tax payers voluntary compliance with mean
value of 3.25

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4.3.7.5. Individual factors that affect tax compliance behavior with tax system

Decision concerning either to avoid or not to avoid taxes are deeply dependent on taxpayers
personal option ,personal incidental factors like tax knowledge ,and perception on offences are
therefore likely to have a significant effect on taxpayers compliance attitude. According to
interview done with revenue authority top management tax payers voluntary compliance or non-
voluntary compliance was depend on tax payers individual or personal behaviors or condition
that means how the individual know tax system and how the individual know tax penalty.

People not only have difficulties to identify with tax system, they also show unfortunate
knowledge about tax rates and basic concepts of tax system. Studies on knowledge and
evaluation have addressed people's appreciative and acceptance of tax phenomena as
well as applicable associations towards tax system detained by different groups of
taxpayers. At the same time as from the viewpoint of the community, tax evasion, tax
elusion, and tax flight all have similar negative consequences, people assess these
phenomena differently. Tax system education and tax system knowledge also plays
main role in determining taxpayers’ compliance behavior. The responses of the
respondents are summarized in the following table.

Table 11.Individual factors that affect tax payers’ compliance behavior with tax system
Frequency Percen Mean Std
t deviation
Strongly agree 11 6.3
Your Tax compliance behavior Agree 35 20.1
with tax system was depending on Disagree 88 50.6
your tax knowledge strongly disagree 40 23.0 3.64 1.217
Total 174 100.0
Strongly agree 10 5.7
Since Your understanding why you Agree 35 20.1 3.65 1.196
pay tax you voluntary complying Disagree 90 51.7
with tax system strongly disagree 39 22.4
Total 174 100.0
If there is penalty or legal Strongly agree 16 9.2
enforcement there is a possibility Agree 40 23.0 3.47 1.293
that you voluntary pay tax. Disagree 83 47.7

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 strongly disagree 35 20.1
Total 174 100.0
Strongly agree 16 9.2 3.45 1.311
Tax payers who possess an Agree 42 24.1
awareness of the penalties for non-
Disagree 79 45.4
compliance are more compliance
than those who do not possess such strongly disagree 37 21.3
awareness Total 174 100.0

Total 3.55

Source: Primary data, January 2021

Table 11 Shows that the general results of tax Knowledge regarding of non-tax compliance
behavior. Accordingly majority of the respondents 128(73.5%) replied agree and strongly agree
on the question of “Your Tax compliance behavior with tax system was depending on your tax
knowledge”, while insignificant numbers of respondents, 46 (26.5%) replied disagree and
strongly disagree. The result indicates that the tax payers who know tax system were more
comply with tax system than tax payers who do not know tax system.

Also for the question of “Since you understand why you pay tax you complying with tax system”
129(74.1%) of respondent replied agree and strongly agree but 45(25.9%) of respondent replied
strongly disagree and disagree. According to interview result the taxpayers of the Aira district
have not well understood the concept of tax compliance.

Also according to above table shows regarding the question of “If there is penalty or legal
enforcement there is a possibility that you voluntary pay tax” 118 (67.8%) of the respondents
strongly agree and agree, while only 56 (32.2%) of the respondents responded disagree and
strongly disagree. Also, 116 (66.6%) of the respondents replied agree and strongly agree that
“Tax payers who possess an awareness of the penalties for non-compliance are more compliant
than those who do not possess such awareness” while, 58 (33.4%) of the respondents. replied
disagree and strongly disagree. The finding indicated that awareness about offence and penalty
are important variables in explaining taxpayers’ compliance with tax system. Taxpayers who
know about fines and penalty were more compliance than whose do not know fines and penalty.
Generally individual factors were affect tax payers compliance behavior with tax system with
mean value of 3.55.

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4.4. Inferential statistics

Inferential statistics make inferences about the population based on random sample. The
researcher used parametric inferential statistics that T-test, ANOVA, Pearson’s correlation and
linear Regression.

4.4.1. Correlation statistics

Correlation statistics is method of assessing the relationship between variables/factors.

To be precise it measures the extent of association between the ordering of two random
variables. Thus the study analyzed the relationships that are inherent among the
independent and dependent variables as well as among the independent
variables/factors. The results regarding these were summarized and presented in table
below.

Table 12.Correlations statistics

TVC DEMOG INSTIT POLOT ECONO SOCIO INDIVID

Pearson Correlation 1
TVC Sig. (2-tailed)
N 174
Pearson Correlation .225** 1
DEMOG Sig. (2-tailed) .003
N 174 174
Pearson Correlation .684 **
.129 1
INSTIT Sig. (2-tailed) .000 .090
N 174 174 174
Pearson Correlation .429 **
.159*
.349** 1
POLOT Sig. (2-tailed) .000 .036 .000
N 174 174 174 174
Pearson Correlation .578** .107 .465** .348** 1
ECONO Sig. (2-tailed) .000 .158 .000 .000
N 174 174 174 174 174

SOCIO Pearson Correlation .302** .124 .168* .139 .113 1

Sig. (2-tailed) .000 .104 .026 .067 .137

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 N 174 174 174 174 174 174

Pearson Correlation .682** .145 .871** .332** .459** .147 1

INDIVI
Sig. (2-tailed) .000 .057 .000 .000 .000 .054
D
N 174 174 174 174 174 174 174
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
Source: Primary data, January 2021

As show on the above table 12, Pearson correlation result indicates demographic factors was
positively and significantly correlated to non-tax compliance behavior (r=0.225, p<0.05).Thus
demographic factors had 22.5 % positive relationship with non-tax compliance behavior.
Institutional factors was the second component to be positively related with non-tax compliance
behavior (r=0.684,p<0.05) an indication that institutional factors weakness of tax authority, un
fairness of tax authority and complexity of tax system had 68.4% significant positive
relationship with tax non-compliance behavior. Political issue, political instability was
significantly associated with tax non-compliance as shown by (r=429, p<0.05) implying that
political issues political instability had a 42.9% positively relationship with tax non-compliance
behavior.

Economic factors was significantly correlated to tax noncompliance (r=0.578, p<0.05).

Therefore, economic factors that perception on tax rate, perception on government spending,
Country economic growth and income level of tax payers and economic program had 57.8%
positive relationship with tax noncompliance behavior. Social factors was positively and
significantly correlated to tax noncompliance behavior(r=0.302,p<0.05).Thus social factors that
culture of paying tax in the society and peer influence had 30.2% positive relationship with tax
noncompliance behavior. Finally individual factors was significantly and positively associated
with tax noncompliance behavior (r=0.682, p<0.05) implying that individual factors that tax
knowledge and perception on penalty had a 68.2 % positive relationship with tax noncompliance
behavior.

When it comes to relationship between independent variables incorporated in the model

demographic factor is positively correlated with political factor with Pearson correlation
coefficients of 0.159 at 5% since p value of 0.036 that less than 0.05.Also institutional factor is
positively correlated with political factor, economical factor, social factor and individual factor

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with Pearson correlation coefficients of 0.349, 0.465, 0.168 and 0.871 at 5% since p value of
0.000, 0.000,0.026 and 0.000 that less than 0.05 respectively.

Political factor is positively correlated with institutional factor, economic factor, demographic
factor and individual factor having Pearson correlation coefficients of 0.349,0.348,0.159 and
0.332 and statistical significant at 5% because sign of 0.000,0.000,0.036 and 0.000 is less than
5% respectively .

Economical factor is positively correlated with institutional factor, political factor, and individual
factor with Pearson correlation coefficient of 0.465, 0.348 and 0.459 at 5% since p value of
0.000, 0.000 and 0.000 that less than 0.05 respectively.

Social factor is positively correlated with institutional factor with Pearson correlation coefficient
of 0.168 at 5% since p value of 0.026 that less than 0.05 respectively.

Individual factor is positively correlated with institutional factor, political factor and economic
factor with Pearson correlation coefficient of 0.871, 0.332, and 0.459 at 5% since p value of
0.000, 0.000 and 0.000 that less than 0.05, respectively.

4.4.2. Multicolinearity statistics

Multi co linearity means that there is linear relationship between explanatory variables which
may cause the regression model biased (Gujarati 2004). Multi co linearity can also be identified
by the variance inflation factor (VIF) technique which is a statistic calculated for each variable in
the model.

Table 13.Multi Co linearity Statistics

Variables Tolerance VIF

DEMOG .956 1.046

INSTIT .232 4.305
POLOT .819 1.221
ECONO .734 1.362
SOCIO .955 1.047
INDIVI .236 4.230
Dependent variable: tax voluntary compliance

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Source: Primary data, January 2021

Hence the VIF result in table 15 as none of the VIFs is excessively high, suggests that there is
perfect or strong co linearity between the explanatory variables. As concluding analysis almost
some variables have high correlation power and this implies multi co linearity problem in the
explanatory variables selected in the affecting tax payers’ non-compliance with tax system.

4.4.3. Regression

A multiple linear regression model was used to predict tax non-compliance in the study. The
prediction was carried out basing on the effect of the six independent factors: demographic
factor, institutional factor, political factor, economic factor, social factor and individual factor. In
addition the β coefficients for each independent variable generated from the model was subject to
t-test, in order to test each of the hypotheses under study. The study thus came up with a model
summery and regression model as presented in the table below.

Table 14.Model Summary

Mode R R Square Adjusted R Std. Error of the Durbin-Watson

l Square Estimate
1 .792a .628 .614 2.198 1.973

a. Predictors: (Constant), Individual factors, Demographic issue, social factors, Political

factors , Economic factors , Institutional factors

b. Dependent Variable: Tax non-compliance behavior

Source: Primary data, January 2021

According to table 14the finding indicated that the model correlation coefficient was 0.792
which indicated that the model predicted over 79 % of the range in the independent variable.
This relationship was significant considering the coefficient of determination value of 0.628.

Also the adjusted R squared is 0.614 which indicates that about 61.4 percent of the variability
of tax noncompliance behavior is explained by the specific factors (demography ,institution,
politics, economic, social and individual).In other words about 61.4 percent of the change in the

66
dependent variable is explained by the independent variables that are included in the model and
the remaining 38.6 percent change in the tax compliance behavior are because of other factors
that are not included in the model. The model was adequate in this case as indicated by the
Durbin Watson statistic value of 1.973 which is in the range of 1to 2.

4.4.4. Model Result

The dependent variable is tax voluntary compliance and explanatory variables are demographic
(DEMOG), institutional (INSTIT), political (POLIT), economical (ECONO), social (SOCIO)
and individual (INDIVID).The beta values (β) explain how much the variation in the dependent
variable is explained by the estimated linear regression model. The regression based on the
above model produce result shown on the following table

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Table 15.Coefficient model

Model Un standardized Standardized T Sig.

Coefficients Coefficients
B Std. Error Beta
(Constant) .737 1.064 .693 .489
Demographic issue .071 .040 .086 1.777 .077
Institutional factors .180 .073 .241 2.460 .015
1 Political factors .224 .093 .125 2.395 .018
Economic factors .224 .046 .271 4.914 .000
social factors .201 .060 .163 3.369 .001
Individual factors .207 .074 .270 2.785 .006
a. Dependent Variable: Tax voluntary compliance

Source: Primary data, January 2021

From Table 15 the researcher found the following estimated regression equation.

TCB=0.737 +0.180(INSTIT) +0.224(POLOTI) +0.224(ECONO)+0.201(SOCIO)
+0.207(INDIVID)

The regression results in table 15. Show that each of the predicted parameters in relation to the
independent factors was in significant β1=0.086(p-value =0.077 which is greater than α=0.05)
which implies that we reject the null hypotheses stating that Demographic factors positively
significant relationship with tax noncompliance. Furthermore the effect of demographic factor
was stated by the t-test value 1.777 which implies that effect of demographic factor is over 1
times that of the error associated with it.

The table also show that β2=0.180(p-value =0.015 which less than α=0.05) which indicate that
we accept the null hypothesis stating that Institutional factors has significant relationship with
tax non-compliance behavior. This implies that for each unit increase in institutional factor, there
is up to 0.180 unit decrease in tax non-compliance. Also the effect of institutional factor is shown
by the t-test value of 2.460 which implies that the effect of institutional factor is over 2 times that
of the error associated with it.

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The value of β3=0.224 (p-value =0.018 which is less than α=0.05) which implies that we accept
the null hypothesis stating that there is significant relationship between political factor and tax
voluntary compliance. This indicates that for each unit increase in politics there is up to 0.224
units decrease in tax non-compliance behavior. The effect of political factor is stated by the t-test
value = 2.395 which indicates that the effect of political factors is over 2 times that of the error
associated with it.

The finding also showed that β4 was 0.224(p value=0.000 which is less than α=0.05) which
implies that we accept the null hypothesis that states that there is significant relationship between
economic factor and tax non-compliance behavior. This implies that there is up to 0.224 unit
decrease in tax non-compliance behavior for each unit decrease in economic factor. Also the
effect of economic factor is shown by the t-test value of 4.914 which implies that the effect of
institutional factor is over 4 times that of the error associated with it.

The value of β5=0.201 (p-value =0.001 which is less than α=0.05) which implies that we accept
the null hypothesis stating that there is significant relationship between social factor and tax
noncompliance. This indicates that for each unit decrease in social factor there is up to 0.201
units decrease in tax compliance behavior. The effect of social factor is stated by the t-test value
= 3.369 which indicates that the effect of social factors is over 3 times that of the error associated
with it.

The finding also showed that β6 was 0.207(p value=0.006 which is less than α=0.05) which
implies that we accept the null hypothesis that states that there is significant relationship between
individual factor and tax non-compliance. This implies that there is up to 0.207 unit decrease in
tax non-compliance for each unit decrease in individual factor. Also the effect of individual
factor is shown by the t-test value of 2.785 which implies that the effect of individual factor is
over 2 times that of the error associated with it.

4.4.5. Discussion of the findings

As stated by hypothesis 1 that Demographic factors have significant relationship with tax non-
compliance research findings show inconsistency with the hypothesis hence demographic factor

69
was not significantly correlated with tax non-compliance (coefficient estimate β1=0.086,p value
=0.077). Based on the result hypothesis H1 is rejected.

Hypothesis 2 states that Institutional factors have significant relationship with tax non-
compliance. Research findings are agreement with the hypothesis (coefficient estimates
(β1=0.241, p value =0.015). Thus the hypothesis H2 is accepted. Institutional factors that
weakness of tax authority and not efficiency tax authority affect tax payers’ compliance behavior
with tax system. Hence, it is Important if a good tax system should become fair and equitable to
tax payers regardless of the type of tax payers. In helping to taxpayers to complete the tax returns
accurately, the tax authority need to have a simple, but enough, tax return (Ahmed & Kedir,
2015). Efficiency and effectiveness of the authority in improving the tax assessment and
procedures of tax collection, building of awareness, enforcement of the tax system influence
positively the voluntary tax compliance behavior of tax payers (Mehariet al, 2017).

Hypothesis 3 states that a political factor such as political stability has positive relationship with
tax non-compliance. Research findings are agreement with the hypothesis (coefficient estimates
(β1=0.125, p value =0.018). Thus the hypothesis H3 is accepted .Political factors that political
stability factors that affect tax payers compliance behavior with tax system. When political
instability occurs, business organization challenged by environment such as lack of security and
people protest disturb working condition of business men which makes decrease ones profit. For
this reason they come to evade or avoid tax. They assumed corruption of countries political
bodies is contented to affect the voluntary and willingness of tax payers to comply with the tax
payment. Also according to interview result political instability of the country affect tax
compliance behavior with tax system.

Hypothesis 4 states that economic factors have significant relationship with tax non-compliance.
Research findings are agreement with the hypothesis (coefficient estimates (β1=0.271, p value
=0.000). Thus the hypothesis H4 is accepted .Economical factors that negative perception on tax
rate, negative perception on government spending and economic growth of the country and
income level of tax payers was affect tax payers compliance behavior with tax system. Many
researcher states that Perception on tax rate was significantly correlated with tax non-compliance
attitude (Kanbiro, 2018). There is a negative and significant relationship between perceptions of

70
government spending and tax non-compliance (Niway, 2015). Negative perception of
government spending is positively correlated with tax non-compliance (Tadesse, and Goitom,
2014). For instance, progressive tax rates might encourage the higher income group to evade
rather than the lower income group because of high tax rates which makes their taxable income
high, consequently, making the tax liabilities much higher than lower income group.

Hypothesis 5 states that social factors have significant relationship with tax non-compliance.
Research findings are agreement with the hypothesis (coefficient estimates (β1=0.163, p value
=0.001). Thus the hypothesis H5 is accepted .Social factors that peer influence and cultural
difference of the society was affect tax payers voluntary compliance with tax system. Culturally
society has negative perception on fairness of tax collector always been broadly regarded as the
most significant criteria in judging a tax system. The problem of unfairness is that a tax system
allows taxes to be shifted from dishonest to honest taxpayers. Non-compliance actions and
attitudes towards the tax system may consequently be affected by the manners of an individual’s
reference group such as relatives, neighbors and friends. Consequently, if a taxpayer knows
many people in groups important to him who evade taxes, his/her commitment to comply was
weaker. Decisions either to evade or not to evade tax some times are affected by family members
or friends (kanbiro 2018).

Hypothesis 6 states that individual factors have significant relationship with tax non-compliance.
Research findings are agreement with the hypothesis (coefficient estimates (β1=0.270, p value
=0.006). Thus the hypothesis H6 is accepted. Individual factors that lack of tax knowledge and
awareness on tax penalty was affect tax payers’ compliance behavior with tax system. According
to Saad (2014) tax knowledge and education has a negative and significant impact on tax
compliance; when there is an improvement in educational background of the taxpayer, a decline
in tax compliance attitude could be expected. This result shows positive relationship between
penalty and tax compliance the structure of penalty system may be different in the countries: can
be various types of penalty rate by the different tax subjects or different structure of penalty rates
by the types of taxpayer. So penalty rates have been independently applied by the different tax
subjects like the individual income tax, capital income tax, value added tax etc (Hyun, 2005). All
tax proclamations of Ethiopia proclaim that taxpayers that fail to fulfill the requirements of tax
liability are chargeable with penalties ranging from financial penalties to custody which is high.

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 CHAPTER FIVE

SUMMERY, CONCLUSION AND RECCOMENDATION

5.1 Summary of Major Findings

The study was conducted to Assess factors that affect taxpayers’ compliance behavior with tax
system in Aira district. In order to attain these relevant data were gathered through
questionnaires and interview with 179 three category taxpayers and revenue authority
management body. The data were analyzed with the aid of descriptive statistics (frequency
percentage and table) and inferential statistics that T-test, ANOVA, Pearson’s correlation and
linear Regression.

Based on the discussion of the data the following summaries of finding are drawn. According to
this study, the result found interview and questionnaire supported by documents review indicates
that there is tax gap at district regarding of culture to evade and avoid taxes problem; the main
reason is factors that affect tax payers’ compliance behavior with tax system.

Factors affecting tax compliance behavior

The economic development of any country depends on the revenue generated for the
accessibility of infrastructure and alternative social services in their given country but because of
some determinants tax payers evade tax. According to study of Ahmed and Kedir (2015)
individual do not like paying taxes and they take a verity of action to reduce their tax liability.
According to finding factors that affect tax compliance behavior were demographic issue
institutional issue, political issue, economic issue, social issue and individual issues. The
outcome attained based on the examination of the data collected from the data collected from the
respondents resulted in the following result.

A. Demographic factors

Demographic factors that affect tax compliance behavior with tax system are age, gender,
education level and occupation. Findings on gender indicated that female tax payers more
comply than male taxpayers, elders tax payers are more compliance than youth and younger tax

72
payers also educated person tax payers are more voluntary comply with tax system. Based on
above indication gender of tax payers is affect tax compliance behavior. Based on the data
gathered from Aira district revenue authority most of tax payers (76.3%) are male and (23.7%)
are female. Female tax payers are more compliance than male tax payers. These indicate gender
of tax payers has significant relationship with tax compliance. Also according to the study most
of tax payers uneducated man that is (89.5%) illiterate and learn up to 12 th but (10.5%) are
diploma and degree older. Educated person are know why it pay tax and more tax voluntary
comply than uneducated person. In term of age most of tax payers are younger with 30-49 year
old (79.8%) and those elder one are (14.1%) and occupation of tax payers has no relationship
with tax non-compliance. According to descriptive statistics result demographic factor was
determine tax payers non-compliance with tax system but with the result of inferential statistics
demographic factors not determine significantly tax payers compliance behavior with tax system.

B. Institutional factors

Institutional factor are organizational weakness, complexity of tax system and unfairness of
revenue authority that affect taxpayers compliance behavior with tax system. Regarding of
revenue authority and Tax system ought to be as heavy as possible for the rationale respondent
response replied agree organizational weakness , complexity of tax system and unfairness of
revenue authority by 74 % and 66 % affect tax compliance behavior. The system of revenue
authority used to collect tax indicates not efficiency, effectiveness and fairness of the
organization. The position of the tax authority in minimizing the tax gap and increasing
voluntary compliance is not clearly significant.

In glow of this fact the survey result showed the tax authority of the district
administration is not efficient and effective in different aspects such as civilizing the tax
estimation and gathering procedures, creating awareness, enforcing the tax system,
providing services, and information regarding tax. Weakness of organization in tax system, not
efficient and fairness of revenue authority in tax system affect tax payers’ compliance behavior
with tax system. Based on the inferential statistics result institutional factors are affects
positively and significantly tax payers’ noncompliance with tax system. Institutional factors have
significant relationship with tax noncompliance. Research findings are agreement with the

73
hypothesis (coefficient estimates (β1=0.241, p value =0.015). Thus the hypothesis H2 is
accepted. Institutional factors that weakness of tax authority and not efficiency tax authority
affect tax payers’ compliance behavior with tax system.

C. Political issue

Political instability occurs in the country was affect taxpayers compliance behavior with tax
system. The survey data also revealed that majority of the respondents (80.4 %) do have a
reservation not good political system was affecting your attitude towards the tax system.
According to interview with tax authority top management when political instability occurs at
the country the work condition for business man not available for this reason profitability of tax
payers are very low .When business men profitability was not achieved tax payers evade or avoid
tax. Tax voluntary compliance relies not only on the enforcement effort but also on the intrinsic
factors that live between individual and government.

The level of enforcement also determines the level of tax compliance. Based on the inferential
statistics result political factors are affects positively and significantly tax payers’ compliance
behavior with tax system. Political factor such as political instability has positive relationship
with tax noncompliance. Research findings are agreement with the hypothesis (coefficient
estimates (β1=0.125, p value =0.018). Thus the hypothesis H3 is accepted .Political factors that
political instability factors that affect tax compliance behavior with tax system.

D. Economic issue

Economic factors that affect taxpayers’ compliance behavior with tax system are negative
perception on the government spending, negative perception on tax rate, economic change
(growth), and economic program and tax payers’ level of income. From this study it is
accomplished that the tax rate is a lot higher than what most taxpayers would similar to it to be
most of the respondents’ sense people should pay taxes according to their capacity. The study
also indicated that almost all of the respondents pay tax based on their ability to pay. According
to the study taxpayers wastend to evade tax if they perceive that the government spends tax
money unwisely. For the question of People are getting incomparable social services from the
government for the tax payer was made tax noncompliance 68.4 % respondent replied agree.

74
Based on the inferential statistics result economic factors are affects negatively and significantly
tax payers’ compliance behavior with tax system. Economic factors have significant relationship
with tax noncompliance. Research findings are agreement with the hypothesis (coefficient
estimates (β1=0.271, p value =0.000). Thus the hypothesis H4 is accepted .Economical factors
that negative perception on tax rate, negative perception on government spending and not good
economic growth of the country and income level of tax payers was affect, tax payers’
compliance behavior with tax system.

E. Social factors

Social factors are including tax payers’ society cultural difference in term of tax and peer or
referent group affect. Findings regarding to society culture to negative perception of fairness and
equity on tax collector was affect tax compliance behavior with tax system. As stated as the
culture of paying tax in a society is low, the level of your compliance behavior with tax system is
also low (86.2%) To this end, the matter of noncompliance is not only a question of state-society
relationships but also a question of relationship between citizens or groups of citizens within
local communities. There is an existing social relationship between the society and this
friendship affects the members of the society in complying with the tax system.

Based on the inferential statistics result social factors are affects positively and significantly tax
payers’ compliance behavior with tax system. Social factors have significant relationship with
tax compliance behavior. Research findings are agreement with the hypothesis (coefficient
estimates (β1=0.163, p value =0.001). Thus the hypothesis H5 is accepted .Social factors that
peer influence and cultural difference of the society was affect tax payers compliance behavior
with tax system.

F. Individual factors

An individual factor includes taxpayers’ lack of tax knowledge and tax payers’ awareness of
penalty or fines directly affects tax voluntary compliance. According to Mohani (2001)
Decisions concerning either to evade or not to evade taxes are a great deal dependent on
taxpayer’s personal decision. Study regarding to tax knowledge for the question of the person
who know why it pay tax were more compliant than the other whose could not know it 74%

75
respondent replied agree. The study results on fines and penalties confirmed that majority of the
respondent agreed they comply by fear of fines and penalties 67.8% of respondent replied agree
to the researcher question if there is no penalty or legal enforcement there is a possibility that
you may not pay Tax.

Based on the inferential statistics result individual factors are affects positively and significantly
tax payers’ compliance behavior with tax system. Individual factors have significant relationship
with tax compliance behavior. Research findings are agreement with the hypothesis (coefficient
estimates (β1=0.270, p value =0.006). Thus the hypothesis H6 is accepted. Individual factors that
lack of tax knowledge and awareness on tax penalty was affects tax payers’ compliance behavior
with tax system.

5.2. Conclusion

This study was undertaken to assess factors affecting tax payers’ compliance
behavior with tax system in Aira District. However, this study delimits itself to the
district level because in previous research such kind of study could not do in the
district level where there is problem of tax negative voluntary compliance more
existed.

For achieving what is aimed, primary data was collected using Likert scale questionnaires and
analyzed using descriptive statistical tools such as frequency percentage and table. Also
inferential statistics like T-test, ANNOVA, Pearson’s correlation and linear Regression.

Six potential factors were considered for these study namely demographic factors, institutional
factors, political factors, economical factors, social factors and individual factors. From these
potential determinants the findings of the investigation showed that tax compliance behavior was
affected by Institutional factors (organizational not efficiency ,complexity of tax system and un
fairness of tax system),political factors (political instability), economical factors(perception on
government spending, perception on tax rate, economic growth and income level and economic
program and trade system) social factors ( Social cultural difference and peer influence) and
individual factors (lack of tax knowledge and awareness of penalty). According to descriptive
statistics analysis all Variable Demographic, institutional, political, economic, social and

76
individual factors are positively affect tax compliance behavior. But according to inferential
statistics only five variable institutional, political, economic, social and individual factors were
positively and significantly affect tax compliance behavior.

Demographic factors that age of tax payers, education level of tax payers, gender of tax payers
and type of business of tax payers are significantly relationship with tax noncompliance.
Institutional factors that not efficiency of revenue authority, weakness of revenue authority are
positively relationship with tax noncompliance. Political factors that political instability was
significant relationship with tax noncompliance. Economic factors that perception on
government spending, tax rate, not good economic growth of tax payers and trade system of the
country affects tax payers’ compliance behavior with tax system. Social factors that social
cultural difference and peer influence are significantly relationship with tax noncompliance .Also
individual factors that individual lack of tax knowledge and not knowing about penalty are
significantly relationship with tax noncompliance.

5.3. Recommendations

Based on the finding of this study, the researcher came up with the following recommendation s
to encourage tax payers’ to comply with tax system among business tax payers.

For Oromia Regional state revenue authority

 The function of tax awareness and perception of tax payers towards the tax system is
essential for tax compliance decision therefore the Oromia Region revenue authority
should constantly work on tax payer’s awareness creation and tax knowledge by giving
adequate tax training and education to tax payers and zonal and woreda revenue
authority officers.
 Awareness creation activities for the leaders and employees for the District Revenue
authority about the concept of tax collection technique, efficiency, fairness of tax system
 To solve the problem of inefficiency and complexity of tax system federal or regional
tax authority need to consider the use of E filing system so as to help tax payers minimize
tax noncompliance.
 In term of social services provided by the government to the public, the study
findings confirmed that when tax payers satisfied with government spending they are

77
 comply with tax system. Also it is significant to make awareness about tax system how
the government spends tax income by disclosing the government budget and expenses the
total amount collected from the tax to citizens transparently.
 Giving training should contain client service training and cross practical training
for employees so that they can have an understanding of the entire system of tax
administration.
 The organization needs to give trainings & capacity building training to taxpayers formal
or informal by using of other mass media(radio, television and social media)
 Political stability is one of the factors that influence tax payers’ compliance with tax
system for this reason the government should fight corruption, build democracy and try to
spend the tax collected wisely for basic facilities such as education, health, safety, and
public transportations.
 To solve the noncompliance in term of demographic factor that gender and education
issue encourages female participation in the business sector. Also encourage educated
person to participate in the business sector.
 Upgrade the culture of society to tax compliance behavior with tax system by making
promotion in term of tax.
 To solve individual tax noncompliance giving training on the rule and regulation of tax
and penalty.
 Economic factor is factors that influence tax payers voluntary compliance with tax
system based on the study government up grade economic program and economic growth
to solve the problem of individual income level.
For District Revenue Authority

 Encouraging tax equity and fairness is not achieved only through levying equal
taxes on individuals who have equal income but also each taxpayer should pay
according to his ability- to pay. The question of equality or impartiality is not
only about dealing with existing taxpayers but also worried with people outside
the tax system. In general the tax should aim to insure tax fairness and equity so
as to support noncompliance behavior.

78
 Non voluntary tax payers may be encouraged if they believed that the current tax system
is unfair and inequitable or if they perceive others escaping tax burden. This can be done
by encouraging and helpful truthful and faithful taxpayers by adopting blond competition
and fair treatment. For this reason District Revenue authority should maintain tax fairness
from side to side treating all tax payers fairly at the time of levying tax
registration ,collection and so on .Also Bringing non tax payers to tax system has to be
considered as a measure of ensuring tax equity and this can also protect honest and loyal
tax payers. In general the tax authority should try to ensure tax fairness and equity so as
to encourage voluntary compliance behavior
 The organization needs to give trainings & capacity building training to taxpayers formal
or informal by using of other mass media(social media)
 The function of tax awareness and perception of tax payers towards the tax system is
essential for voluntary tax compliance judgment; therefore the district revenue authority
should constantly work on tax payers’ awareness creation and tax knowledge by giving
sufficient tax education to taxpayers.
 According to findings perception on tax rate and government spending the factors that
influence tax payers voluntary compliance with tax system; to avoid negative perception
on tax rate and government spending make transparency
 Revenue authority should also support trustworthy tax payers through special
mechanisms such as by giving recognition for them; this waseventually encourage
taxpayers’ voluntary compliance with tax system.
 An effective compliance program requires tax administration to have sufficient powers
that enable it to enforce compliance effectively .Tax voluntary compliance is promoted
not only by an awareness of rights and expectation of a fair and efficient treatment but
also by clear simple and user friendly administrative system and procedures. Tax system
that depend on ad heck administrative procedure rapidly become discredited and
endanger compliance .to encourage compliance it is equally important that tax authority
administer the low fairly .function such as tax assessment ,collection, awareness creation,
providing information and enforcement has to performed effectively so that it was
perceived as strong and power full by the tax payers.

79
  One of the areas to stress on while dealing with the issue of voluntary compliance is the
development of persuasive communication between the tax authorities and tax
payers’ .The most effective tool for making people more positive is to empower them
with knowledge about tax and fines. It is believe that there is no better tool for
government to positively influence the tax payers than to provide them with knowledge
on how tax payers’ money utilized. Any resistance or inability by government to
communicate this most important area waslead to possible speculation and resistance.
Tax payers’ attitude toward tax and penalty of tax is changed mainly through sustainable
awareness creation program.
 Tax voluntary compliance was developed only with participation of the society by
upgrade the culture. Merely relying on stick approach has no far reaching
outcome .Hence the government and tax authority have to capitalize on responsible
citizens’ approach in their effort of bringing about tax voluntary compliance. Tax evasion
and noncompliance is inevitable in every society or nation Culture. Therefore it is
worthwhile to recommend that the above approach has to be backed by legal enforcement
and the effort must complement each other.

For Future Researchers

Any study cannot be necessarily free from limitations to some extent .Accordingly; there
are some limitations in present study. At first it focused only on factors affecting tax
payers’ compliance behavior with tax system in Aira district West Wollega oromia
region. Thus the finding of this study can be generalized for all business tax payers in
Aira district but it may be difficult to generalize this findings about all taxpayers others
District and zones in Oromia. Hence this study can be improved it was done at other
district and zonal level

District public sectors were poor researched area because of this different strategy proposed were
not supported with enough required resources. This brings failure in tax system implementation
and large tax payers on the ground were dissatisfied with understanding of tax system. Still the
problem was not well known, media and researchers are far from them; because of this it needs
further investigation on the extent change tax noncompliance at district level to solve tax evasion
and avoidance.

80
Explanatory variables of this study can explain tax noncompliance at an extent of 61.4%, as
Showed by the result of adjusted R 2 was 0.614. There are about 38.6% other than explanatory
variables of this study which can affect tax payers’ compliance behavior with tax system. Thus
researcher ought to recommend that a study should be done on the assessment of factors that
affect all category tax payers’ noncompliance with tax system; find out assessing factors that
affect tax payers’ noncompliance with tax system by their category.

81
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 APPENDIXES
Appendix .1

QUESTIONNAIRE

Great Land College

Department of Management

Questionnaire was filled by taxpayers

Dear respondents,

The general purpose of this research is to study about Assessment of the problem of Tax
Collection practices on Category of “A” Tax Payers in case of Aira Woreda Revenue
Authority Branch. At the moment the key advantage of this research is to study in Ethiopia, like
any other developing countries, faces complexity in raising tax revenue to the level required for
the promotion of economic growth.

I am currently conducting this research as part of my fulfillment for the master of business
administration degree at Great Land College. It was a great contribution if you may complete all
the items covered in the questionnaire since your opinion is of utmost importance. In view of this
kindly answer the following questions to the best of your knowledge.

This questionnaire wasonly take a few minutes to complete. Please be assured that your response
was treated with the strictest confidence and the information that you provide is only for
academic purposes. Thank you for your time and cooperation towards making this study a
success.

Thank you

For additional information

Edosa Gudina

Hand phone _________________________

Section I: Background information of respondents. Make circle on the letter you want to choose!

I. Tax payer category

1. A 2.B 3.C

II. Age :( in years)

1. Less than 30 2. 31 to 49.

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3. 50 years or more

III. Gender:

1. Male 2. Female

IV. Educational status:

1. Illiterate, 2. Elementary 3. High school,

4. Diploma and Degree holder

V. What is your business type (Occupation):

1. Service giver 2. Merchandising 3.Manufacturing

VI. For how many years you are known as tax payer?

1. 0-1 year, 2.2-5 year,

3.6-10 year, 4.11 year and above.

Section II. Research issue question. Make circle on the letter you want to choose!

1. Why do you pay taxes? (You can answer by more than one answer)

1. To avoid disturbances (penalties, sanctions,)

2. In the anticipation of public services

3. There is no opportunity to evade.

4. It is an obligation towards the government.

5. Don’t know.

State if any, _____________________________________________

_______________________________________________________________
__________________________

Do you pay tax on time the amount that expect to you? 1. Yes 2 .No

If your answer is “No” Why ________________________________________________

3. Have you got training about the tax system 1. Yes 2 .No

If your answer is “yes” by whom ___________________________

If your answer is “No” why ____________________________________________

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 A. You have no get chance

B. You have no interest to train

4. There is a factor that influences your tax voluntary compliance with tax system?

1. Yes 2. No

If your answer was “Yes” what are it

______________________________________________________________________________
______________________________________________________________________________
_________________________________________

Section III: Likert scale questionnaire for study issue

Put 1 for strongly agree for agree, 2= agree, 3=neutral, 4=disagree, 5=strongly disagree and
Please tick ___in the box that matches your agreement with each of the positions below

No. Items 1 2 3 4 5

I Tax voluntary compliance

5 decrease tax payers voluntary compliance

6 With enforcement tax payers paying their tax

7 Tax payers not reporting their tax on time

8 Tax payers not paying tax that expected to them at time

II Demographic issue

9 Elder tax payers are more tax compliance than young taxpayers

10 Educated person are more tax compliance than un educated person (illiteracy)
taxpayers.

11 Female tax payers have positive tax compliance behavior than male taxpayers

12 Your tax compliance behavior with tax system was related with your business
type (occupation)

III Institutional issue

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13 Un fairness of tax authority is affect you tax compliance behavior with tax
system

14 Not working strongly revenue authority regarding of service delivery, awareness

creation and tax collection efficiency delay your compliance with tax system

15 Not trust in the tax system, assessment, and collection procedures has affect your
tax compliance behavior with tax system

16 Automation of tax system affect tax payers compliance behavior with tax system

IV Political issue

17 Instable political system was affect your compliance behavior towards the tax
system

18 Since Politics were instable occur you are report and pay tax on time to revenue
authority

V Economic issue

19 Where people are not getting comparable social services from the government
was affect tax compliance behavior of business tax payers

20 Your negative perception on tax rate was affect your tax compliance behavior

21 Your organization does have been audited by the tax authority? A. Yes, B. No

If your answer is “yes” how many time in one year. A. One time at year B. Two Time at year three time at
year , D .Four time at year

If your answer is “No”why________________________________________________________________

22 Do you agree that tax payers including you may commit tax compliance where
there is country economic change (growth) and your income level?

23 Do you agree that taxpayers’ behavior including you toward the general level of
taxation and tax compliance is depending on attitudes about the desirability of the
nation economic program and trade system?

VI Social issue

24 As the culture of paying tax in a society is low, the level of your tax compliance
behavior with tax system is also low.

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25 Do you agree that cultural differences have a direct impact on ethical values and
moral   development and ultimately affect tax compliance decisions.

26 Your friends’ and relatives’ action affect your decision to compliance with tax
system

27 You evade tax if everyone is doing it

VII Individual issue

28 Your Tax non compliance with tax system was depending on your tax knowledge

29 Since Your understanding why you pay tax you complying with tax system

30 If there is penalty or legal enforcement there is a possibility that you pay tax.

31 Tax payers who possess an awareness of the penalties for non-compliance are
more compliant than those who do not possess such awareness

32. In your opinion what are the factor that affect your tax compliance with taxsystem?
______________________________________________________________________________
______________________________________________________________________________
_________________________________________

33. What do you suggest/propose as corrective action to overcome the your negative compliance
behavior of tax system? ________________________________________

Appendix .2
INTERVIEW GUIDELINE QUESTIONS

Interview to be for top management of the revenue authority

Introduction: this interview is prepared for the accomplishment of master’s thesis entitled on
factors affecting taxpayers’ compliance behavior with tax system in the west Wollega Aira
district. The purpose of this interview is collecting relevant information from you regarding
factors that in tax payers’ non compliance with tax system in your respective sectors.

Are you collecting the amount of tax that you plan to collect at the year? If your answer in "No"
What is the reason?

Have you know why tax payer negatively voluntary compliance with tax system? Explain it.

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What are the challenges that face the tax payers to voluntary compliance with tax system?
Explain it

What are factors that affect tax payers’ voluntary compliance with tax system? Discuses for us.

To what extent social (perception on equity and peer influence), political (political stability),
economical (tax rate, income level, perception on government spending and being audit),
individual (tax knowledge and awareness offence), and institutional (efficiency of revenue
authority and simplicity of tax system) factor influence tax payers’ voluntary compliance with
tax system?

Age, Gender, educational status and occupation (business type) of tax payers influence tax
payers’ voluntary compliance?

What role did your organization play in solving taxpayers’ negatively voluntary compliance with
tax system problem?

What do you recommend for the problem of taxpayers negatively voluntary compliance with tax
system?

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 Appendix .3
INTERVIEW GUIDELINE QUESTIONS BY AFAN OROMO

Gaafannoo Afaani dhimma wantoota akka kafalaan gibiraa gibira hin kaffalle
godhan iratti koree manajimentii Abbaa taayitaa Galiwwanii Aanaa Ayiraa waliin
godhame

1. Gibira amma waggaa tokkoof karoorfatan funaantanii beektuu ? Yoo hin funaanamne
ta’ee sababi isaa maali?
2. Kafalaan gibiraa waa’ee gibiraa ilaalcha sirrii akka hin qabaanne wantoota godhan
beektuu? Naaf Ibsaa.
3. Rakkoowwan akka namni fedhii dhaan gibira hin kaffallee godhan adda baaftanii
beektuu? Maal fa’ii?
4. Sababoota akka kaffalaan gibiraa seera gibiraatti madaqee ,gibira hin kaffallee godhan
adda baaftani beektuu? Ibsa itti nuuf kennaa.
5. Hanga kamiin sababoonni Hawwaasumma,Dinaagdee,siyaasaa,dadhabinaa fi ciminni
Abbaataayitaagaliiwwani fi rakkoo dhuunfaa akka kaffalan gibiraa,gibira yeroo fi hanga
itti murta’ee akka hin kaffallee godha?
6. Saala ,Umurii ,sadarkaa barnootaa fi gosii daldalaa haala kamiin rakkoo seera gibiraatti
madaquu fi dhiisuu kaffalaa gibiraa fida?
7. Rakkoo akka kaffalaan gibira seera gibiraatti akka hin madaqnee godhan hiikuuf
tarkaanfii maalii fudhatan?
8. Rakkoo kaffalaan gibiraa akka gibira yeroo dhaan akka gibira hin kaffallee godhuu
hiikuuf gorsa akkamii nuuf laattu?

93
Appendix.4

94
95