Abstract
In the Ethiopian government the second five year Growth and Transformation Plan, it has been clearly stated that efforts will be geared towards promoting compliance and equipping tax collection institutions with adequate enforcement power which will further boost revenue mobilization at federal, regional, Zonal and woreds levels. The country’s tax mobilization was also the lowest among sub-Saharan African countries and thus, objectives if the study the identifying the factors that determine tax non- compliance behavior has been open for empirical investigation. There are seven determinates included in this study, to be researched upon and are categorized into non-economic factors and economic factors. Authors used a cross-sectional survey method of research design. The target population of the study was category “C” tax payers in purposefully selected three category taxpayers of Hosanna town, Ethiopia ,this group are considered hard to tax because the law doesn’t require them to declare their income or keep books of account.. A sample of 247 Category “C” tax payers was randomly taken from the selected cities. The number of questionnaires completed and returned was two hundred and twenty-eight (247), constituting 76% response rate. Both primary and secondary data were collected. Seven explanatory variables were used in the ordered logistic regression model. The p-value was used to test the significant at 5 % significance level of the study variables. The results showed that rate of tax, future tax costs, tax education/tax knowledge and Gross of sales are factors that positively significantly affect tax non- compliance behavior. However, Individual Tax Morale, report of income tax, and public quality governance were not significantly at 5 % significance level affect non-tax compliance. Therefore, researcher recommended, the outcomes of the study may inform policymakers about the determinants of non-tax compliance behavior of tax payers in the Hosanna town and helps to formulate better policy decisions related to non- tax compliance behavior. Keywords: Tax Non- Compliance Behavior, Tax Payers, Ethiopia DOI : 10.7176/RJFA/10-21-02 Publication date: November 30 th 2019
Highlights
Tax non-compliance, has always been a problem to tax administrative system in any countries, either in developed countries, or in emerging countries
There are factors that determinates of non-tax compliance in this study were economic factors and Non-Economics factors are Public Governance Quality, Tax Education and Tax Morale
Examining economic and Non-economics factors that influence tax non- compliance behavior in Hosanna town, Ethiopia is the primary purpose of this study
Summary
Tax non-compliance, has always been a problem to tax administrative system in any countries, either in developed countries, or in emerging countries. There are factors that determinates of non-tax compliance in this study were economic factors (rate of tax and future tax costs) and Non-Economics factors are Public Governance Quality, Tax Education and Tax Morale. Examining economic and Non-economics factors that influence tax non- compliance behavior in Hosanna town, Ethiopia is the primary purpose of this study. Seven factors that affecting tax non-compliance are examined and are divided into two categories, namely economic factors and non-economic factors Economic factors are those variables that intrinsically found in affecting one’s value, such as tax rate, income level and expectation on future tax cost that will be penalized if the non-compliant is discovered. The level of public governance quality and tax morale of taxpayers, are those behavioral influences that fall under category of non-economic factors. Tax education may need to be taken into the consideration as one of the noneconomic factors in perpetrating tax non-compliance
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