Determinants of Taxpayers' Voluntary Compliance with Taxation the Case Study of Dire Dawa City
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Date
2007-08
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A.A.U
Abstract
Improved tax compliance boosts the revenues available for supporting public services
without increasing the current tax burden on compliant tax payers. There appears to be a
trend in tax compliance policies with initiatives by a number of tax authorities to move
towards a more taxpayer focused approach. A number of tax authorities have been
moving towards a more sophisticated approach to tax compliance. Traditionally there
seems to have been an assumption that tax compliance can be ensured with the help of
legal enforcement and penalties.
These days this is ceasing to be the case, as the taxpayers are demanding more assistance
and fair treatment from the tax authorities. Even there seems to have been a shift in
attitudes towards treating the taxpayer less as a passive donor who simply has to be
billed for taxes due and more as a customer sometimes requiring particular forms of
assistance and support.
The voluntary compliance behavior of the taxpayers is determined by various factors and
identifying these factors and treating them accordingly should be the central premises of
any tax system in order to maintain voluntary compliance at satisfactory levels. This
study was meant to identify the determinants of taxpayers ' voluntary compliance in Dire
Dawa city. Based on this fact the necessary data were collected using standard
questionnaire and analyzed
According to the response of the respondents, certain factors were found to be the
determinants of taxpayers' voluntmy compliance. These are, tax fairness and equity,
organizational strength of the tax authority, awareness level of the taxpayers, sociocultural
factors, and provision of social services by the government.
Finally, based on the findings possible recommendations were given. These include,
maintaining tax fairness and equity, building capacity of the tax authority, conducting
extensive awareness creation programs, and providing social services to the general
public.
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Keywords
Compliance with taxation, Determinants of taxpayers'