Abstract:
Tax is a major source of finance for the government. However, in most developing countries, it is a common phenomenon to notice serious problems in collecting adequate tax that permits a government to sufficiently finance its expenditures. Thus, this study intends to assess the Challenges of Tax Administration in Oromia Regional State by focusing on the Menagesha Town Revenue Authority. For accomplishing this purpose, the researcher used descriptive type of research design. The study also employed purposive sampling techniques in order to get the necessary information about the subject under consideration. Accordingly, sample size consulted for the study were 59. Moreover, in conducting the study, the researcher employed major data collection instruments like questionnaires and interviews. The findings show that Menagesha town revenue authority was not effective in performing its tax Collection Mandate due to several reasons such as lack of sufficient skilled man power, lack of team work and cooperation among the employees, low awareness about tax proclamation, tax payers unethical behavior (tax avoidance, tax evasion), taxpayers unwillingness and poor understanding about tax rules, high official‘s poor political commitment and Corrupt practice of tax officials. Thus, researcher recommends Menagesha town administration to reorganize the staff of the tax authority with adequate and competent human and material resources. In addition, Menagesha town tax authority must frequently provide tax awareness for tax payers in order to change the tax payers’ unethical behaviors such as tax avoidance, tax evasion and tax noncompliance.
