Abstract:
The purpose of this study is to assess factors affecting revenue collection in West Shoa Zone
Ambo town. An explanatory research design, which involved quantitative and qualitative
research approach, was employed. The study is based on primary data collected from 133
sample selected at random using questionnaire. The primary data was also obtained from key
informant interview. The collected data were analyzed by IBM SPSS Version 23 statistical software. A
descriptive statistics like frequency, percentage, mean and standard deviation and inferential statistics
(multiple linear regression models) were used to summarize the data collected on factors affecting
revenue collection in Ambo town. The result of the study revealed that the practices of revenue authority
of Ambo town were provide training to the tax payers, collecting tax, preparing brochures to enhance the
awareness of the tax payer, applying new tax estimation, making audit, monitoring business activity, and
legalize the business sector. The results from multiple linear regressions confirmed that internal control
system, enforcement of laws, revenue collection personnel capacity and taxpayer’s knowledge were
positively and significantly influenced revenue collection in Ambo town. The result from key informant
interview also indicated that lack of man power, tax evasion, tax avoidance, insufficient training, lack of
monitoring and evaluation, lack of budget allocated for tax collection and lack awareness of the tax payer
on tax. The findings indicated stakeholder’s involvement in the revenue collection in Ambo town.
Accordingly, tax payers were not participating in revenue collection and the government didn’t consider
the majority opinions of tax payer. The experts and concerned body of the government impose taxes on
taxpayers. The tax payers have no representatives in the tax authority and the government didn’t involve
the tax payers in drafting tax policies. The government didn’t value their feedback on the tax system. The
study concluded that the practices of the revenue authority and the stake holder’s participation in revenue
collection were not satisfactory. It is recommended that providing training, strengthen internal control
system, allocate sufficient budget, and enhancing the stakeholder’s participation in revenue generation
plays a crucial role in improving revenue generation.
