Factors Affecting Tax Collections. A Case of Shager City Administration, Burayyu Sub City Revenue Office”.

Abstract

The main objective of this study is to investigate the major factors affecting tax revenue collection. To achieve this objective a cross-sectional data was used. An explanatory and descriptive research designs was applied to investigate the relationship that exists between the level of tax revenue collection and factors affecting tax collection. In this study, a mixed research approach was applied. Both primary and secondary sources of data were utilized for this study. The sample consisted of 279 taxpayers, selected from a total taxpayer population of 920. A self administrated structured questionnaire was distributed to the sample of the study. From the finding of the study, it is signifying that 60.2% of the variance in tax collection can be explained by the four independent variables. Taxpayer awareness has an unstandardized coefficient of 0.057 (t = 2.590, p = 0.031), indicating that each unit increase in awareness could raise tax collection by 0.057 units. Tax office capacity follows with a coefficient of 0.023 (t = 2.300, p = 0.027), while tax compliance shows a coefficient of 0.032 (t = 2.909, p = 0.021). Interestingly, tax evasion has a coefficient of 0.029 (t = 2.231, p = 0.042), suggesting potential indirect influences on collection. Government authorities Burayu sub city should use regular communication strategies to inform taxpayers about their tax contributions, publicize successful projects, and to reduce tax evasion need to full capacity of tax rule implementation. Staffing adjustments, technology investment, public awareness campaigns, simplified tax guides, and stakeholder feedback are also recommended.