Abstract:
The study's objectives are to examine the level of perceived fairness of the tax paying system
among small, medium, and micro enterprise (SMMEs) holders in the Burayu district of Oromia.
It was intended to identify the demographic and business-related factors that influence tax payers
perceptions and to explore the underlying reasons for their perceptions of tax fairness. The study
utilized a mixed-methods study to explore the perceptions of SMME holders about the fairness
of the tax-imposing system. A sequential explanatory design is employed, where both
quantitative and qualitative data are collected and analyzed in two phases. The quantitative data
were collected and analyzed before and qualitative data were collected following the findings
from quantitative study. The target population consists of all SMME holders in Burayu district,
from which a systematic random sample of 364 participants were selected for the quantitative
phase. A survey questionnaire was administered to collect data on the respondents to achieve the
quantitative objectives. Additionally, sampling was used to select 20 authorities from tax
collection sectors for in-depth interviews, providing rich, qualitative insights into their
experiences and perceptions of the tax system. The study's findings reveal that SMME holders in
the Burayu district perceive the tax system as moderately unfair. The results indicate that 60% of
respondents believe that the tax system is unfair, citing complexity, lack of transparency, and
unequal treatment as major concerns. The study also found that demographic factors such as age,
education level, and business experience, as well as business-related factors such as business size
and type, significantly influence SMME holders' perceptions of tax fairness. Specifically,
younger and less-educated SMME holders were tend to perceive the tax system as more unfair,
while larger and more established businesses tend to perceive the tax system as more fair. The
qualitative findings highlight the need for tax education, simplification of tax laws, and improved
communication between tax authorities and SMME holders to enhance perceived fairness. The
implication is that the study suggests that policymakers and tax authorities should prioritize tax
reform efforts to address the concerns of SMME holders and promote a more equitable and
effective tax system in Ethiopia.
