Determinants of Tax Non- Compliance Behavior in Ethiopia: The Case of Hosanna Town Taxpayers

Dereje Lemma Lalisho


In the Ethiopian government the second five year Growth and Transformation Plan, it has been clearly stated that efforts will be geared towards promoting compliance and equipping tax collection institutions with adequate enforcement power which will further boost revenue mobilization at federal, regional, Zonal and woreds levels. The country’s tax mobilization was also the lowest among sub-Saharan African countries and thus, objectives if the study the identifying the factors that determine tax non- compliance behavior has been open for empirical investigation. There are seven determinates included in this study, to be researched upon and are categorized into non-economic factors and economic factors. Authors used a cross-sectional survey method of research design. The target population of the study was category “C” tax payers in purposefully selected three category taxpayers of Hosanna town, Ethiopia ,this group are considered hard to tax because the law doesn’t require them to declare their income or keep books of account.. A sample of 247 Category “C” tax payers was randomly taken from the selected cities. The number of questionnaires completed and returned was two hundred and twenty-eight (247), constituting 76% response rate. Both primary and secondary data were collected. Seven explanatory variables were used in the ordered logistic regression model. The p-value was used to test the significant at 5 % significance level of the study variables. The results showed that rate of tax, future tax costs, tax education/tax knowledge and Gross of sales are factors that positively significantly affect tax non- compliance behavior. However, Individual Tax Morale, report of income tax, and public quality governance were not significantly at 5 % significance level affect non-tax compliance. Therefore, researcher recommended, the outcomes of the study may inform policymakers about the determinants of non-tax compliance behavior of tax payers in the Hosanna town and helps to formulate better policy decisions related to non- tax compliance behavior.

Keywords: Tax Non- Compliance Behavior, Tax Payers, Ethiopia

DOI: 10.7176/RJFA/10-21-02

Publication date: November 30th 2019

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