The Effects of Tax Education on Government Revenue Collection: The Case of Small and Medium Enterprises in Morogoro Municipality, Tanzania

Abstract

The efficient and effective tax education to SMEs in developing countries like Tanzania is critical to overcome the challenges of tax compliances. Despite the trend of tax reforms in Tanzania since 1998, the effects of tax education on Small and Medium Enterprises (SMEs) are still poor and many SMEs still see taxation process and cost as constraints to SMEs’ successes (Adam, 2012; Masanja, 2019). The study employed deductive approach, exploratory and descriptive survey methodology. The respondents involved 96 SMEs owners of Morogoro Municipality and four (4) TRA Education Department employees. The data collection tools involved the use of purposeful distributed questionnaires and interviews. The Statistical Package for Social Sciences (SPSS) was used to analyze data. The scope was to produce the frequency tables (Kothari, 209; Mbalwowa, 2014). To determine if the provision of tax education has resulted in tax compliance among SMEs, the results shown that to large extent there were high level of incompliancy on: timeliness for tax payment, voluntary tax payment, use of EFDs, issuance of fiscal receipts and online filing of tax returns. Therefore, the main attributing factors of tax incompliancy have been associated with tax education. The study recommends: to evaluate the tax education programs on revenue collection, complements information technology to disseminate tax education, carry out relational or causal studies of tax education on tax compliances across different demographic characteristics in Tanzania. More importantly, to promote a shift from the tax being assessed by TRA to self-tax assessment among SMEs through tax education program.