factors affecting tax morale in Tanzania

1. i
THE INSTITUTE OF FINANCE MANAGEMENT
(IFM)
FACTORS AFFECTING TAX MORALE IN TANZANIA
(THE CASE OF DAR ES SALAAM)
BY
MHINA AMIRI A
IMC/BTX/13/74203
JUNE, 2015

2. ii
ABSTRACT
Tax morale is the most important tool in promoting the compliance behavior of taxpayers so as
to improve and to meet the required goal of revenue collection.
This study was designed to examine the factors affecting tax morale among presumptive taxpayer
in Tanzania taking Kinondoni tax region as a case study. Data for the study will be collected from
respondents which covered all research questions and facilitated to achieve the objective of the
research.
The study found that in general, shows that tax policy should maintain a high level of social capital.
If people they are well educated, create awareness,, believe that government is transparency, social
and public services are well provided, their willingness to pay tax increase, otherwise the
government and tax administration get into hot water.
Furthermore, generalized that, if individuals notice may other not pay tax (inequality of taxation),
there are misusing of government fund, high rate and complexity of tax system their intrinsic to
comply taxes decreases. Low tax morale is signal that intrinsic and motivation is not recognized.
Tax payers get feeling that they can as well be opportunistic and the moral cost of evading taxes
decreases.

3. iii
CERTIFICATION
The undersigned certify that they have read and hereby recommend for acceptance by the Institute
of Finance Management for a research: Factors affecting Tax morale in Tanzania: A case study at
Kinondoni Domestic Tax Region, in Partial fulfillment of the requirement for individual
assignment.
SUPERVISOR: Ms. Sinje Catherine.
SIGNATURE: ………………………
DATE: ………………………………

4. iv
DECLARATION
I, AMIRI A. MHINA, declare that this Assignment is my own work and that it has not been
presented to any other Institute/ University for a similar or any other award.
Signature: …………………..
Date: ………………………….

5. v
COPYRIGHT
© AMIRI A. MHINA (2015)
All rights reserved. Any person or organization who wishes to copy, reproduce or adapt any or all
parts of this report for commercial purposes, must obtain permission from the Institute of Finance
Management on behalf of the Author. But it is encouraged to adopt it to meet academic needs.

6. vi
ACKNOWLEDGEMENT
I thank Almighty God for everything’s, without whose grace all these could not be possible. I am
also greatly conveys my sincere gratitude to those all who participated by one way or another for
an accomplishment of my fieldwork report.
I would like to take this opportunity to express my sincere and special gratitude to my Supervisor,
Ms. Sinje; for valuable knowledge that made this work success. Chief Librarian and Assistants at
IFM library are acknowledged for allowing me to borrow books that were very helpful in
accomplishing this study.
And without forgetting my fellow students and my friends , JB Mpiana, Seif Nando, Chenge, Spiro
Jasmin and all btx students for moral and material support and all my relatives and friends who
contributed much for my success.
GOD BLESS YOU ALL

7. vii
DEDICATION
This research work is dedicated to my beloved Parents Mr. and Mrs. Mhina. My beloved sister
Jamila and my youngs Fetty and Abdallah for their inspirational, limitless and underlying love
they made me to be a great person.
And all the good souls around me, whose inspiration, prayers, support and love blessed my heart
and sustained me in every second of my life.
Thank you very much.

8. viii
TABLE OF CONTENTS
ABSTRACT......................................................................................................................ii
CERTIFICATION..........................................................................................................iii
DECLARATION.............................................................................................................iv
COPYRIGHT...................................................................................................................v
ACKNOWLEDGEMENT..............................................................................................vi
DEDICATION.................................................................................................................vi
TABLE OF CONTENTS .............................................................................................viii
CHAPTER ONE ................................................................ Error! Bookmark not defined.
1: INTRODUCTION ......................................................... Error! Bookmark not defined.
Introduction...................................................................... Error! Bookmark not defined.
1.1 Background to the study ............................................ Error! Bookmark not defined.
1: 2 statements of problems ........................................... Error! Bookmark not defined.
1.3 Significant of the study................................................................................................2
1.4 Objectives of study. .....................................................................................................2
1.4.2 Specific objectives ....................................................................................................2
1.5 Research question ........................................................................................................3
1.6 limitation…………………………………………...………………………………………….3
CHAPTER TWO .............................................................................................................4
2 : 0 Literature review ....................................................................................................4
2 : 1 Empirical Evidence...................................................................................................4
2.2 Tax morale ...................................................................................................................5
2.3 The concept of tax compliance ...................................................................................6
2.4 Compliance benefits and costs.....................................................................................7
2.5 Relationship between tax morale and tax compliance.................................................8
2.6 Effects of Tax Morale on Tax Compliance: ................................................................8
2.7services provided by the government ...........................................................................9
2.8Tax education on tax morale..................................................................................10-12
2.9 Complexity of tax system on tax morale ...................................................................13

9. ix
CHAPTER THREE.......................................................................................................14
3: 0 RESEARCH METHODOLOGY..........................................................................14
3:1 Overview....................................................................................................................14
3:2 Conceptual frame work..............................................................................................14
3.3 Research Site............................................................................................................15
3.4 Sampling procedures……………………………………………………………………….15
3.5 Sample size ..............................................................................................................15
3.6 Data Collection .......................................................................................................16
3.7 Primary Data ...........................................................................................................16
3.8 Secondary Data ........................................................................................................16
3.9 Data Analysis Methods............................................................................................16
CHAPTER FOUR..........................................................................................................17
DATA ANALYSIS AND DISCUSSION......................................................................17
4.1 Introduction................................................................................................................17
4.2 general findings..........................................................................................................17
4.3 Response Rate............................................................................................................17
4.4 Interpretation for the results.......................................................................................23
4.5 Research ethical………………………………………………………………………………23
CHAPTER FIVE ...........................................................................................................24
CONCLUSION AND RECOMMENDATIONS.........................................................24
5.1 Introduction................................................................................................................24
5.2 Conclusion .................................................................................................................24
5.2 Recommendations......................................................................................................24
REFERENCE.................................................................................................................25
APPENDICIX ...........................................................................................................26-31

10. 1
CHAPTER ONE
1: 0 INTRODUCTION
1.1 Background to the study
Tax morale consist of the motivation to pay taxes arising from the moral obligation to pay taxes
by every individual. Tax morale vary from one country to another, being affected by culture and
education. Much recent research has investigated whether values, social norms, and attitudes
differ across countries and whether these differences have measurable effects on economic
behavior. One area in which such studies are particularly relevant is tax compliance, given both
the noted differences across countries in their levels of tax compliance and the marked inability of
standard economic models of taxpayer compliance to explain these differences. The determinants
of an individual’s intrinsic willingness to pay taxes – what is sometimes termed ‘‘tax morale’’
using information from the World Values Survey for a wide range of countries over several years
of data. It is analyzed that a cross-section of individuals in Spain and the United States. In line
with previous experimental results, the findings indicate a significantly higher tax morale in the
United States than in Spain, controlling in a multivariate analysis for additional variables. The
literature shows that individuals in the United States have the highest tax morale across all
countries, followed by Austria and Switzerland
A study conducted by Daude C, at al (2012) shows that World Values Survey on the drivers of tax
morale around the world, with an emphasis on developing countries. It shows that socio-economic
factors such as age, religion, gender, employment status and educational attainment have a
significant impact on people’s levels of tax morale. In terms of institutional determinants, it finds
that the satisfaction with democracy, trust in government and the satisfaction with the quality of
public services plays an important role in increasing tax morale. In Tanzania there is low intrinsic
motivation of paying taxes which is attributed by culture, education, political influence and
corruption.

11. 2
1: 2 statements of problems
Tax morale consist of the intrinsic motivation to pay taxes arising from the moral obligation to
pay taxes by every individual. Tax morale varies from one country to another depending on the
education and cultural influence. Tax morale is important for tax payers since is an intrinsic
motivation which enables the tax payer to comply with the law. Tax morale plays significant
roles in taxpayer complying with laws, time saving, and reduction of unnecessary cost and hence
increases revenue collection. High tax morale leads to increase in revenue collection which
results to meet optimal level of public expenditure. Tanzanian government is motivating
taxpayer in number of ways like taxpayer’s day in which the Tanzania Revenue Authority issue
the certificate to the best Taxpayers.
Despite the government is doing this still there is low tax morale among the presumptive
taxpayer recently there is refusal of use of electronic fiscal devices. This may be attributed by
lack of transparency misuse of public funds, service being provided by government to her
citizen. This study wants to find out the factors affecting tax morale among the presumptive tax
payers. The results obtained from this findings will be useful for policy makers and stake holders
who will require to amend laws and policy in order to motivate taxpayer, thus increasing morale
.Those factors can be achieved by research question which investigate the level of Knowledge to
the tax payer, impact of multiplicity of tax and service provided by the government is in
satisfactory level to the tax payer.
1.3 Objectives of study.
1.3.1 General objectives of the study.
The general objectives of this study is to find out the factors affecting tax morale in Tanzania.
1.3.2 Specific objectives
i. To identify how complexity of tax system affect tax morale in Tanzania.
ii. To determine how the level of education and awareness of taxation affect tax morale in
Tanzania.
iii. To examine if the services provided by the government affect tax morale in Tanzania.

12. 3
1.4 Research question
i. Do complexity of tax system law in Tanzania affect tax morale in the country?
ii. How does the level of education and knowledge about taxation affect tax morale in
Tanzania?
iii. How does the services provided by the government affect tax morale in Tanzania?
1.5 Significant of the study
This paper will help the authority and policy maker to know different areas to be considered to
improve tax morale as result of increasing in tax morale then tax compliance will be increased
and hence improvement on government revenue hence national development at all. Also to the
researcher will get additional knowledge on the factors affecting tax morale in the society.
1.6 Limitation of the study
Privacy and secrecy policy to both taxpayers and the revenue authority is a challenge for date
collection.
Time factor. The allowed for conducting research is not enough as my research topic is very
important for betterment of our nation.

13. 4
CHAPTER TWO
2:0 Literature review
2:1 Empirical Evidence
The empirical evidence of this study has been done by number of scholars. A study conducted by
Benno T. (2011) the study revealed that tax morale is affected by norms and social capital. Another
study conducted by James A (2006) the results also indicate a range of strategies by which tax
morale can be increased. For example, we also find a strong relationship between tax morale and
trust, which implies a clear policy strategy: induce trust at the constitutional level and at the
politico-economic level. Such a relationship between the state and the taxpayers can be maintained
by positive actions by the government, well-functioning state institutions, and the maintenance of
a positive social capital atmosphere. And such a strategy will be rewarded with a higher tax morale
and so a greater willingness of individuals to pay their taxes. Belatedly, treating taxpayers as clients
rather than as offenders by the tax administration likely enhances their sense of civic duty and thus
their tax morale (Alm et al., 2004).
The relatively high tax morale in the United States and in Switzerland, two countries with a strong
direct democratic tradition, provides further policy implications. Improving the ability of
individuals to participate in the political arena might be another fruitful strategy to improve tax
morale. Furthermore a study conducted by Semboja J (1998) Further, the experience with
development levy also seems to have contributed to undermine tax morale and the legitimacy of
the state in a way that may have long term consequences for the performance of local governments
in Tanzania.
The study further provides us with some directions for future research. In improving our

14. 5
Understanding of tax compliance behavior in developing countries, there is a need for more
thorough examination of the apparent Further, the experience with development levy also seems
to have contributed to undermine tax morale and the legitimacy of the state in a way that may have
long term consequences for the performance of local governments in Tanzania.
The study further provides us with some directions for future research. In improving our
understanding of tax compliance behavior in developing countries, there is a need for more
thorough examination of the apparently important concept of unfairness in fiscal exchange, i.e. the
contractual relationship between taxpayers and the government. Further, thereby important
concept of unfairness in fiscal exchange, i.e. the contractual relationship between taxpayers and
the government thereof.
2.2 Tax morale
Tax morale entails the intrinsic motivation to pay taxes arising from the moral obligation to pay
taxes by every individual tax revenues provide governments with the funds they need to invest in
development, relieve poverty, deliver public services and build the physical and social
infrastructure for long-term growth. However, many developing countries face challenges in
increasing their revenue from domestic sources. These challenges include a small tax base, a large
informal sector, weak governance and administrative capacity, low levels of per capita income,
domestic savings and investment and possibly tax avoidance by elites. Some countries, including
half of those in sub-Saharan Africa, raise less than 17% of their gross domestic product (GDP) in
tax revenues. This is the minimum level considered by the UN as necessary to achieve the
Millennium Development Goals. By way of comparison, OECD countries raise on average close
to 35% of GDP in tax revenues. Developing countries and development partners alike increasingly
realize the importance of mobilizing domestic financial resources for development (OECD

15. 6
march 2013) Institutional factors deal more directly with aspects of government in general, which
can explain how citizens perceive how taxes are being spent and thus affect their willingness to
pay them. These factors include support for democracy, trust in government, and preferences for
redistribution i.e. .whether taxing the rich and subsidizing the poor is an essential characteristic
of democracies)
2.3 The concept of tax compliance
Chapter six volume two of the book Why paying tax by Maliyamkono, T.L et al .the concept of
compliance is used differently by various institutions and scholars. In the conceptualizing people’s
compliance in paying taxes some of economists make a basic behavioral assumption that people
are inherently free riders. In other word no one will voluntarily contribute to the Government
revenue unless the threat of punishment makes it sensible to do so (Allingham& Sandmo 1972).
Nevertheless, Slemrod (2003) observes that there is an increasing amount of evidence from
experimental studies and survey data to show that the rate of contribution to a public goods is
affected by factors such as citizen’s trust in others and by his or her perception of the
trustworthiness of the government. From this perspective, Levi (1998) argues that citizens are
likely to trust the government only when they believe that:
(1) It will act in their interest
(2) Its procedures are fair and reasonable ; and
(3) Their trust in the state and others people is reciprocal
Fjeldstad (2006) also argue that citizens’ willingness to pay taxes voluntarily rests on the
government’s capacity to provide goods and services and its demonstrated readiness to secure the
compliance of the otherwise non-compliant. Following the above observation, in defining

16. 7
voluntary tax payments compliance, a number of variables are taken into consideration. For
instance, the Internal Revenue Services of United States of America defines voluntary tax
compliance as a system of compliance that relies on individual citizens to report their income
freely and voluntarily, calculate their tax liability correctly, and file a tax return on time. Voluntary
compliance also means that one must inform the tax authority of one’s own tax liability. The only
way to do that is to file tax return. In this paper voluntary compliance is used to refer to citizens’
willingness to honor the country’s tax laws, regulations and requirements as provided by tax
administration authorities.
The aspects of voluntary compliance by the citizens in paying taxes deserve special consideration.
In the society where there is high level of voluntary compliance tax administration process become
both effective and efficient. By contrast, in a society where there is no voluntary compliance, such
as is the case in many developing countries including Tanzania ,research findings indicate that it
is common for half or more of the potential tax revenue to revenue to remain un collected(
Bird,1992, Krugman, et al.1992).
2.4 Compliance benefits and costs
In self-interest model of compliance, the benefits derives derived from an illegal act provide the
primary incentives not to comply. A number of studies have argued that systematic different in
benefits explain observed patterns of non-compliance. For example, Title and Rowe (1973) found
cheating tests to be more prevalent among students with lower grades who had more to gain. Feest
(1967) noted that the decrease benefits(increase risk) of running a stop signs when cross traffic
was present accounted for most compliant stopping at stop signs.
The most obvious benefit of evasion is the amount of tax saved. For a given amount of
underreported taxable income, the amount saved increases as the tax rates increase. But as noted

17. 8
earlier, both the utility the evaded tax and the taxpayer’s willingness to take risk to acquire it are
traditionally assumed to depend on the level of (after-tax) income. Also as noted earlier, other cost
of compliance ascertaining compliance requirements, maintaining records, filing returns and of
non-compliance large fees to promoters of abusive tax shelters, discount for payments in cash may
affect taxpaying behavior.
2.5 Relationship between tax morale and tax compliance.
Wherever there is high tax morale there is also high tax compliance .tax morale to be achieved is
associated with some factors as depicted by Togler et al ,on international study program a results
show that the quality of political institutions has a strong observable effect on tax morale. Not only
the overall index, but also the sub-factors of voice and accountability, rule of law, political stability
and absence of violence, regulatory quality and control of corruption exercise a strong influence
on tax morale .Moreover, trust in the justice system and the parliament also has a highly significant
positive effect on tax morale. In general, our analysis highlights the relevance of extending the
standard economic theory of tax evasion, which is based on the narrow principle of homo
economics.
2.6 Effects of Tax Morale on Tax Compliance:
There is considerable evidence that enforcement efforts can increase tax compliance. However,
there must be other forces at work because observed compliance levels cannot be fully explained
by the level of enforcement actions typical of most tax authorities. Further, there are observed
differences, not related to enforcement effort, in the levels of compliance across countries and
cultures. To fully understand differences in compliance behavior across cultures one needs to
understand differences in tax administration and citizen attitudes toward governments.

18. 9
The working hypothesis is that cross-cultural differences in behavior have foundations in these
institutions. Tax compliance is a complex behavioral issue and its investigation requires the use of
a variety of methods and data sources. Results from laboratory experiments conducted in different
countries demonstrate that observed differences in tax compliance levels can be explained by
differences in the fairness of tax administration, in the perceived fiscal exchange, and in the overall
attitude towards the respective governments. These experimental results are shown to be robust by
replicating them for the same countries using survey response measures of tax compliance. Ronald
G (2005)
2.7 services provided by the government
Provision of sufficient services by the government like schools hospitals and infrastructures create
trust to the government by its citizen in the paper presented by Philipp Doerrenberg and Andreas
Peichl progressive taxation and tax morale
Trust in Government and National Pride a major focus in tax morale research is on perceived trust
in state functioning or public finance. The intuition is obvious: taxpayers who trust their
government and believe that tax revenue is spent properly should be more willing to pay taxes.
In contrast, tax morale decreases as people believe that tax money is spent redundantly a notion
supported by survey research. For example, Slemrod (2003) and Frey and Torgler (2007) use data
for Europe and find significant and positive effects of different trust in state" variables on tax
morale. Their results are confirmed for other countries and cultures, such as Spain (Alm and
Gomez 2008), Asia (Torgler 2004), Latin America (Torgler 2005) and Russia (Alm et al. 2006).
Another closely related variable is national pride.
Using a similar intuition, taxpayers who are proud of their country of residence may well be more
willing to pay taxes. Konrad and Qari (2009) employ a cross-country analysis on several European

19. 10
countries and find strong evidence that patriotism does indeed have a positive effect on tax morale.
Similar results are found for Latin America (Torgler 2005), Asia (Torgler 2004) and Russia (Alm
et al. 2006).
Also Benno togler in tax compliance and tax morale a theoretical and empirical analysis he was
discussed about trust on government
The result of the trust variable imply a clear tax policy strategy induce trust at the constitutional
level as well as current politico economic level .In all the different control setting such as strategy
has appositive effect on ax morale if taxpayers trust the government the court and the legal system
on the tax administration the taxpayers are willing to pay taxes. Therefore all of these actors have
act trustworthily. The result show that the relationship between them and the tax payers (relational
contract) can be maintained positive action and well-functioning institutions implementing a social
capital atmosphere. Such strategy will be honored with high tax morale .In the light of current
politico economic process these finding are interesting and relevant. According to Fred (2003) it
is possible that European Union will levy its own tax in future. This would mean new and
additional taxes (pg20) it is questionable weather deterrence strategy would help to maintain tax
compliance under this circumstances it even enforce under these distinctive effects of addition tax
thus building trust might be alternative strategy to guarantee that tax morale is not crowded out.
Furthermore as on result shows that trust policy is an essential in increasing tax morale
2.8Tax education on tax morale
Educational level become more important in the increasing tax compliance across countries, as it
was suggested that one of the measures to increase voluntary tax compliance is by assuring that
taxpayers has a certain level of qualification, ability and confidence to exercise their tax
responsibility. Therefore it argued that educate taxpayer it may be a way of non-compliance

20. 11
opportunities, but their potential better understanding of tax system and their high level of moral
developments promotes a more favorable taxpayers attitude and therefore great compliance. Also
it is suggested that those with a higher education level are more likely to have a high level of moral
development and higher high level of attitude toward compliance and thus will tend to comply
more
Tax education is related to taxpayer’s knowledge of tax laws according to Benno Toggler. Better
educated taxpayer are supposed to know more about tax laws and fiscal connections they are better
aware of the benefits and services state provides for it citizen from revenue and thus they are in
better position to assess the degree of competence (see Lewis 1982) .On the other hand highly
educated taxpayers should be more aware of government waste further more they may be less
compliant because they better understand the opportunities for evasion and avoidance and they
might be more critical about better aware on how the state uses that tax revenue .However this
argumentation might be relevant for the degree of tax morale on the basis of these different
argument it is interesting to check empirically the effects of education on tax morale and tax
compliance .Not surprisingly the results show unrelated picture . In many estimations the effects
of education on tax morale or tax compliance are not statistically significant .In the estimation
where the coefficient indicate a significant influence the signs are also mixed these result might
indicate that the current politico economic situation (government spending the input output relation
between paid taxes and obtained benefits) influences the education variable
Also ELIYAZAL YONNA in his report about effectiveness of taxpayer’s education on tax
compliance presented at the Institute of Tax Administration march 2012. Researcher found some
of the studies discussed about tax education on taxpayers.

21. 12
Taxpayers education refers to the way tax administration of any country impart knowledge to its
taxpayers on all matters relating to taxation, by making them understanding tax laws and their
operation. Taxpayer’s education is important because it enhances the level of tax knowledge to the
taxpayers and increase the level of voluntary compliance and reduce tax evasion. Taxpayer’s
education is the core to the voluntary compliance
Tax compliance in an ideal world, all citizens and business would satisfy their obligation under
the tax laws to register where specifically required and to voluntarily declare and pay on time their
tax liabilities all calculated fully and accurately in accordance with the law. This statement
encapsulates four basic tax compliance obligations of the citizen and business that generally
speaking must be administered by all revenue bodies in accordance with their respective tax laws
such as to register for tax purposes, to file tax returns on time, correctly report tax liability and to
pay tax in time. In explaining taxpayers compliance, that is the reasons why taxpayers comply and
do not comply there are broadly two classes of theories which emphasizes incentives, and
psychology-base theories which emphasize attitude (Trivedi&Shehata 2005). Economic theories
of tax compliance are also referred to as deterrence theory. According to Trived and Shehata (2005)
economic theories suggested that taxpayers plays the “audit lottery” i.e. they make calculations of
the economic consequences of different compliant alternatives such as whether or not to evade tax;
the probability of detection and consequences thereof and choose the alternative which maximizes
their expected after tax return. The theories suggested that the taxpayers are a moral utility
maximizes hence, economic theories emphasizes increase audits and penalties as a solution to
compliance problems. Economic based on studies suggest that taxpayer behavior influenced by
economic motives such as profit maximization and probability of detection (Trived and Shehata
2005)

22. 13
(Erard & Ho, 2002; Cobhan, 2005) business income taxpayer s operating in informal economy
(Etch berry, 1992) among many factors
Psychology theories of tax compliance assume that psychological factors including moral and
ethical concerns are also important to taxpayers and so taxpayer may comply even where the risk
of audit is low. Psychological theories de-emphasize audit and penalties and instead of focus on
changing individual attitudes toward tax system.
Eriksen and Fallan (1996) postulate that as the level of tax knowledge increases , the rate of tax
evasion decreases and the level of tax compliances become much higher . It therefore shows that
the knowledge of tax is one of the best devises to reduce tax evasion among taxpayers. Knowledge
about prevailing tax laws and consequences of engaging in some unethical behavior in declaring
actual income in tax return, will desist taxpayer from evading tax.
2.9 Complexity of tax system on tax morale
The effects of the tax rate and the income on tax evasion are difficult to assess theoretically. It
depends on the individual’s risk preference and the progression of the income tax schedule (see
Andreoni, Erard and Feinstein, 1998). A higher marginal tax rate makes tax evasion marginally
more profitable, but a contrary effect works depending on the risk aversion of taxpayers. The
results are influenced by the tax schedule (proportional, progressive, regressive) (see Frey and
Feld, 2002). Furthermore, the relationship between tax evasion and tax rate depends also on the
penalty structure. In case the penalties are proportional to the amount of evaded income and taking
into consideration a decreasing absolute risk aversion and constant tax rates than the sign is
ambiguous (Allingham and Sandmo, 1972). On the other hand, an increase in the tax rate will
encourage individuals to declare more income, if fines are proportional to the amount of evaded
taxes (Yitzhaki, 1974).

23. 14
CHAPTER THREE
3: 0 RESEARCH METHODOLOGY
3:1 Overview
This chapter describes how the study will be conducted in terms of research design, area of study,
sample size of the study, sampling techniques, and the instrument of data collection and analysis.
The scientific work toward providing an answer from a certain problems prevailing is actually
done in the systematic way in order to come with the solution and potential answer to the existing
problems.
3:2 Conceptual frame work
Tax morale is very important in tax collection purposes, where there is high tax morale it increase
revenue collected since it will be people culture of paying tax,tax evasion and tax avoidance will
be reduced hence increase tax base and the relationship between government and her citizen also
will be high but where there is low tax morale people will avoid payment of tax and even if they
saw other people they will not feel bad and if possible they will help them to avoid taxes.
Tax awareness
Absence of multiplicity of taxes
Satisfactory goods and services
provided by government
High tax morale

24. 15
3.3 Research Site
The population of this study was at Kinondoni Tax region, which consisted of tax officers and
presumptive taxpayers who are mainly located in Kinondoni Tax region.
3.4 Sampling procedure
For this probability sampling was adopted, and this was because under this sampling, the element
or members of the population of different tax payers had a chance of being selected in the sample.
3.5 Sample size
The sample size of 33 respondents can be used since it is not feasible to collect data from all
taxpayers and tax officers due to time and financial constraints. The sample is to be drawn from
the population basing on convenience sampling technique.
Lack of tax awareness
Multiplicity of taxes
Unsatisfactory goods and
services provided by
government.
Low tax morals

25. 16
3.6 Data Collection
In this study two types of data can be collected namely primary data and secondary data.
3.7 Primary Data
These are data which are collected directly for the first time from the respondent by using the face-
to-face interview and telephone interviews using questionnaires. These data includes sampled
questions related to attitudes and compliance.
3.8 Secondary Data
These are the data which have already been collected and analyzed by someone else. These data
are to be collected from different tax journals, papers, TRA reports, minute of meetings, library in
the TRA office and regulatory reports textbooks, thesis, internet websites, magazines and
newspapers.
3.9 Data Analysis Methods
This study used both qualitative and quantitative analysis; Quantitative analysis is used to show
the relationship between the objective and actual findings. The percentages, tables and averages
have is used to provide much understanding of the finding. And quantitative analysis which contain
descriptive statistics is been used to some of the components, where the percentages and
frequencies together with the means and standard deviations has to be computed and analyzed to
determine factors affecting tax morale among presumptive taxpayers.

26. 17
CHAPTER FOUR
DATA ANALYSIS AND Processing
4.1 Introduction
This chapter present the research finds, analyses and interpret the results obtained from the
research.
4.2 general findings
The study is to obtain opinions concerning the factors that leading to low tax morale among the
tax payers.
4.3 Response Rate
Through the Questionnaires and interview guide, data can be collected from sampled tax payers in
Kinondoni District and Tanzania Revenue Authority (TRA) officials. Like 40 respondents will be
requested for an interview and interviewed using the interview guide and questionnaires. The
responses are to be measured through my combination strategies questionnaires as follows; I have
scaled using 5 points scale and carrying; 1 point= Strong disagree, 2 points = Disagree, 3 points =
Neutral, 4 points = Agree and 5 points = Strong Agree
However open questions will be asked to obtain straight arguments from respondents. Respondents
are aged between 21-40 and 41-60 years old). Data can be collected and be filled in tabulated seen
below;-

27. 18
Table 1 (open questions)
Q/n Factor affecting Tax morale Frequency % age
1 Tax Awareness/lack of /education skill-tax
2 Poor social services( hospital, Roads)
3 Tax erode profit (Tax burden)
4
inequality in tax payment(Regressive taxation
system)
5 Abuse of government fund
6 Poor government leadership
7 Poor tax administration by TRA
8 high tax rate
9 too much taxes
+10 regularly changes for tax laws
13 unfair and lack of transparency
14 poor living standard
15 political influence
16 Complicity of tax
17 Lack of proper punishment to tax evaders

28. 19
Table 2: (Scaled questions)
To what extent do you agree/ disagree with
the
Following statement
(complexity of Tax system on Morale)
Scaling the factors
Strong
Agree
“5”
Agree
“4”
Neutral
“3”
Disagree
“2”
Strong
Disagree
“1”
fn % fn % fn % fn % fn %
Numerals tax leads to high tax morale
Few tax lead to high tax morale
Multiplicity of Tax leads to tax evaders
Multiplicity of Tax Increase government
revenue
Inequality of tax payment lead to low tax
morale
High Tax rate reduce payment morale

29. 20
Table 3 (scaled question)
To what extent do you agree/
disagree with the
Following statement
(Level of education and tax
awareness)
Scaling the factors
Strong
Agree
“5”
Agree
“4”
Neutral
“3”
Disagree
“2”
Strong
Disagree
“1”
fn % fn % fn % fn % fn %
Training and seminar to the tax
payer can increase tax morale
The technique used by TRA to
educate Tax payer is good
Tax education build up ethics in
overall aspect of tax management
The skill and knowledge of tax
improve the rate for tax compliance
Tax education improve moral and
code of conduct in tax system
The knowledge of tax minimizes
the rate of tax avoidance and
evasion

30. 21
Table 4(Scaled question)
To what extent do you agree/
disagree with the
Following statement
(Services Provided by
government and Tax Morale)
Scaling the factors
Strong
Agree
“5”
Agree
“4”
Neutral
“3”
Disagree
“2”
Strong
Disagree
“1”
fn % fn % fn % fn % fn %
Services offered by the
government are satisfactory
There is no relationship between
tax paid and service return
Services offered by the
government are politically
influenced
There are insufficient services
rendered by the government
The weakness in law enforcement
leads to poor services

31. 22
Table 1 (open questions)
Qn ways of increasing Tax morale Frequency % age
1 Education on tax affairs
2 Improving public and social services
3 Reduction for Tax rate
4 Taxation subject from primary school level
5
Taxation should be equivalent to level of
income
6 Elimination for exemptions
7 Elimination of inequality taxation system
8 Reductions for multiplicity
9
Enough manpower at tax administration
level
10 Good customer care
13 Controlling government expenditure
14 Simplicity for government law
15 Extension for tax payment period
16 Transparency of the government
17
Improvement for government tax
collection system
18
Introduction for self-assessment for
taxation

32. 23
19 Strong punishment to the tax evaders
4.4 Interpretation for the results
This study will have to determine the factors affecting tax morale among presumptive taxpayers
in Tanzania. The factors affecting tax morale in their potentiality order found to be; Lack of
education, poor social services, and too much taxes, misuse of government fund, high tax rate and
lack of transparency. The Other minor factors sought to be Inequality taxation system, poor
government leadership, and poor tax administration, Regular changes for tax law, Complicity of
tax law and procedures and lack of proper punishment to tax evaders.
4.5 ethical consideration
The research ethics are to be considered. These can be done by obtaining respondents consent to
complete questionnaires, to get permission of collecting data from TRA, every respondent are free
to volunteer or not to volunteer to the study, names and other identities have to be omitted to
maintain their privacy.

33. 24
CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
This chapter contains the conclusion made from the study, individual and also the recommendation
is provided.
5.2 Conclusion
The study analyses the factors affecting tax morale based on compliance between taxpayers and
tax authority to the situation which taxpayers interacting and are considered. Its seems tax morale
are affected by number of factors like lack of tax awareness and tax education are very important
to increase morale of paying tax to the taxpayers. Another factors to be considered in order to
improve morale of paying tax are, insufficient social services provided by the government like
schools roads and hospitals, abuse of the government fund, unfair and lack of transparence reduces
morale of taxpayers when comes to the payment of taxes.
5.2 Recommendations
In accordance to the findings on the factors affecting tax morale among presumptive tax payers in
Tanzania the following are the recommendations.
 Knowledge on tax matters should be provided to the taxpayers since there is a problem of
not knowing the importance of tax.
 Improvement of social services provided by the government like government hospitals,
schools should provide satisfactory services to the citizens so that they can see the impact
of their money taken by the government
 Taxpayers should be levied lower amounts of taxes so that they will make them to comply
easily.

34. 25
References,
Adam J (2008), Research methods for business and social studies, Dar es salaam: Dar es Salaam
university press
Malyamkono, T.L, Mason, H, Ndunguru, A and Osono, N.E (2010). Why pay Tax? 2nd
Edition.
Tema publisher, Dar es Salaam and Siyaga Publish South Africa.
Andreoni, J. Erard .B .and Feinstein, j. (1998). Tax compliance.’ Journal of Economic
Literature, XXXXVI: 818-860.
Co well, F. and Gordon, J. (1988). Unwillingness to pay. Tax evasion and public goods provision.’
Journal of Public Economics, 36:305-321
Ongwamuhana ,k (2011),tax compliance in Tanzania analysis of laws and affecting volutantary
taxpayer compliance
James, S, and C.Alley1999 Tax compliance, self-assessment and administration in New Zealand
Torgler, B., 2003 Tax morale: theory and empirical analysis of tax compliance, PhD
Dissertation, Basel, university of Basel

35. 26
APPENDIX
ATTACHMENT OF QUESTIONNAIRE
Dear respondents.
This questionnaire is designed to gather information about factors affecting tax morale among
presumptive taxpayers in Tanzania. All responses will be used to conduct a study of postgraduate
diploma in taxation from Institute of Tax Administration. I highly appreciate your cooperation and
looking forward to get feedback from you
Region________________ District_____________ ward _____________
Street____________________
Name of the business…………………………………………………………..
Taxpayer identification number (T.I.N)…………………………………….
Type of business tick ( ) the appropriate assessment
A Manufacturing
B Hotelier services
C Trading
D Retail
E Others

36. 27
A: PERSONAL INFORMATION
Please circle what describes you better.
1. Sex. (a) Female ( ) (b) Male ( )
2. Level of education
(a) Primary level (b) Secondary level (C) university level (d) master/ PhD level (e) Other
specify………………………………………………………………………………………………
3. Age (a) Less than 20 (b) 21 – 40 (c) 41 -60 (d) 61 and above
B. TAX MORALE
4. To what extent do you agree/disagree with the following statements, place a tick (√) in
appropriate cell
Guiding Scale Strongly Agree = 5; Agree = 4;
Neither Agree nor Disagree = 3

37. 28
Disagree= 2; Strongly Disagree = 1
MULTIPLICITY TAX ON MORALE 5 4 3 2 1
Numerals tax to the business increase tax morale:
Limited number of tax increase tax morale
Multiple tax increase tax evasion
Multiplicity of tax increase the tax revenue collection
Tax is unfair because not everyone pays it therefore decrease morale to pay
Tax rates are quite too high which decrease morale
5. To what extent do you agree/disagree with the following statements, place a tick (√) in
appropriate cell.
Guiding Scale: Strongly Agree = 5; Agree = 4;
Neither Agree nor Disagree = 3
Disagree = 2; Strongly Disagree = 1
THE LEVEL OF EDUCATION AND AWARENESS OF TAXATION 5 4 3 2 1
Training and seminar to the taxpayer can increase tax morale
The ways used by TRA to provide education is good
Tax education increases the ethics in tax management

38. 29
Knowledge of tax improves the rate of tax compliance
Tax education improve moral and code of conduct in tax system
Knowledge of tax decrease the tax avoidance and evasion
Tax education helps in Tax planning
6. To what extent do you agree/disagree with the following statements, place a tick (√) in
appropriate cell
Guiding Scale: Strongly Agree = 5; Agree = 4;
Neither Agree nor Disagree = 3
Disagree = 2; Strongly Disagree = 1
SERVICES PROVIDED BY GOVERNMENT AND TAX MORALE 5 4 3 2 1
Services offer by government are satisfactory
There is no relationship between the tax paid and service return
Services offered by government are politically influenced
There services offered by government are insufficient
Loopholes given by tax laws leads to have poor deliverance of services
The service offered is discriminatory which reduce tax morale

39. 30
7. What do you think are the factors affecting tax morale?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
____________________________________
8. Suggest five ways of increasing tax morale
(i)_____________________________________________________________________
(ii)____________________________________________________________________
(iii)____________________________________________________________________
(iv)____________________________________________________________________
(v)____________________________________________________________________
9. Which bands of turnover do you fall yearly. Circle your category
(a) Less than 4,000,000
(b) Between 4,000,000 -7,500,000
(c) Between 7,500,000 -11,500,000
(d) Between 11,500,000 -16,000,000
(e) Between 16,000,000 -20,000,000

40. 31
C: TRA EMPLOYEES.
10. How do you rates tax morale among presumptive tax payers? Please tick your opinion
(a) High tax morale { }
(b) Low tax morale { }
11. If tax morale is low, what do you think are the reasons?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________
12. Suggest ways of increasing tax morale among the Tax payer s
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________________