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An Assessment of ERCA's Taypayer Education Programs and How They Can Be Improved

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Presentation by Azime A. Hassen at the second annual meeting of the Ethiopian Tax Research Network, which took place in Addis Ababa on 8th October 2018.

Published in: Economy & Finance
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An Assessment of ERCA's Taypayer Education Programs and How They Can Be Improved

  1. 1. An Assessment of ERCA’s Taxpayer Education Programs and how they can be improved Azime A. Hassen Oct 8,2018 1
  2. 2. Outline • Introduction • Objectives and research questions • Literature Review • Methodology • How does the ERCA taxpayer Education compare with other countries? • The Tax education Initiatives in ERCA • The taxpayers’ perceptions about the taxpayer Education program • How taxpayer Education program designed properly for its purpose and in its application? • Concluding remarks • Recommendations 2
  3. 3. Introduction • Tax Education is the method of educating taxpayer through various media. • Tax education may increase taxpayer knowledge of tax laws and procedures, potentially increasing their ability and willingness to comply and thus increasing tax revenue for the government, through better compliance. • Large number of studies focused on the role of tax education in shaping tax morale. • Tax is part of the social contract by which citizens collectively agree to contribute to a civilized society. • Using Afro barometer data on thirty-six African countries, Isbell (2017) reports that the majority of respondents have difficulty figuring out what taxes they owe to the government. 3
  4. 4. Objectives and Research questions The purpose of this study is to assess ERCA’s taxpayer education programs and how they can be improved. More specifically, my study asks the following research questions: 1. How is ERCA reaching out to inform and engage current and future taxpayers? 2. How does the ERCA’s taxpayer education compare with those of other countries? 3. What are the taxpayers’ perceptions about the taxpayer education program? 4. Is ERCA’s taxpayer education program designed and implemented properly for its purpose? 4
  5. 5. Literature Review • Taxpayer education covers a wide range of activities and actors – • from government programs to encourage tax-compliant behavior, • to efforts by business organizations to mobilize and represent the interests of their members on tax issues, • to civil society initiatives to bring citizens into policy debates on tax collection and redistribution. • The large informal economy in most developing countries is an important reason for engaging in taxpayer education. A simple cost- benefit analysis is likely to show that chasing many potential taxpayers whose contribution would likely be minimal drains more resources than it brings in. • However, engaging and educating them can help to strengthen feelings of responsibility and identity to the state(OECD, 2012). 5
  6. 6. Methodology • To review/survey current initiatives • compare with other countries, plus go in depth on taxpayer perceptions and the suitability of current programs. • qualitative methods -allow us to have an overview of programs and an in depth understanding of the implementation and perceptions around them. • A total of 250 questionnaires were distributed • Two ERCA Branches(Focus on Small and Medium Taxpayers). • 15 interview from Taxpayers , as well as an interview of tax education experts at ERCA. 6
  7. 7. RQ1. How is ERCA reaching out to inform and engage current and future taxpayers? A. TV and Radio Program I. “Gebe Lelimat” TV Program • EBC (discontinued ) • Walta • Fana II. Radio • 97.1 FM Radio(discontinued) • National Radio(discontinued) • Radio Fana 7
  8. 8. RQ1. How is ERCA reaching out to inform and engage current and future …. B. News Paper: Gebe Lelimat Gazeta C. Tax week celebrations D. Tax training and seminars E. Call Center 8
  9. 9. RQ2. How does the ERCA’s taxpayer education compare with those of other countries? • Most taxpayer education programs, especially Africa, were created during the last decade • despite this short history, taxpayer education is increasingly being included amongst the strategic business lines of tax administrations. South Africa’s Taxpayer Education : • South Africa has created a stronger presence in rural areas through mobile vehicles that bring tax information to the people. • It also reaches millions of taxpayers through TV and radio, explaining the importance of good fiscal citizenship and showing taxpayers how to become tax compliant • Main Objective of the program: • to explain why citizens should pay tax and how tax revenue is used • to show taxpayers how to be independently compliant • to make taxpayers aware of their obligations, 9
  10. 10. RQ2. How does the ERCA’s taxpayer education… Zambia’s taxpayer education: • Zambia’s weekly radio programme, Tax Chat, allows taxpayers to call in live and ask questions . • The first half explains a tax matter – such as domestic tax, customs tax or changes in the administrative system – in the form of an interview between the Head of the ZRA Co-operation Communication Unit and a ZRA expert. • The second half of the show involves a live call-in to allow taxpayers to ask questions, raise concerns or give feedback. • The general public also provides feedback by email, face to face contact and by phoning the call center. • Criticism and feedback is used constructively to improve the show. 10
  11. 11. RQ2. How does the ERCA’s taxpayer education… Nigeria’s taxpayer education • the Nigerian Federal Inland Revenue Service (FIRS) has developed several strategic initiatives that aim to make tax messages more appealing to taxpayers. • In Nigeria, a television soap opera – “Binding Duty” – provides a relaxed, enjoyable and non-confrontational way of reminding citizens of their responsibility to pay taxes. • Making tax messages engaging and interesting is a good way of motivating people. 11
  12. 12. RQ2. How does the ERCA’s taxpayer education… • Bangladesh celebrates National Income Tax Day every year on 15 September in the run up to the formal submission day of 30 September, when more than 80% of tax returns are filed. • Rwanda’s Taxpayer’s Day serves to strengthen links between taxation and national development, promote tax compliance, and build trust in the RRA. As guest of honor, the Rwandan President gives awards to the country’s best taxpayers . 12
  13. 13. RQ2. How does the ERCA’s taxpayer education… • Kenya implemented its Schools Outreach Programme in the 2012 to inculcate a taxpaying culture among future taxpayers • Mauritius’ tax administration has likewise undertaken tax sensitization at secondary schools 13
  14. 14. RQ3. What are the taxpayers’ perceptions about the taxpayer education program? • According to survey of taxpayers’ perceptions on ERCA’s tax education program shows that most of them agree that tax is an important subject to be learnt in different ways and media, since nobody could escape from it. 14
  15. 15. RQ3. What are the taxpayers’ perceptions about… 70% of respondents disagreed with the statement that it is difficult to file a tax declaration. A smaller, but still substantial, proportion indicated that they agree with the same statement (25%), while the rest were neutral. 11% 14% 5% 49% 21% Difficult to file an income tax declaration Strongly agree Agree neutral Disagree Strongly disagree 15
  16. 16. RQ3. What are the taxpayers’ perceptions about… the easiness to get in touch with ERCA to obtain clarifications on tax laws and procedures about 31% agreed. However, 60% disagreed with the statement that easy to get in touch with ERCA to obtain clarifications on tax laws and procedures. Strongly agree 19% Agree 12% neutral 9% Disagree 6% Strongly disagree 54% Easy to get in touch with ERCA Strongly agree Agree neutral Disagree Strongly disagree 16
  17. 17. The majorities of the respondents were aware of the training and weekly radio program about 23% and 16% respectively. 11 15 2 6 4 16 23 9 5 8 0 0 5 10 15 20 25 In person (local office) Telephone letter ERCA website Weekly TV program Weekly Radio Program Training Workshop Tax week celebration Gebe lelimat newspaper Other % Knowledge on taxpayer’s education initiatives 17
  18. 18. Strongly agree Agree Neutr al Disag ree Strongly disagree I was treated with courtesy and respect 21 35 10 19 15 I was helped quickly 28 33 14 14 11 I was provided with clear and useful information 23 21 8 39 9 I was able to resolve my question(s) or issue(s) 17 39 13 15 16 • It shows that 34% of respondents disagreed with the statement that it they treated with courtesy and respect. A larger, proportion indicated that they agree with the same statement (56%), while the rest were neutral. • It shows that 61% of respondents agreed with the statement that it they were helped quickly. A smaller, but still substantial, proportion indicated that they disagree with the same statement (25%), while the rest were neutral. • The perception of the respondent is on the clarity and usefulness of information; about shows that 44% of respondents agreed with the statement that it they was provided with clear and useful information. A equal, proportion indicated that they disagree with the same statement (48%), while the rest were neutral. • Concerning the ability to resolve the questions or issues by the visitor's perception of the respondent’s shows that about shows that 56% of respondents agreed with the statement that it they were able to resolve the question(s) or issue(s). A large, proportion indicated that they disagree with the same statement (31%), while the rest were neutral. Taxpayers experienced when they visited ERCA office 18
  19. 19. Usefulness of the different taxpayers’ initiatives Very useful Somewhat useful A little useful Not useful at all Have not used “Gebi Lelmat” Gazeta 19 15 11 24 31 Tax Topics articles (flyers, Brochures) 28 21 9 32 9 Weekly Programs detailing specific tax applications in Radio 37 31 15 5 12 Gebe Lelmat TV Program 13 24 17 29 17 Tax training 42 37 9 8 4 Tax workshop 34 29 16 20 2 Local office assistance 17 23 39 15 6 Telephone Information Center 8 15 33 40 4 Tax week celebrate 9 15 34 38 4 19
  20. 20. Usefulness of the different taxpayers’…. • The most popular or appreciated taxpayers initiatives are training, radio, workshops and flyers, Brochures. • But among the different taxpayers education initiatives telephone Information Center, tax week celebrate and local office assistance and Gebe Lelmat TV Program are the least preferred; so, few of the taxpayers use or benefited from this initiative. 20
  21. 21. RQ4. How taxpayer Education program designed properly for its purpose? • Even though there are more works an initiative for the education going on, but there is still difficult in evaluating the initiatives effectiveness. 21
  22. 22. Directly applied the knowledge/information you learned in your business 16 17 42 24 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT a)Training 24 21 37 18 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT b) Tax education workshops 48 14 10 28 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT c) “Gebe Lelimat” TV Program 19 7 39 35 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT d) Radio Fana 15 11 34 40 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT e) 97.1 FM Radio 16 14 41 29 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT f) National Radio 22
  23. 23. Directly applied the knowledge/information…. 27 24 42 6 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT g) Tax week celebrate 24 38 32 6 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT h) ERCA website 44 22 15 20 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT i) Telephone Information Center 38 11 26 26 NO IMPACT A SMALL IMPCAT A MODERATE IMPACT A LARGE IMPACT j) Local office assistance 23
  24. 24. Tax training content rating Excellent Good Fair poor Have not attended If you attended tax training, how would you rate the content/presentation? 52 23 4 10 10 24
  25. 25. • Using questionnaires administered to the participants of this research, the respondents identified factors that prevented them from participating in more taxpayers’ education; • there was a lack of content detail, • taxpayer education conflicted with their work schedule 25
  26. 26. In addition to the survey data analysis, I interviewed tax officials too. They responded to the main problems and challenges related to taxpayer’s education. They briefly explained as follows. • poor communication between the tax authority and taxpayers, • Weak achievement of categorizing business income taxpayers in their attitudes and identifying noncompliance to educate them, • No adequate budget, • The absence of practice sharing, • The taxpayers have less interest to participate in tax education program • Lack of assessment to obtain gets the outcomes of taxpayers’ education • Lack of monitor and control tax clubs that established in schools, • Lack of cooperation with stakeholder, • Lack of consistency relation with the business community, • Inadequate education with media. 26
  27. 27. Concluding Remarks • There is the almost complete lack of rigorous evaluation in the different tax education initiatives. • The existing initiatives can be improved to enhance their effectiveness. • The content of existing tax education initiatives needs improvement. 27
  28. 28. Recommendation • There is a need of sustainability of the taxpayer education message at institutions is through active participation from the citizens. • Using taxpayers education create an awareness for fiscal contract that found between citizens and the state. • involve the participation of some more groups such as legislators, tax preparers, tax professional associations, schools, churches, mosques and taxpayer advocacy groups if available. • Prepare and disseminate simple and easy type of flyers and broachers about the different topics of tax. • Improve the contents of the training and its convenience • Improve the attractiveness and contents of TV and Radio • Improve the distribution and availability of the Gebe Leimat news paper 28
  29. 29. Thank you!!! 29

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