CHALLENGE OF BUSINESS INCOME TAX IN THE CASE OF MEKELLE TOWN, TIGRAY, ETHIOPIA
DOI:
https://doi.org/10.62737/177jyf44Keywords:
Business, income tax, Revenue, Mekelle City, and ChallengesAbstract
For many decades, the tax contribution to GDP was much lower, and it needs improvements to its filing system, assessment, and collection process to enhance the government revenue. On the other hand, the Ethiopian government has a strong belief and commitment to poverty reduction and ensuring sustainable development, and it is impossible to achieve such a goal without generating sufficient revenue that can cover the government expenditure. To narrow the gap between the revenue and expenditure of the government, the effective collection of business taxes has played an important role. Therefore, the researcher tried to fill the tax gap by assessing the challenges of collecting business taxes in Mekelle town. To attain the objective of the study, the survey method was used, and data were collected by distributing questionnaires to a sample of 163 taxpayers and tax collectors in categories A, B, and C and conducting informal interviews with the tax collectors. The study focused solely on business income taxpayers. In the process of business tax collection, it was observed that different problems and challenges have been encountered, and the main challenges were the availability of illegal traders, the attitudinal problem of taxpayers towards the tax system, and the weakness of tax collectors in tax collection and administration. The research findings showed that most of the respondents have positively agreed with the availability of illegal traders in the town and negatively disagreed with the tax system and organizational strength of the tax authority. As a result, the branch office has lost a lot of birr per year. The study's findings recommend that the first step is to control unregistered traders. Secondly, there arises awareness that payment of taxes is compulsory and the duty of every responsible citizen for the common welfare and socio-economic development of the country. Thirdly, it is important to build the implementation capacity of the branch office's tax collectors in registering, filing, assessing, and collecting processes, as these will enhance their efficiency and effectiveness in ensuring compliance with tax regulations.
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