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ASSESSMENT OF BUSINESS INCOME TAXPAYERS SATISFACTION WITH THE TAX SYSTEM: The Case of Woldia City Administration
Research submitted to College of Finance, Management and Development, Department of Tax and Customs Administration as partial fulfillment of the requirement for Bachelor of Arts Degree in Tax Administration
By: – Eyeberu Lulie Aragaw
Advisor : Ato Getachew Wolde Mariam
April, 2018
Addis Ababa
CHAPTER ONEINTRODUCTIONBackground of the StudyAll civilized countries need to collect taxes for several reasons, such as to finance developmental activities, to meet their day-to-day expenses related to maintenance of a free and fair society, to control the economy through fiscal measures, and to a certain extent, to change the economic behavior of people (Kumar 2004).

It is already known that taxes are important and trustworthy source of government revenue in any country. But the amount of revenue to be generated and collected by a government from taxes for its expenditure program largely depends up on the willingness of the taxpayers to pay taxes and fulfill their legal obligation with tax laws of a country. Matthiujs Alink and Victor Van Kommer (2011); the most cost-effective means of collecting taxes is through the voluntary compliance of the public with the tax laws. In order to encourage taxpayers to comply with their tax-paying responsibilities voluntarily, it is important that the tax Administration assists them in understanding their responsibilities.
A country’s revenue generation primarily depends upon its sufficient capacity to tax more in both economic and administrative term, lack of homogeneity across time and culture, the existence of gap between the tax payments required by the law and those actually surrendered to the state because of the inadequacy of the tax authority manpower, institutionally weak and lack in potential support are not in a position to collect the amounts outstanding (Cheibub, 1998).

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As per Federal Income Tax Proclamation No. 979/2016, business taxpayers are classified into three categories. “Category A” is including taxpayers with annual turnover Birr 1,000,000 or more, while “Category B” is consisting taxpayers with annual turnover between 500,000 and Birr 1,000,000. Taxpayers below Birr 500,000 with annual turnover classified under “Category C”
Unlike “Category A” and “Category B”, businesses under the third category are not obliged to keep books and accounts rather a simple report only recording their profit and expenditure with no need to record payable and receivable moneys. They are subjected to presumptive tax, based on a percentage of turnovers.

But revenue come from those tax payers are not sufficient to finance the government expenditures because the tax revenue performance is low in developing countries due to various problems. Therefore, developing countries receive a very low amount of revenue from taxation because these countries face a number of problems in the process of revenue generation. (Mesele and Tesfahun, 2016)
Revenue generated from taxation has got the attention of governments as a major source of funds necessary for the countries overall development. According to (Brautigam et al. 2008), taxation is the new frontier for those concerned with state building in developing countries. But revenue come from tax are not sufficient to finance the government expenditures because the tax revenue performance is low in developing countries due to various problems. As per Crandall and Bodin (2005), the developing countries tax revenue is in a weak position because of both a complex tax system and widespread corruption. Complex and fragmented tax administration has its source in part in developing countries.

Statement of the ProblemTax is the main component of government revenue that will use to finance all the government expenditure to stabilize the economy and to maintain sustainable development in a given country. The expenditure here means the used of government’s revenue for the development and operational expenditure that will bring an economic growth. Likewise, taxation in Ethiopia; especially in Amhara regional state, is a challenging topic.

With the intention of maintaining and effectively implementing this objective of tax system the responsible organs of the government perform varieties of activities. Tax offices as revenue collecting organs do assume the responsibilities of collecting the higher amount of tax revenue for the government. To do so there are so many legislative powers assigned for them and the mechanisms of doing it. Ethiopia’s revenue administration system relies on taxpayers assessing their tax liability under the law and paying the correct amount of tax. However, unless it is systematically administered such system of self-assessment has inherent risks (Yonas, SendabaNemera, 2016). Attitude and perception of taxpayers play a vital role on the proper implementation of tax laws and will increase the amount of revenues to be collected from tax. If taxpayers do have positive attitude towards taxpaying and tax authority officials, they will be willing to comply tax laws. Tax compliance is one explanatory factor for the level of satisfaction of tax payers.

But, Temtime (2014).Indicated that unfair practices will be taking place which will violet the rule of law that may automatically increase the burden of taxes on honest taxpayers. Such pressure on honest taxpayers would lead to the prevalence of taxpayers’ resentment. This could be a source of dissatisfaction in the service given by the tax administration. Moreover, one of the main reasons for the tax gap is noncompliance by taxpayers and potential taxpayers with tax legislation and the perception of taxpayers on tax system. Both gaps of poor perception and taxpayers’ resentment towards taxes system will lead to inefficient and ineffective collection of taxes. Unless efforts are made to narrowing down the gap, in line with knowing the taxpayers’ perception and how tax regimes satisfy taxpayers, will help tax administration to mobilize adequate tax revenues.
This study therefore will examine factors that determine the satisfactions of Business taxpayers with the tax administration in Woldia city administrations. The study will also aim at examining the significant relation between their satisfaction towards the tax system and their behavior towards paying tax. The study will emphasis the need for better understand those factors contributing to taxpayers’ satisfaction, including activities to be done that taxpayer’s how to achieve highest satisfaction. In this study, taxpayer’s satisfaction will be treated as a new variable leading to know why taxpayers are dissatisfied with the tax administration and satisfaction leading to participation will be derived through investigation of four circumstances: they are; tax fairness perception, tax knowledge and understanding, attitude towards taxation, and service quality given by tax officials.

Research Questions
This research will attempt to answer the following research questions.

How do business Income taxpayers perceive they are treated by the tax administration?
To what extent are business taxpayers satisfied with the tax system?
How is the satisfaction of business taxpayers with the taxpayer’s service?
What are the major factors that affect the satisfaction level of business taxpayers towards the tax system?
Objectives of the Study
General objectiveThe general objective of this study is to explore the satisfaction level of business taxpayers in Woldia city administration, Amhara Regional State.

Specific objectivesThe specific objectives of this study are to:
Assess the perception of business taxpayers towards the tax administration.

Explore the extent of business taxpayer’s satisfaction with the tax system.

Examine the satisfaction of business taxpayers with the taxpayer’s service and availability of tax information?
Identify the major factors that affect the satisfaction level of business taxpayers.

Significance of the StudyThe attitudes of business taxpayers towards the tax system will significantly importance to collect all the revenue generates from the economic activities of the area. This will also be considered as fundamental for Woldia city tax revenue office being effective and efficient to provide relevant information and knowledge that will help tax officials and collectors to identify factors that may affect tax collection performance in relation to business taxpayer’s satisfaction. This will enhance a large number of voluntary tax compliance. It will also hope that by identifying the problem associated with taxpayers, Woldia city revenue office will have been understood the business community and hence modify its services delivery as much as to increase taxpayer’s satisfaction and this in turn reflects the taxpayers’ beliefs, perceptions and interpretations on the tax system. Moreover, this study will help Woldia city administration revenue office to know the problems that need attention to provide solution and further improvement in implementing tax rules and regulations and tax imposition based on principles of taxation so as to meet the need of business taxpayers. This study will also important for the business taxpayers for which to benefit them from an improved service that will deliver from any tax officers in the tax administration office.
RESEARCH DESIGN AND METHODOLOGYResearch design
Research design is the overall plan of the research. It is referred to as a blue print for the collection, measurement and analysis of data (Kothari, 2004). It also shows how the study is implemented from problem definition to conclusion of study. The researcher employed descriptive research design to describe the phenomenon as it exists in all aspects that the researcher investigated and associational research design to get the causes and effects of the relationship between local tax revenue collection and the level of taxpayer’s satisfactions in Woldia city administrations. Both qualitative and quantitative data collecting mechanism were used to get ample and accurate information from the selected target samples.

Data source
To identify the main problems of the study and arrive at an effective conclusion, the researcher will collect data from primary and secondary sources. Primary data will be collected from the targeted tax payers, employees and officials of the revenue office. Secondary data will be collected from different sources related to the study like annual plan report and documents of Woldia city Administration revenue office.

Data gathering toolsThe primary data were collected mainly by structured questionnaire, semi structured and personal interviews. The questionnaires that were designed are both closed and open ended. The researcher can use checklist to control the distribution and the collection of data from respondents.
Secondary data sources can be published or unpublished data like annual reports, tax reform manuals, websites and other related documents which can show the objective of the study.

QuestionnaireAs Masada, (2013) defines questionnaire as a self-administered schedule of questions and statements. It is a special interview schedule, which is completed by respondent himself instead of the interview. It consists of a number of questions printed or typed in a defined form or set of the forms. The primary data were collected mainly by structured questionnaire, semi structured and personal interviews. The questionnaires that were designed are both closed and open ended. Structured Questionnaires distributed to the targeted respondents who are expected to read them, understand and answer the questions on their own. Structured questionnaires are simple to administer and relatively inexpensive to analyse over other instruments
Document Analysis
The researcher analyzed documents of the tax office. This included published or unpublished data like annual reports, tax reform manuals, websites and other related documents which can show the objective of the study. Moreover; the number of tax payers those who submitted their complain on the amount of tax that they requested to pay and on the service they have given by the officers and how fast their claim would have got response. Since it helps to check whether the tax offices have been giving emphasis on the taxpayers’ problem or not.InterviewThe researcher prepared sample interview questions for the Woldia city Administration tax officials. The interview had semi-structured questions in order to gain deeper information about the factors that affect the tax administration system and its management strategies in relation to business taxpayer’s satisfaction.
Generally, the interview questions designed based on the objectives of the study. To overcome misunderstanding semi-structured interview questions were translated in to Amharic. The purpose of this tool is to find out factors affecting business taxpayers’ satisfaction using qualitative approach.

Procedure of data Collection
The data gathering tools were designed on the basis of review of related literature. The questionnaires and interview questions were developed and analyzed in line with the basic questions of the study. In order to maintain the validity and reliability of the questionnaires, pilot test was made at North wollo zone Revenue branch office in order to check language, ideas, contents, and other grammatical errors. Based on the feedback from pilot test, the necessary corrections were made and restated as required. Then, finally adjusted questionnaires were distributed to the target groups of the study. During questionnaire and interview administration, the researcher made the objectives of the study clear to the respondents in order to avoid any confusion and the time convenience of the respondents and interviewees considered so as to maximize the rate of return from the questionnaires and the interview questions.

Population, Sample Size and Sampling TechniquesPopulation of the studyThe study will target on the Woldia, Cities administrations business taxpayers and the tax officials of city revenue offices. Multi-stage sampling technique will be used to select sample tax payers. Tax payers shall first stratify into three strata according to their categories: Category “A”, ‘B’, and ‘C’ tax payers. Then, a proportional random sampling method will be employed to select the sample tax payers from each stratum.

Table SEQ Table * ARABIC 1. Taxpayers Population of studyCenter No. of Taxpayers by Categories Remark
A B C Total DebreGelila – – 1044 1044 Yeju Genet – – 1487 1487 Defergie – – 1241 1241 Admin. Office 456 473 – 929 Total 456 473 3772 4701 There are a total of 4,701 tax payers out of which 456 are under category of tax payer A, 473 are under category taxpayer B and 3,772 are under category taxpayers C (Woldia City Administration revenue Office, 2017 Annual report).
Table SEQ Table * ARABIC 2. Employee population of the studyCenter Number of employees in Tax center
Male Female Total
DebreGelilaKebele 7 5 12
Yeju GenetKebele 5 7 12
DefergieKebele 8 4 12
Admin. Office 28 24 52
Total 48 40 88
The total number of employees and officials are 88 of which 48 are male and 40 are female who are currently working.
Therefore, the target population for this study will be the sum of all category taxpayers and employees which is 4,789. (2017 Annual reports of Woldia City Administration revenue Office)
Sample size and techniqueThe study included all category taxpayers and some selected employees under Woldia City Administration revenue office. A sample size will be taken for the study is by applying the sample determination formula.

As a result of the political crisis in the country, there was a high level of community opposition upon the government around the study area and this could made the data collection procedure very challenging. So that, the researcher had considered with 92% confidence level and he might had been encounter 8% (0.08) the desired margin of error. Then the total number of sample size of tax payers could be calculated as;
n = N
1+N(e2 ) ,Where; n= the size of sample
N= number of target population of taxpayers.
e= The desired margin of error
Therefore, N = 4701number of target population, and e= 8%
Thus: n = 4701 = 4701 = 151
1+4701(0.08)2 31.144
So, the total sample size of taxpayers were approached to 150 respondents from the total target population number of all categories ‘A’, ‘B’ and ‘C’ tax payers. But, the share of the sample size of the study area with the corresponding taxpayer’s categories was distributed randomly.
To represent the population of Tax payers in the target site, randomly selected 24 tax payers under category A, 37 tax payers in category B, and 89 taxpayers’ category C will be selected as primary source of data. In addition to the tax payers, 4 tax officials or heads of tax centers had selected purposively aiming that they are key informants for focus group discussion and interview.

The sampling technique that employed in this research is both probability and non-probability sampling techniques. From the probability sampling techniques, simple random sampling technique was used to select each categories of tax payers from sample size of the target population because of having similar characteristics or homogeneous in nature within the categories. On the other hand, the study also uses non probability sampling techniques by applying purposive sampling technique to select the respondents from office’s employees. But, due emphasis is given to criterion sampling in order to get quality data.

Data analysis and interpretationData analysis part is one of the major parts in this research. Therefore, to come across with suitable description of the research and valid generalization of findings, the researcher will be used both qualitative and quantitative mechanisms of data analysis. Quantitative data gather from the questionnaire tabulated around the subtopics related to the research questions. Moreover, the data gathered from the field through questionnaire organized and present in tables on the nature of the data for clarity and readability purpose.
Likewise, the researcher analyzed qualitative data that were collected through interview, open-ended questionnaires, and document. To discover patterns, ideas and explanations, data organization, summary and interpretation steps of analysis will be employed. These Both quantitative and qualitative data collected from different sources so as to give answer to the research question was organized and presented in terms of table, calculated using percentage and illustrate to what extent the respondents agree or disagree. And these were carefully checked to maintain the reliability and validity of the study and produce concrete results.

Scope of the studyWhile it is difficult to cover the whole registered taxpayers in North Wollo Zone, the study is delimited to some Woldia City registered taxpayers and employees. Woldia is one of the City Administration in North Wollo Zone of Amhara Regional State. North Wollo Zone is one of the administrative zones of the Amhara Regional state with recurrent food with significant amount of Tax payers.

Limitation of the studyThough taxation in Ethiopia is not a recent phenomenon, locally written literature particularly on Taxation in Ethiopia and especially practices in Woldia city is not available. Therefore, it was difficult to collect past information about the subject matter. Documentation at Woldia city administration revenue offices were not kept as required.
It is obvious that adequate and reliable information is important to undertake any kind of survey precautions. However, the unwillingness and carelessness of some respondents while filling the questionnaires during data collection created constraints to the study. Hence, to overcome the challenges that expected from the respondents the researcher were make his effort to convince them by clarifying the objective of the research and their responses were be kept confidential.
Organization of the study
This research study attempts analyze satisfaction level of business taxpayers in Woldia city administration. Accordingly, the paper will be organized in a way that chapter one deals with the Introduction of the study and research methodology, chapter two presents the Review of the Related Literature, chapter three presents the Data Analysis and Results of the Findings and the last chapter, chapter four, deals with the Conclusion and Recommendation parts of the study under taken.
1.12. Operational Definition of Basic Terms
Business Income- is any income that is realized as a result of business activity.

Taxpayer- is a person or organization (such as a company) subject to a tax on income.

Satisfaction- is a way of dealing with a complaint or problem that makes the person who complained/feel happy:
Tax System- a legal system for assessing and collecting taxes.

REVIEW OF RELATED LITRATURE
Concept of Business Income Tax in EthiopiaAs per Berhane, (2010).The taxation of business organizations generally falls into two basic models-“Corporate” taxation and “Partnership” taxation. Corporate taxation typically imposes a tax on the income of certain types of business organizations and also taxes the profits distributed to the holders of the ownership interests. The partnership taxation model, on the other hand, taxes the income derived by the organization directly to the owners whether or not distributed.
According to Federal Income Tax Proclamation No. 979/2016, tax is imposed on business income. The Proclamation under Article 21(1) defines business income as the business income of a taxpayer for a tax year shall include the following:
the gross amounts derived by the taxpayer during the year from the conduct of a business, including the gross proceeds from the disposal of trading stock and the gross fees for the provision of services (other than employment income);
the gross amounts derived by the taxpayer during the year from the investment of the capital of a business, including dividends, interest, and royalties;
a gain on disposal of a business asset (other than trading stock) made by the taxpayer during the tax year;
any other amount included in business income of the taxpayer for the tax year under this Proclamation.

The tax imposed on the taxable business income / net profit realized from entrepreneurial activity. Taxable business income would be determined per tax period on the basis of the profit and loss account or income statement, which shall be drawn in compliance with the generally accepted accounting standards. Corporate businesses are required to pay 30% flat rate of business income tax. For unincorporated or individual businesses, the business income tax ranges from 10% – 35%. In the determination of business income subject to tax in Ethiopia, deductions would be allowed for expenses incurred for the purpose of earning, securing, and maintaining that business income to the extent that the expenses can be proven by the taxpayer.

In Ethiopia, like any other developing countries, faces difficulty in raising revenue to the level required for the promotion of economic growth. Hence, the country has been experienced a consistent surplus of expenditure over revenue for long period of time. To tackle this problem; the government impose direct and indirect taxes among others; as major and important sources of public revenue. However, this imposition of tax couldn’t still bring the required result due to a number of reasons such as lack of clear understanding about the tax system by the tax payers, tax payers don’t comply with their tax obligation, hostility between the tax payers and tax officials, negative attitude of taxpayer towards the tax system, that is, understating their taxable income by significant amount and related. For these reasons, the actual amount of tax couldn’t be collected properly (www.researchersworld.com).
Taxpayer’s SatisfactionTaxpayer’s satisfaction measures how well the expectations of the taxpayer’s concerning with the overall quality of service provided by the tax authority. As per Andrew Okello (2014), Modern tax administrations seek to optimize tax collections while minimizing administration costs and taxpayer compliance costs. The most cost effective systems of collecting taxes are those that induce the vast majority of taxpayers to meet their tax obligations voluntarily, leaving tax officials to concentrate their efforts on those taxpayers who do not comply. Taxpayers are more likely to comply voluntarily when the tax administration: (1) adopts a service-oriented attitude toward taxpayers, and educates and assists them in meeting their obligations; (2) creates strong deterrents to non-compliance through effective audit programs and consistent use of penalties; and (3) is transparent and seen by the public to be honest, fair, and even-handed in its administration of the tax laws. Experience shows that voluntary compliance is best achieved through a system of self-assessment.

Moreover; Yonas (2016), explain that revenue generation at optimum level is always desired and various measures have been taken to encourage taxpayers for voluntary compliance. It is expected that the tax compliance rate increases based on various factors including the satisfaction which mainly reflected by the positive attitude of tax payers about tax authorities the tax policies, their implementation, fairness of tax assessment and the like. The primary objectives of tax administrations are to ensure compliance with tax laws and improve customer service satisfaction for taxpayers and an improved understanding of taxpayer behavior (and attitudes to taxation) can help tax administrations to develop stronger and more effective compliance risk treatments.
Factors Affecting Tax Payer’s Satisfaction
According to Temtim (2014); many of the functions of tax administration depend to at least some degree on the voluntary compliance of taxpayers. In addition, large elements of the tax system in developed countries are based on self-assessment. In this context, there is clearly potential to influence behavior to improve compliance. The central contribution of behavioral research to tax administration is to understand why taxpayers are compliant or not. This can inform the work of tax administrations across a range of their functions. Several factors that determine the level of compliance in a taxpayer population have been identified. The sections below present an overview of these factors.
Central to the overall objective of this study and the investigation focus on assumption and factors such as employees’ willingness and preparedness to serve the taxpayers, promptness of service delivery, complaint and appeal handling mechanisms, taxpayers’ education and information system, soliciting feedback and consulting with taxpayers, the work environment, and other related issues are factors considered as independent variables which could affect the taxpayers’ satisfaction. Several of these independent variables are found to be factors influencing the taxpayers’ satisfaction (Yihalem, 2013). In this study, taxpayer’s satisfaction will be treated as a new variable leading to know why taxpayers are dissatisfied with the tax administration and satisfaction leading to participation will be derived through investigation of tax fairness perception, tax knowledge and understanding, attitude towards taxation, and service quality given by tax officials as factors that affect taxpayer’s satisfaction with the tax administration.

Tax fairness and trust in tax administrationAs per International Journal of Economics and Financial study (2014 ISSN: 1309-8055) Vol6-1, tax fairness and trust in tax administration explained in the following manner as:
Fairness: The OECD (2010) has discussed three types of fairness in taxation: distributive fairness (the perception that the government acts as a wise spender of tax revenues); procedural fairness (the perception that the tax administration adheres to procedures that are fair in dealing with taxpayers); and retributive fairness (the perception that the tax administration is fair in applying punishments when the rules are broken). The latter two are more relevant to (and can be influenced by) tax administrations (Walsh, 2012: 5-6). If taxpayers do not trust the tax administration to collect taxes fairly and to spend tax revenues wisely, these will increase non-compliance (Murphy, 2004a: 203).

Trust: Basic trust in the tax authorities with respect to the honesty of taxpayers and the respectful treatment of taxpayers by the tax authorities must be accompanied by incentives for taxpayers to observe the rules of the game (Feld, Frey, 2002:10). The key to establishing trust is to frame the collection of taxes to the population in a transparent manner and to emphasize the perceived fairness of the approach (Walsh, 2012: 6). Treating others as trustworthy will produce a more cooperative approach with regulations and more information about practices and possible areas of noncompliance, and it will engage the regulators in best-practice decisions for securing compliance (Murphy, 2004a: 203). If those who are regulated are treated as trustworthy, they will be more likely to repay this respect with voluntary compliance with fair requirements (OECD, 2004: 42).

Tax knowledge and understanding of taxpayersEducating business taxpayers on their rights and responsibilities is a key part of the tax administration strategy. Working with individual taxpayers and business associations helps to provide information through “user friendly” approach and brochures, offers a technical inquiry service, and give training on tax rules and regulations with regular interval and even their children at school is highly important. This in turn increases taxpayers’ level of satisfaction so as to comply voluntarily.
As cited from Tadesse (2014), the level of education received by taxpayers is an important factor that contributes to the understanding about taxation especially regarding the laws and regulations of taxation (Eriksen and Fallan, 1996). Previous studies have evidenced that tax knowledge has a very close relationship with taxpayers’ ability to understand the laws and regulations of taxation, and their ability to comply (Singh and Bhupalan, 2001). Knowledge of taxation is the reasoning and meaning of arrest on tax laws. The people should have a knowledge and understanding of tax regulations, due to meet tax obligations, taxpayers need to know about taxes in advance. Without their knowledge and understanding of the tax rules, the taxpayers’ may not want to pay taxes. With their understanding of tax good, the public will better understand the importance of paying taxes, and what benefits can be felt directly and indirectly. With the knowledge and understanding of tax rules, the taxpayers’ will be open minded, that taxes are purely used for the needs of the nation and its people. With this understanding of the tax, the level of corruption and fraud that may occur can be minimized. Simultaneously, the level of compliance of taxpayers to pay taxes will increase.

In Ethiopia where the knowledge and access for information about tax matters is very low, taxpayers education have been assumed as a major determinant to bring tax payers in to the track of compliance. Complexity in the tax law and its administration can easily baffle taxpayers and leads to compliance problems. In adequate planning for taxpayers’ education and outreach may significantly impact compliance in ever changing complex tax environment. Therefore, taxpayers’ education and access to information is very essential in promoting compliance. Tax payers must receive clear and concise information on what is taxable, how to calculate their tax liabilities, and procedures for calculating and paying taxes and where and when they pay taxes. In addition, forms and procedures for calculating and paying taxes should be as simple as possible. Thus, educating tax payers and keeping them well informed with the sentences of being an evade understanding obligation may be important, as a prevention measures is better than cure (Fantahun, 2002).

Taxpayers’ attitude towards taxationNugiNkwe (2013). As cited from (Mowen ,1987) in his book entitled ConsumerBehavior, defined attitudes as consisting of the following:
Attitudes are likes and dislikes.

The “major characteristics that distinguish attitude from other concepts are its evaluativeor affective nature”.

Attitudes are the core of our likes and dislikes for certain people, groups, situation, objectand intangible ideas.

In addition; NugiNkwe (2013), from ( Ajzen’s ,1991) Theory of Planned Behavior, attitude relates to one’s ownpersonal views about a behavior. Attitude may also be defined as positive or negative views of an “attitude object”; that is to say a person, behavior or event. In relation to taxation, taxpayers’ attitudes may be defined as positive or negative views of tax compliance behavior. Theoutcome of positive views is tax compliance and negative views are tax noncompliance. These views may be explained by Psychology-based theories which reveal that taxpayers’ attitude may be influenced by the following factors which eventually influence taxpayers ‘behavior. Individual attitudes toward compliance have been shown to be a function of social and cultural norms (Elster, 1989; Naylor, 1989). If such attitudes would carry over to actual compliance, enhancing these norms, as through increasing overall trust in government, is a desirable policy instrument to complement the usual enforcement options. The attitude of taxpayers varies considerably. Some comply to the fullest extent required, irrespective of whether the tax System is actively auditing them or their industry. Other taxpayers essentially play the audit lottery and either do not prepare contemporaneous documentation or prepare the absolute minimum with the hope of avoiding the imposition of penalties (Turner, 2003).

Taxpayer Service given by tax administrationTaxpayer service is a set of measures undertaken by the tax administration that are designed to assist taxpayers in complying with the tax law. Therefore, delivering service that is more effective to taxpayers would cause the tax administration to incur higher administrative expense; however, going for lower compliance costs and improved taxpayer performance are likely to outweigh the increased administrative costs. Upgrading taxpayer service quality to reduce the costs incurred by taxpayers in their effort to understand the law or to complete their self-assessments and make payment may be a cost effective way to increase the overall performance of revenue collection and level of compliance (Ali Endris, 2016).
For any tax administration to meet the canons of taxation, it must be supported by a quality taxpayer service. Taxpayer service usually means service and information which the Tax Administration provides to taxpayers so that they can fulfill their tax obligations. It should also give the taxpayer a fair guideline of what consequences taxpayers’ activities will have in terms of taxes. The service should not only address the expressed needs of the taxpayer, it should also include assistance in areas in which the taxpayer might not even have realized that compliance could be facilitated through taxpayer service and information (Grampert, 2001).
Yassie Hodges (2013), taxpayer services curb compliance costs by providing programs that enable taxpayers to fulfill their obligations more easily, thereby minimizing the need for the tax administration to expend more costly resources to enforce compliance. With effective public information, forms, and services, and by convincing non-compliant taxpayers that they can comply with relative ease, taxpayer services can also encourage and help accomplish greater voluntary compliance. Therefore; Services given to business taxpayer’s plays a critical role in increasing their level of satisfaction by which the tax administration provides the necessary information and assistance that help to enable them to meet their tax obligations.

Complexity of the tax SystemChau ; Leung, (2009:37-38), explain that the complexity of tax systems, probability of detection and penalties and tax rates affect the effectiveness of a tax system. The more tax laws become complex the lower the compliance levels. Simple, understandable and clear tax rules enhance tax compliance.
The complexity of tax laws makes it difficult for ordinary taxpayers to understand. Although taxes are not part of everyday conversations, people will normally try and make sense of the contributions that they make to the government through the payment of taxes. When trying to makes such sense, they will evaluate the fiscal policy, the tax rates, the provision of public goods and services and the interaction between themselves as taxpayers and the tax authorities. At the end of it all, the motivation to comply or not comply develops and this shapes their subsequent tax behavior. (Kirchler, 2009:29-30.)

CHAPTER THREEDATA PRESENTATION, ANALYSIS AND INTERPRETATIONSThe general objective of this research was to explore the satisfaction level of business income taxpayers in Woldia City Administration of Amhara Regional State. To succeed the research target both primary and secondary data were used. To collect data from the primary sources 150 questionnaires were distributed to the taxpayers in Woldia City Administration. Four employees of the city revenue office were interviewed and focus group discussion was made with those who worked as of Woldia City Administration of revenue office. Among 150 questioners distributed, 142 (94.6%) were properly filled in and returned.
Based on the data collected from taxpayers through questionnaire and from revenue office employees and officers using interview and focus group discussion, the results are presented in four sections. The sections presented are, demographic characteristics of respondents, taxpayer’s perception towards the tax system and taxpayers’ level of satisfaction.
Demographic characteristics of Respondents
The demographic characteristics taxpayers are summarized in terms of their age, sex, educational qualification, business experience and Taxpayer’s category.
Table SEQ Table * ARABIC 3. Demographic characteristics of respondents
Characteristics Demographic back ground
Sex Sex Male Female Total Frequency 112 30 =SUM(LEFT) 142 Percent (%) 78.8 21.2 =SUM(left) 100 Age Age in years 20-30 31-40 41-50 Above 50 Total
Frequency 36 55 34 17 142
Percent (%) 25.3 38.7 24.0 12.0 100
Educational qualification Education Below 12
Grade Grade 12 Complete Diploma First Degree Total
Frequency 63 24 29 26 140
Percent (%) 44.4 16.9 20.4 18.3 100
Business Experiences In years < 2 yrs 2-5 6-10 >10 Total
Frequency 6 46 52 38 142
Percent (%) 4.0 32.4 36.6 27.0 =SUM(LEFT) 100
Categories of taxpayer’s Category A B C Total Frequency 24 36 82 =SUM(LEFT) 142 Percent (%) 17.0 25.3 57.7 100 As presented in table 3. above, the demographic information of the respondent shows that the majorities 112(78.8%) of the tax payers respondents were male and the rest 30 (21.2%) were female. As far as the age grouping is concerned, the majority of the respondents 55(38.7%) were fall between 31years and 40 years and it is believed to be that this age group did not hesitate to give genuine information. From the total of the respondents 63(44.4%) had below 12 grade and only 26(18.3%) had first degree educational qualification. 52(36.6%) of the respondents were also had experiences of doing business activities between six to ten years and only 38(27%) of the respondents had more than ten years of doing business. The majority of the respondents 82(57.7%) were category C taxpayer’s, where as the rest 24(17%) and 36(25.3) were categories of A and B taxpayers respectively.
General Perception of Taxpayers towards the Tax SystemHere under, the perception of the respondent taxpayers’ towards the tax system has been discussed. The respondents were asked to indicate their agreement or disagreement based on the given statements that are supposed to be related to some of the factors that affect their perception to the tax system in woldia City Administration of Amhara regional State.

As shown below in Table 4, the respondents were asked to indicate their perception whether the government is fairly levying taxes or not. As a result, the majority 66(46.5%) of the respondents were strongly disagreed and 56(39.4%) of the respondent were agreed on the statement that the government fairly levying taxes on the taxpayers; while 16(11.3%) agreed and 4(2.8%) strongly agreed on the statement. A fair tax system should be designed considering a balance between the interests of the taxpayers’ and the tax authorities. Most people agree that a fair tax system should ask taxpayers’ to contribute to the cost of public services based on their ability to pay. Unfairness of the tax system may reflect taxpayers’ perceptions that they are overpaying taxes in relation to the value of the services provided by government or in relation to what other taxpayers’ pay (Chau and Leung, 2009)
The respondent were also requested whether the tax procedure are clear and simple or not. Then from the total of the respondents 65(45.8%) were disagreed and 50(35.2%) were strongly disagreed. That is to say, about 115(81%) of the respondents felt that the tax procedure is not clear and simple, only 14(9.9%) and 13(9.1%) of the respondents agreed and strongly agreed respectively. Whenever the tax procedure is not clear and simple, it implies that there is complexity of tax system and this in turn has a negative impact on taxpayer’s satisfaction towards the tax administration.

Table SEQ Table * ARABIC 4.Taxpayer’s perception
Criteria Respondent Alternatives
1 2 3 4 T M
Failure to pay taxes leads to strict punishment
frequency 10 9 83 40 142 3.1
Percent (%) 7.0 6.3 58.5 28.2 100 The government is fairly levying taxes
frequency 66 56 16 4 142 1.7
Percent (%) 46.5 39.4 11.3 2.8 100 The tax procedure are clear and simple frequency 50 65 14 13 142 1.9
Percent (%) 35.2 45.8 9.9 9.1 100 Amount of taxes to be paid to the government is generally high frequency 11 22 59 50 142 3
Percent (%) 7.7 15.5 41.6 35.2 100 My neighbors and friends are reporting and paying tax honestly frequency 42 52 34 14 142 2.1
Percent (%) 29.6 36.6 23.9 9.9 100 Tax office solve your complain properly frequency 76 39 20 7 142 1.7
Percent (%) 53.5 27.5 14.0 5.0 100 It is every ones responsibility to comply with the tax laws frequency 7 11 49 75 142 3.4
Percent (%) 5.0 7.7 34.5 52.8 100 It is everyone’s responsibility to pay the correct amount of tax frequency 7 9 50 76 142 3.4
Percent (%) 5.0 6.3 35.2 53.5 100 Grand mean 2.5
N.B. Strongly disagree (1), Disagree (2), Agree (3), and Strongly Agree (4)
Regarding the statement that my neighbors and friends are reporting and paying tax honestly, about 42(29.6) respondents were strongly disagreed and 52(36.6) disagreed. This means that 94(66.2%) of the respondents claimed that their neighbors and friends are reporting and paying tax dishonestly, the rest 34(23.9%) were agreed and 14(9.9%) were strongly agreed that their neighbors and friends are reporting and paying tax honestly.

Respondents also requested to give their view that the tax office solves their problem properly. The result shows that, 76(53.5%) of the respondent strongly disagreed and 39(27.5%) disagreed. This is to mean, cumulatively 115(81%) of the respondents reported that the tax office do not solve taxpayer’s complain properly, only 20(14%) of the respondents agreed and 7(5%) of the respondents strongly agreed on the statement.

Besides, 123(86.7%) of the respondents were positively perceives the statement that Failure to pay taxes leads to strict punishment. The majority 59(41.6%) of the respondents agreed and 50(35.2%) strongly agreed that the amount of taxes to be paid to the government is generally high, only 33(23.2%) did not agreed upon it. Moreover, 75(52.8%) of the respondent strongly agreed and 49(34.5%) agreed with the statement that it is every ones responsibility to comply with the tax laws, but only a cumulative of 18(12.7%) of the respondent did not agreed with the statement. Likewise, respondents were requested to give their agreement or disagreement upon the statement that it is everyone’s responsibility to pay the correct amount of tax. Hence, 76(53.5%) of the respondent strongly agreed and 50(35.2%) agreed, only 9(6.3%) and 7(5%) of the respondents disagreed and strongly disagreed respectively.
As can be seen in table 4 above, the perception of taxpayer towards tax is positive on average (mean=2.5). However, they still disagree that the government is fairly levying taxes, the tax procedure are clear and simple, their neighbors and friends are reporting and paying tax honestly, and Tax authority solve their complain properly.

Table SEQ Table * ARABIC 5. Taxpayer’s perception towards tax rate in Amhara regional stateRespondent Tax rate
Very low Low Medium High Very high Total
Frequency 0 0 14 39 89 142
percent 0 0 10.1 27.3 62.6 100
The respondents were asked to disclose their perception on how high and low in line to the existing tax rate in Amhara regional state. From the research data, 89(62.6 %) of the respondents indicated that the Amhara regional state tax rates are very high, 39(27.3%) and 14(10.1 %) of the respondents respectively indicated that tax rates are high and medium. None of the respondents were felt that the tax rates are low and very low. In general, the perception of respondent taxpayers towards the tax rate is very high.
Satisfactions of Taxpayer’s
Satisfaction of Taxpayer’s with Service delivery by the tax officeStatements like; service with Integrity and respect, getting help and service quickly, provide clear and useful information to the taxpayers, resolve taxpayer’s questions, Changes in tax laws rules and regulation are communicated timely, the tax Compliant and appeals process is fair and fast and Tax assessment and tax collection systems has to be fair were considered as some of the factors that affect taxpayers satisfactions upon the services that they have been given by the tax office. Accordingly respondents were requested their satisfaction on the service they have delivered.
As shown in Table 6 below, respondents were asked as they have been served with Integrity and respect. The majority, 53(37.4%) of the respondents strongly disagreed. Were as; 42(29.3%) disagreed, 37(26.3%) agreed and 10(7.1%) strongly agreed. Hence, a total of 95(66.7%) respondents agreed that they have not been served with Integrity and respect.

Table SEQ Table * ARABIC 6. Taxpayers Satisfaction on service deliveryCriteria Respondent Alternatives
Strongly disagree Disagree Agree Strongly Agree Total
I was served with Integrity and respect frequency 53 42 37 10 142
Percent (%) 37.4 29.3 26.3 7.1 100
I was helped Quickly frequency 39 72 23 8 142
Percent (%) 27.5 50.7 16.2 5.6 100
I was provided with clear and useful information frequency 47 65 26 4 142
Percent (%) 33.3 45.5 18.2 3 100
I was able to resolve my questions frequency 47 69 19 7 142
Percent (%) 33.3 48.5 13.1 5.1 100
Changes in tax laws rules and regulation are communicated timely frequency 56 55 28 3 142
Percent (%) 39.4 38.7 19.7 2.1 100
The tax Compliant and appeals process is fair and fast frequency 66 50 20 6 142
Percent (%) 46.5 35.2 14.1 4.2 100
Tax assessment and tax collection systems are fair frequency 72 55 9 6 142
Percent (%) 50.7 38.7 6.3 4.2 100
N.B. SD=Strongly Disagree, D=Disagree, A=Agree, and SA=Strongly Agree
In addition respondents were asked that they have been helped quickly. 39(27.5%) respondents strongly disagreed, 72(50.7%) disagreed, 23(16.2%) agreed and only 8(5.6%) strongly agreed to the statement. In general a total of 111(77.8%) respondents assured that they did not helped quickly.

Likewise, respondents were asked to give their view on the statement I was provided with clear and useful information. 47(33.3%) of the respondents strongly disagreed and 65(45.5%) disagreed for the statement. Only 26(18.2%) and 4(3%) of the respondents are respectively agreed and strongly agreed. Hence, the majority of the respondents 112(78.8%) did not agreed on the statement. In the same manner a cumulative of 116(81.8%) of the respondents disagreed and only 26(18.2%) of the respondents agreed upon the statement I was able to resolve my questions.
One of the statements that were provided to the respondents to express their agreement or disagreement was Changes in tax laws rules and regulations are communicated timely.56(39.4%) of the respondent strongly disagreed and 55(38.7%) disagreed on the statement but only 28(19.7%) respondents agreed and 3(2.1%) strongly agreed. So therefore, a cumulative of 111(78.1%) respondents did not agreed on the statement. On the statement the tax Compliant and appeals process is fair and fast, 66(46.5%) of the respondents were strongly disagreed and 50(35.2%) were disagreed. Only 20(14.1%) respondents were agreed and 6(4.2%) were strongly agreed. Then a total of 116(81.7%) of the respondents would never have been satisfied that the tax Compliant and appeals process is fair and fast. As far as the tax assessment and tax collection systems is concerned, 72(50.7%) respondents were strongly disagreed and 55(38.7%) were disagreed. Only a cumulative of 15(10.5%) respondents were agreed. To end up with, the total of 137(89.4%) of the respondents were assure that the tax assessment and tax collection systems are not fair and simple.
Therefore; the tax administration has a role to play for the taxpayer’s satisfactions by providing accurate and up-to-date information, giving support and care, making the tax Compliant and appeals process is fair and fast and the tax assessment and tax collection systems are fair. And this in turn increases the number of voluntary tax compliance within the timeframe set in the tax law. Yassie Hadges (2013), taxpayer service plays a critical role in maximizing voluntary compliance by providing taxpayers with the information and assistance they need to enable them to meet their tax obligations. Taxpayer services curb compliance costs by providing programs that enable taxpayers to fulfill their obligations more easily, thereby minimizing the need for the tax administration to expend more costly resources to enforce compliance. With effective public information, forms, and services, and by convincing noncompliant taxpayers that they can comply with relative ease, taxpayer services can also encourage and help accomplish greater voluntary compliance.

Satisfaction of Taxpayer’s with managers and Tax officials Professionalism
Not only the professionals’ service that delivered to the taxpayer’s has a strong connection with the attitudes of the taxpayer’s towards the tax system, but also the professionalism, attitudes and behaviors of the professionals in the taxpayer’s society determine the satisfaction of the tax payers with in the tax system. Respondents were requested to show their view on the Position of the Managers and Officers of Revenue Assessors and collectors based on their Professional efficiency, sincerity, Equity and Workflow fluency.

Table SEQ Table * ARABIC 7. Taxpayer’s satisfaction with Managers and tax officials ProfessionalismCriteria Respondent Alternatives
Very low Low Good High Very high Total
Professional efficiency Frequency 30 56 46 6 4 142
Percent (%) 21.1 39.4 32.4 4.2 2.8 100
sincerity Frequency 55 43 32 9 3 142
Percent (%) 38.7 30.3 22.5 6.3 2.1 100
Equity
Frequency 60 56 20 3 3 142
Percent (%) 42.3 39.4 14.1 2.1 2.1 100
Workflow fluency Frequency 33 60 36 9 4 142
Percent (%) 23.2 42.3 25.4 6.3 2.8 100
As shown in Table 7; respondents were requested to indicate the position of Managers and Officers of Revenue Assessors and collectors based on their professional efficiency. 30(21.1%) of the respondents indicate as very low and 56(39.4%) as low. whereas 46(32.4%) of the respondents indicated as good. As a result, the total of 86(60.5%) of the respondents confirmed that Managers and tax professionals have no Professional efficiency to satisfy their customers. Moreover, 55(38.7%) of the respondents indicate as very low and 43(30.3%) as low, but 32(22.5%) respondents as good for the level of sincerity of managers and tax officials. Only a total of 44 (30.9%) of the respondents have been satisfied with the question of the level of sincerity of managers and tax officials, while 98(69%) of the respondents did not satisfied.
As such, the services provided by the tax officials and Managers to their taxpayers are injustice when we compared the attitudes of respondent taxpayers towards the equitability of the service that they received. Hence, 60(42.3%) of the respondent were viewed as very low, 56(39.4%) were as low and only 26(18.3%) of the respondent were satisfied the equitability of the service that they received. As far as Workflow fluency is concerned, 33(23.2%) of the respondent were saying very low, 60(42.3%) as low and only 49(34.5%) of the respondents were saying that workflow fluency of managers and tax officials is good.
Tax payers’ satisfaction with the tax system
The respondents were asked about the location and accessibility of tax office to taxpayers and that it does convince to contact appropriate tax officer. Accordingly, 59(41.1 %) and 24(17.2%) of the respondents were reported that the location and accessibility of tax offices convenience to their business taxpayer’s is good and excellent respectively; only 24(17.2%) of the respondents were replied as very poor and 22(15.2%) of the respondent felt that it is poor. With regards to friendliness and behavior of tax officials, 52(36.6%) of the respondent stated that friendliness and behavior of the tax officials were poor and 51(35.9%) were as very poor. Only 29(20.4%) of the respondent were saying good and 10(7.1%) as very good. So that the majority 103 (72.5%) of the respondents were assured that friendliness and behavior of tax officials have been very poor.
Table SEQ Table * ARABIC 8. Taxpayers satisfaction with the tax systemCriteria Respondent Alternatives
1 2 3 4 5 Total W. Mean
Location and accessibility of tax office and its convinces Frequency 24 22 59 13 24 142 2.9
Percent (%) 17.2 15.2 41.4 9.0 17.2 100 Friendliness and behavior of tax officials Frequency 51 52 29 10 0 142 1.98
Percent (%) 35.9 36.6 20.4 7.1 0 100 Length of time taken to complete your task/tax matter Frequency 36 48 45 13 0 142 2.24
Percent (%) 25.4 33.8 31.7 9.1 0 100 Fairness of tax officials in dealing with tax matters Frequency 31 60 37 14 0 142 2.24
Percent (%) 21.8 42.3 26.0 9.9 0 100 Attitude and perceptions of tax officials towards solving your problem Frequency 39 59 36 9 0 142 2.12
Percent (%) 27.3 41.4 25.3 6.0 0 100 Overall satisfaction with the service provided by tax officials Frequency 43 59 36 4 0 142 2.01
Percent (%) 30.3 41.4 25.3 3.0 0 100 Grand Mean 2.25
N.B: Values given 1= very poor , 2= poor, 3= Good , 4=very good and 5=Excellent
Length of time taken to complete taxpayer’s affair is one of the factors that influence taxpayer’s satisfactions towards the tax system. As the result, a cumulative of 84(59.2%) of the respondents were replied that the time taken to complete their tax matter has been very long or the performance of tax officials to complete once affair is in a poor fashion and 58(41.8%) respondents were mentioned that length of time taken to complete taxpayer’s affair is not that much long. So that taxpayer’s haven spent much of their time to complete their tax matter in the tax office. As far as fairness of tax officials in dealing with tax matters is concerned, a total of 91(64.1%) of the respondent were assured that it is poor. Hence, the level of satisfaction of taxpayers with regard to fairness in dealing with tax matters by tax officials was found to be low, but only 51( 35.9%) of the respondents felt good on the statements.

Concerning the level of satisfactions of taxpayer’s towards the attitude of tax officials towards to solve the taxpayers’ problem, 59(41.4%) of the respondents think that the views of tax officials towards solving their problems were poor level and 39(27.3%) of were replied as very poor, whereas another 36(26.0%) of the respondents mentioned that the attitude of tax official to solve taxpayer’s problem was good and the remaining 9(6.0%) of the respondents were replied as very good. In general, business income taxpayer’s have been dissatisfied with respect to the attitude of tax officials towards solving their problem. Regarding the Overall satisfaction with the service provided by tax officials, a cumulative of 102(71.7%) of the respondents were replying as poor level and only 40(28.3%) of the respondent were indicated their perceptions about the statement has to be good. Therefore, the result clearly indicates that business income taxpayers are dissatisfied with the services received from the tax officials.
The government has a keen interest and has to play roles in reducing tax fraud by increasing the satisfaction level and participation of taxpayers in tax administration systems. And through; the government is believed to play a major role in formulating the tax administration system from the formatting of the tax system to the collection of revenue that has to be generated from the economic activity and enforcement of the tax law, but practically it is incompatible with what is on paper. Mohd Rizal Palil (2010), in order to increase compliance, maximize tax revenue and be respected by taxpayers, a government must first have an economical tax system, which is practicable; they must discourage tax evasion and not induce dishonesty; they must avoid the tendency to dry up the source of the tax and should avoid provoking conflict and raising political difficulties.
Satisfaction of Taxpayers’ with Participating in Training and awareness Creation
As shown in table 9 below, the respondents were asked to indicate whether they had participated in taxpayers’ education and awareness creation programs conducted by revenue office. Respondents those who had participated in Taxpayer’s education and awareness creation program were further asked to indicate their level of their satisfaction. Accordingly, only 69(48.5%) of the respondent indicated that they had participated on the programs conducted by tax office, the majority 73(51.5%) of the respondent were not. Out of the respondents who had participated in the program, 4(6.3%) of the respondents were satisfied with the program while the majority of the respondents 65(93.7 %) were not satisfied with programs
Table SEQ Table * ARABIC 9. Taxpayer’s satisfaction on participation in training, education and tax knowledge
Questionnaires Respondent Alternatives
Yes No Total
Have you ever participated in tax payers’ education and awareness creation programs conducted by Woldia revenue office? Frequency 69 73 142
Percent (%) 48.5 51.5 100
If your answer to question above is yes, do you believe in that awareness creation program organized by Woldia city Administration revenue office is satisfying business taxpayers? Frequency 4 65 69
Percent (%) 6.3 93.7 100
Do you know Taxpayer’s obligations owed by the Tax Law Frequency 54 88 142
Percent (%) 38 62 100
Do you recognize Tax types exclusively Frequency 64 78 142
Percent (%) 45 55 100
Do you know Criminal and administrative penalties imposed by the tax law Frequency 58 84 142
Percent (%) 41 59 100
Moreover, respondents were asked whether they know Taxpayer’s obligations owed by the Tax Law. 88(62%) of respondents did not know the taxpayer’s obligations under the Tax Law, and only 54(38%) of the respondents said that they knew their obligations. So also, 78(55%) of respondents do not identify tax types, and 84(59%) of respondents are not aware of the criminal and administrative penalties imposed on the Tax Law.
Tax education is important for improving taxpayers’ satisfaction towards the tax administration and taxing culture but the tax office did not be able to come up with adequate tax education and awareness creation programs to the taxpayers in order to the taxpayer can voluntarily pay for tax and fulfill their obligations. Taxpayers Education is directly related with voluntary tax compliances behavior and views or taxpayers satisfaction towards the tax law. The objective of teaching tax payers is to increase the number of taxpayers applying with respect to the tax law. If taxpayers do not know how much tax they pay and when and why they have to pay tax, the number of voluntary tax compliance will be reduced in the same way. This has an adverse impact on increasing the level of taxpayer’s satisfaction and the growth of the revenue generated by the effort to meet the social development needs of the community as well.

Factors that affect Satisfaction of Taxpayers’ with the tax system
Here under are some statements considered to be as possible factors that affect the overall taxpayer’s satisfactions with the tax system. And respondents were requested to show their level of satisfaction that they have on the Tax law and Tax Administration issue, Taxpayers educating and awareness creation , Availability, accuracy and usefulness of tax information, Simplicity of Tax assessment and collection procedures, Overall service provided by tax officials and Taxpayers file keeping (documentation) system.

Table SEQ Table * ARABIC 10. The overall Taxpayers’ SatisfactionsPossible factors Respondent Level of satisfactions
V. poor poor Good v. good Excellent Total
Tax law and Tax Administration issue Frequency 50 60 24 4 4 142
Percent (%) 35.3 42.2 16.9 2.8 2.8 100
Taxpayers education and awareness creation Frequency 43 69 26 4 0 142
Percent (%) 30.3 48.5 18.2 2.8 0 100
Availability, accuracy and usefulness of tax information. Frequency 42 62 30 6 3 142
Percent (%) 29.3 43.4 21.2 4 2 100
Simplicity of Tax assessment and Tax collection procedures Frequency 42 67 33 0 0 142
Percent (%) 29.3 47.4 23.3 0 0 100
Overall service provided by tax officials Frequency 32 59 36 11 4 142
Percent (%) 22.2 41.4 25.3 8.1 3 100
Taxpayers file keeping or Documentation system Frequency 53 52 30 7 0 142
Percent (%) 37.4 36.4 21.2 5.0 0 100
Respondents were requested to show their level of satisfaction on the Tax law and Administrative issues. The majority 60(42.2%) of the respondent expressed their satisfaction level as poor and 50(35.3%) as very poor. Hence, 110(77.5%) of the respondents did not satisfied on the Tax law and Tax Administration issues. In addition; respondents were also asked to indicate their level of satisfactions about Taxpayers’ education and awareness creation. 69(48.5%) of the respondents have replied as poor and 43(30.3%) as very poor. Only 26(18.2%) and 4(2.8%) of the respondents gave their view as good and very good respectively. Whatever the case it may be the majority 112(78.8%) of the respondent dissatisfied on the taxpayer’s education and awareness creation what they have been by tax office and this in turn made them incapable of doing their tax obligation based on the tax law.
Availability, accuracy and usefulness of tax information are one of the questions that were posed to the respondents so as to know how much they have been satisfied or dissatisfied about it. 62(43.4%) of the respondents indicate their view as poor and 42(29.3%) as very poor. Hence, a total of 104(72.7%) respondents did not satisfy the availability, accuracy and usefulness of tax information presented by the tax office. The Simplicity of Tax assessment and Tax collection procedures were also presented to the respondents to show their level of satisfaction. 67(47.4%) of the respondents replied as poor and 42(29.3%) respondents as very poor. Only 33(23.3%) of the respondents have a good view towards the statement. Now then, 109(76.7%) of the respondents dissatisfied on the Simplicity of Tax assessment and Tax collection procedures.

Respondents were also requested whether they would have been satisfied or dissatisfied about the Overall service provided by tax officials. 59(41.4%) of the respondent express their view as poor, 36(25.3%) as good and 32(22.2%) of the respondent as very poor. Then, 91(63.6%) of the respondents did not satisfied about the Overall taxpayer services provided by tax officials. Moreover; taxpayers file keeping or Documentation system was one of the queries posed to the respondents to show their level of satisfaction. 53(37.4%) of the respondents replied as very poor and 52(36.4) as poor. And hence that; the majority 105(73.8%) of the respondents have dissatisfied about their file and document handling mechanisms in the tax office.
When taxpayers were asked to give their opinions and suggestions that would have been increase taxpayer’s satisfaction towards the tax system and to pay their tax and tax credits honestly on their own initiative through an open ended questions. Then taxpayers have responding and comment in the following manner
It is better feasible to meet the necessary inputs to improve the overall performance of the organization;
It is good for professionals to have a good view of their customers, and if it is possible to give a quick and accurate response to the question of the taxpayer’s request,
To increase the tax credibility and awareness of the tax payer through a wide-ranging and transparent discussion with the taxpayer,
The taxpayers have to be notified before the new laws, regulations and directives are enforced,
If it is possible to capture accurate tax information on every taxpayer’s business to ensure tax integrity, because of the uncompromising nature of business practices,
Law enforcement with respect to tax laws and taxpayers, who cannot be properly taxed
Because the information is too messy, receipts from a taxpayer file are lost and we will be charged again.

The structure of the institute has not been fully modernized and there has been a slack in work, indicating other organizational gaps, and responding to it.

Identify and accredit the specialists in their ethical and executive ways by recognizing and recognizing taxpayers as well as taking actions and actions that may be different from bad ethical and weak performance,
Extending their opinion on the ethics, know-how and performance of the professionals of the process to prevent corrupt service or to improve the service delivery, the same has the experience and knowledge of the institution that has the responsibility of the institution.

Therefore, the responses given in the open questions have indicated that there are a number of problems with the city administration revenue collection processes, such as in all seasons, and there are a lot of problems with the process of management of the work process and the qualifications of the professionals.

CHAPTER FOUR
SUMMARY, CONCULUSION AND RECOMMENDATION
SummaryThis research was conducted in Woldia city administration of North Wollo Zone of Amhara regional state. It was attempted to answer; how do business Income taxpayers perceive they are treated by the tax administration, to what extent are business taxpayers satisfied with the tax system, and how is the satisfaction of business taxpayers with the taxpayer’s service and what are the major factors that affect the satisfaction level of business taxpayers towards the tax system.

But it has been found that the perception of taxpayer’s towards the tax administration is so poor as they did not satisfied the overall service received from the tax office. The taxpayer’s assured that their poor level of satisfaction with in the tax administration was mainly associated with the service that they received from tax office and the Integrity, professional competency, work fluency and behavior of both tax officials and managers of the revenue office.
To improve revenue mobilization and modernize the tax system in developing countries tax reform is basically necessitated, and hence many countries in the world have currently undergoing significant tax reform to overcome fiscal deficit by improving taxpayer’s service and that increased the satisfaction level of taxpayers.

Likewise; the Amhara Regional state has also implementing tax reform programs in all Regional Local Authorities to achieve this objective in its region by increase the number of voluntary compliance, there are challenges that affect the tax reform implementation in local levels and that would have been hindered the satisfaction of business taxpayers. These are lack of qualified and skilled man power, absence of computerized taxation system; poor information and data management system, poor tax education and awareness creation, delinquency of tax assessment and collection system, weak service delivery reflect the current situation of local tax administration. ConclusionThe conclusions presented by the investigators as a result of the analysis of the collected data and the comments given on an open questionnaire are summarized and hence that it is understandable that collecting the revenue generated by the economy is not easy, as it is not feasible to establish trust and satisfaction with taxpayers on the systematic tax administration. The tax officers are responsible for collecting the full amount of revenue generated by increasing taxpayers’ satisfaction. The amount of revenue and taxpayer’s satisfaction is directly related to the efficiency and quality of the tax administration.
This study demonstrated that in Woldia City Administration, in respect of taxpayer’s education and awareness creation, the quality of service delivered to the taxpayer’s, and the integrity, efficiency, quality and commitment of the tax officials and managers are found to be at low levels. And this in turn decreases the taxpayer’s satisfaction towards the tax system and hence Voluntary compliance with the tax laws would have been decrease.

Revenue collecting officers and managers are not exerting proper duties and responsibilities due to tax administration system in order to solve taxpayer’s problems. Many taxpayers have indicated that they have a problem with the in-charge of the revenue authority, especially the professionals and executives, whose performance is poorly understood by their viewers.

The quality of service provided by tax officers is unsatisfied the tax payers. This is because the professionals and managers are either unhappy to give service, their lack of confidence, and their lack of understanding of the tax laws, rules and guidelines. This has caused the taxpayer to be disturbed and unhappy by the tax administration and the service requested is a problem of good governance, with a lack of trust in the government and a lack of confidence in the tax administration and motivates them to hide their income and tax and encourage non-compliance with the law.

The professional staff and officials have been proven to be at a lower level in their professional competencies and their sincerity. This cannot be attributed to the fact that taxpayers have to be aware of the conditions required by the taxpayers, who are unable to provide quality and efficient services in the institutional capacity of the institution. It was also a lack of transparency and accountability to the taxpayer’s at any point in their honesty and good ethical conduct.
Taxpayer’s education and awareness creation are necessary to increase the number of taxpayers applying based on the tax law. Thus, quality education and continuous tax education have a great impact on taxpayers’ tax credits; especially comply with tax laws, regulations and directives. However, this study shows that the level of tax payer’s satisfaction towards tax education and awareness creation in the City Administration is very poor. Many taxpayers do not know even the criminal and administrative penalties imposed on the tax law. Recommendations
The desired objectives of the tax administration can be achieved only when it is properly implemented tax policies and tax laws. Malfunction in administer the tax laws, rules and regulations would crush its very purpose and exerts unnecessary pressure up on the taxpayers. Therefore, one of the most important recommendations is that the tax system never has been complex. The tax system should be rational, equitable and simple.

The inadequate service for the taxpayer’s is adversely affected by the quality and efficiency of the organization, as well as the individual’s feelings, beliefs. The result of this study was assured that the poor taxpayer’s satisfaction with the tax system due to the widespread lack of knowledge, skills and attitudes of the Woldia City administration Revenue officials for their customers was slow and unprofessional in the tax system. The professionals must have the knowledge, skills and attitudes required to perform their tasks efficiently and efficiently as time demands. Depending on the training needs, tax officials and Managers have to be trained on skill, ethics and service delivery and Annual Client Satisfaction Study has to be undertaken to address the problems arising from the Study Results so as to meet the needs of the tax administration as well as to improve the taxpayer’s perceptions towards the tax system. Prosecute the taxpayers and mismanagement of the taxpayer’s time and expense, with no excuse administrative action has to be taken against the taxpayer’s time and expenses and the action has to be announced to the business community or the general public.

The tax administration is responsible for ensuring taxpayers satisfaction with tax system and also should ensure that the tax system is fair, simple, and transparent and minimize compliance cost. Thus, the authority should aim to simplify and clarify the tax policy and tax administrative issues to motivate taxpayers through continuous taxpayer’s education and awareness creation programme and this would help to improve taxpayer’s satisfactions with the tax administration. Tax education may not only benefit the taxpayers, but also help the political leaders, elders, religious leaders, and multilateral associations who can influence the tax system. Moreover; there has to be consultation with the business community and its stakeholders before new changes or practices are implemented or come into practice within the tax administration system and the call for consultations has to be made through their representatives (through trade associations and chambers of commerce).

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Yihalem Mulu Zerihun, (2013). Assessment of Business Income Taxpayers’ Satisfaction.Yonas,SendebaNemera, (2016) Assessments of taxpayers’ attitude. International Journal of Commerce and Management Research ISSN: 2455-1627, Impact Factor: RJIF 5.22www.managejournal.comVolume 2; Issue 3; March 2016; Page No. 129-135
APPENDICESQuestionnaire for Business taxpayers in Woldia city Administration on the title:-Business Taxpayers Satisfaction with the Tax System: the case of Woldia City Administration.

Dear Respondents
This study is conducted in partial fulfillment of the requirements for the BA Degree in Tax and Custom Administration. I am carrying out a study on Business Taxpayer’s satisfactions with the Tax administration in Woldia City. The purpose of this questionnaire is to obtain your perceptions and opinions regarding the existing Tax administrative activities that increase level of taxpayer’s satisfaction in the City and its main constraints against effective and efficient tax administration. This study will help the City Administration to identify its problems and improve its Tax administration.

The genuine information that you give, will enable me to critically examine the subject matter. Therefore, please answer all questions. Moreover; here what I can assure you is that, all information obtained through this questionnaire shall be used for academic purposes only and will be handled and stored with the highest order of confidentiality. Please do not write your name anywhere on the questionnaire.

I thank you very much in advance for your cooperation.

Section A. General Information
Please Indicate your choice from the list given below and show your choice by putting (?) in the box corresponding to your choice
Please indicate your age : 20-30 years 31-40 years 41- 50 years above 50 years
Your gender : Male Female
Your educational qualification
Below grade 12 grade 12 completed Diploma First degreeAbove first degree
How many years have you personally been working on business (tax) related activities
Less than 2 years 2-5 years
6-10 years more than 10 years
You are in categories of tax payers : A B C.
Business background
From the following question, please indicate your choice by putting “?” corresponding to your answer
What is your own business activity?
Hotel and restaurant caffee Service provider Whole sales Retailer Others ______________
Please indicate the tax office that you pay your tax liability /obligation
DefersieYeju Genet
DebreGelila Main office
Section II: General Perception on Tax (Tax knowledge of taxpayer’s)
please indicate your agreement or disagreement to the following statements
Criteria Strongly Disagree Disagree
Agree
Strongly Agree
8.1 Failure to pay taxes leads to strict punishment
8.2 The government is fairly levying taxes
8.3 The tax procedure are clear and simple
8.4 Amount of taxes to be paid to the government is generally high
8.5 My neighbors and friends are reporting and paying tax honestly
8.6 tax authority solve your complain properly
8.7 It is every ones responsibility to comply with the tax laws
8.8 It is everyone’s responsibility to pay the correct amount of tax
How high/low are the tax rates in general Amhara national regional state
Very low Low Medium High . Very high
Please indicate your experience when gone visited the tax office based on the following criteria. Put “?” in the box of your choice.
Criteria Strongly agree Agree Disagree Strongly disagree
10.1 I was trended with courses and respect 10.2 I was helped Quickly. 10.3 I was provided with clear and useful information 10.4 I was able to resolve my questions 10.5 Changes in tax laws rules and regulation are communicated timely Please indicate the position of the Managers and Officers of Revenue Assessors and collectors based on the criteria set forth below. Put “?” in the box of your best choice corresponding to the criteria.
Criteria Positions of Managers and professionals
Very low Low Good High Very high
Professional efficiency Sincerity Equity Workflow fluency Section III: Tax payers’ satisfaction with tax system
How satisfied are you with the overall quality of service you received from the tax office, Kindly rate your responses based on the criteria given by putting “?” corresponding to your choice
Criteria Very poor
Poor
Neutral
Good
Very Good
12.1 Location and accessibility of tax office /convince
12.2 Friendliness and behavior of tax officials
12.3 Length of time taken to complete your task/tax matter
12.4 Fairness of tax officials in dealing with tax matters
12.5 Attitude of tax officials towards solving your problem
12.6 Overall satisfaction with the service provided by tax officials
Have you ever participated in the training/education/awareness development programs conducted by tax authority? Yes No
If your answer to question number 13 above is yes, do you believe that awareness creation program organized by Woldia City Administration office is satisfying business taxpayers? Yes No
If your business is due for VAT refund, how long does it take to receive the refund after submitting the income or VAT return? ——————————
Are you satisfied with present refund procedure? Yes No
If “No” please explain
_______________________________________________________________
______________________________________________________________
Kindly rate your response based on the following criteria with regards to tax information and tax document
Very poor
Poor
Neutral
Good
Very Good
17.1 Availability of tax information
17.2 Ease in understanding the available tax documents
17.3 Content and coverage of the tax documents (simple to fill)
17.4 Overall satisfaction with tax documents
Please select how often you get tax information from the tax office/frequency of time.
Never Rarely Once a month About 2- 3 times a month
How satisfied or dissatisfied were you with the following aspects of the information?
Possible performance Very poor
Poor
Neutral
Good
Very Good
Tax policy and Administration issue
Taxpayers educating, awareness creation and consultation sessions
Generally, availability, accuracy and usefulness of tax information to taxpayers
Simplicity of collection procedures and transparent
Overall service provided by tax officials (timely and adequately)
Taxpayers file keeping system
How important or unimportant area each of the following measures that the government should undertake to you in order to improve the tax system.
Possible measures Not very important
Not important
Neutral
Important
Very important
Improving tax policy and administration issue
Educating the taxpayers and conducting awareness creation and consultation sessions
Provide useful and accurate information to taxpayers
Making the estimations, assessment and collection procedures simple and transparent
Provide adequate and timely services to taxpayers
Rewarding for best taxpayers
Please provide the researcher with any suggestions/comments you may have with regard to business tax system in Woldia City administration
___________________________________________________________________________
___________________________________________________________________________
Thank you very much for your great cooperation
Interview Guide questions for office Heads
(Questions on general issues to be answered by the heads of Woldia City Administration RevenueOffice and Small Taxpayers/ kebele office)
How do you evaluate the trends of WoldiaCity Administration Revenue Office in administering Business income tax in the last five years?
How do you evaluate the satisfaction of business taxpayers with tax system?
Do you think that business taxpayers are satisfied with the taxpayer’s service, availability of tax information and Tax education given by the tax office?
How do business taxpayers perceive they are treated by the tax administration?
How do you evaluate the satisfaction of business taxpayer with tax Assessment and collection procedures, administrative mechanism and tax law enforcement?
Do you think that the existing tax laws and regulations are fair and consistent?
Finally, please, generalize the degree of effectiveness of the City in Business tax administration.

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