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CHAPTER THREE: METHODOLOGY
3.0 Introduction
This chapter presents the methodology which consists of the research design, area of study, study population, sample population and selection, sampling technique, data collection method, data quality control, data collection procedures and limitations of the study.
3.1 Research design
Qualitative and quantitative research designs were used. The researcher used the above method because many aspects will be covered in the study concerning the income tax performance in Uganda URA Nakawa.
3.2 Area of the study
The study was carried out in URA Nakawa. It was conducted among only URA staff.
3.3 Study population and sample size
The study targeted officials from finance department, ICT department, accountants and auditors.
3.4 Sample size
According to (Amin, 2005) sampling involves selecting a sample of the population in such a way that samples of the same size have equal chances of being selected. The sample comprised of 70 respondents who included officials from ICT department, field staff, procurement staff, and accountants of URA.
While carrying out research, purposive sampling was applied to the below different categories of respondents.
Table 3.4.1 Sample size
| CATEGORY | SAMPLE |
| Procurement staff | 05 |
| ICT Department | 20 |
| Field staff | 30 |
| Accountants/auditors | 15 |
| TOTAL | 70 |
SOURCE: URA
3.5 Data Collection Instruments
The major instruments for data collection were questionnaires guide. Surveys were one part of a complete data collection and evaluation strategy. The major method of data collection for the study was the survey, which was done using selected instruments like questionnaires.
The questionnaire provided respondents with ample time to comprehend the questions raised and hence, they were able to answer factually.
3.5.1 Questionnaires
The questionnaires were used to collect quantitative data. The researcher administered the questionnaires to all the respondents, which was designed basing on study objectives and questions. Respondents filled in the questionnaires themselves. The questionnaires were close ended with likert scales questions.
3.6 Reliability and Validity of data
Data analyses in this study focused on data validity and reliability. To establish the validity of the questions, pre-testing was done amongst the selected categories of respondents. Their comment was incorporated in the final instruments to suit the data requirement of the study. The final amended research instrument was reviewed jointly by the researcher and the supervisor. Reliability was checked using the test – retest practice advocated for by Amin (2005). In other words, the questions were put to course mates and their comments noted, they were presented to the respondents and their views was compared with those of the course mates. On receipt of the questionnaires, manual editing was done, followed by coding. Frequency count of different variables was done and this gave the number of occurrences and percentages out of total occurrences.
3.7 Data collection methods
Primary data was obtained from the questionnaires administered on the target respondents to gain opinions and practices on the effect of tax education on income tax performance. Secondary sources comprised of literature related to the topic. Secondary data was sourced because it yields more accurate information than that obtained through primary data, and it is also cheaper.
3.8 Data collection procedures
Upon receiving the University permission to carry out research, the area of study was visited for purposes of familiarization. The researcher sought permission from staff and once allowed to proceed with research, questionnaires were issued and interviews were carried out with the selected staff.
3.9 Quality control of data instruments
The instrument was taken to the supervisor to check its correctness there after pilot study was be carried out to find out if it measures what it is meant for.
3.10 Data processing and analysis
The raw data was coded, edited, and arranged ready for analyzing only completed raw data was analyzed using statistical tables and graphs.
3.11 Limitations of the study
Financial constraint, this is in terms of financial support for transport, printing questionnaires among other requirements that require finance. However this was overcome by soliciting money from friends, relatives and sponsors which assisted in making my work a success. Some respondents delayed to fill the questionnaire and feared to give information, but they were persuaded that the information is kept secret.
CHAPTER FOUR: PRESENTATION, ANALYSIS, INTERPRETATION OF FINDINGS
4.0 Introduction
This chapter presents the results in reference to objectives in chapter one. Gender of respondents, Age of respondents, education level of respondents, the level of tax education in Uganda, and the annual income tax revenue collected in Uganda, the determinants of income tax performance in Uganda and policies for improving the performance of income tax in Uganda
4.1 FINDINGS ON GENERAL INFORMATION
Table 1 shows the findings on the gender of respondents
| Gender of respondents | |||||
| Frequency | Percent | Valid Percent | Cumulative Percent | ||
| Male | 49 | 70.0 | 70.0 | 70.0 | |
| Female | 21 | 30.0 | 30.0 | 100.0 | |
| Total | 70 | 100.0 | 100.0 | ||
Source: primary data
Table 4.1 above shows that 70% of respondents were male and 30% were female. That means that the biggest percentage of respondents and employees in the organization were male and apart from that it also shows that male gender dominate the work force of Uganda Revenue Authority.
Figure 1 Shows finding on gender of respondents
Source: primary data
From the above findings it is evident that most of the respondents were male, this results implies that male respondents readily participated in the study than females.
4.2 FINDINGS ON THE AGE OF RESPONDENTS.
Table 1 Shows findings on age of respondents
| Age category of respondents | |||||
| Frequency | Percent | Valid Percent | Cumulative Percent | ||
| Valid | 18-29 | 26 | 36.7 | 36.7 | 36.7 |
| 30-39 | 21 | 30.0 | 30.0 | 66.7 | |
| 40 and above | 23 | 33.3 | 33.3 | 100.0 | |
| Total | 30 | 100.0 | 100.0 | ||
Source: primary data
The table above shows that 30% of the respondents are in the ages of 18-29 while 37 % of the respondents are in the ages of 30-39 while the 33% of the remaining respondents are in the ages of above 40 years.
Bar graph showing the age of respondents
Figure 2 Shows findings on age category of respondents
Source: primary data
The graph above shows that majority of the respondents were in the ages of 30-39, this therefore shows that majority of the respondents are mature and therefore were able to give accurate information, this implies that most of the respondents were well conversant with the study topic and therefore they gave correct answers.
4.3 Findings on educational level of respondents
Table 2 Shows findings on educational level of respondents
| Educational level of respondents | |||||
| Frequency | Percent | Valid Percent | Cumulative Percent | ||
| Valid | Masters | 12 | 17 | 17 | 16.7 |
| Degree | 42 | 60 | 60 | 76.7 | |
| Diploma | 14 | 20 | 20 | 96.7 | |
| Below diploma | 2 | 3 | 3 | 100.0 | |
| Total | 70 | 100.0 | 100.0 | ||
Source: primary data
Table above shows that the majority of staff is degree holders and their percentage is 60%, masters 17%, while 20% of the respondents are diploma holders and the rest of the respondents have other qualification, these results imply Uganda Revenue Authority employees’ degree holders and therefore they are able to give correct answers.
Figure 3 Educational level of respondents
Source: primary data
The line graph above shows that majority of the respondents were degree holders, this showed that majority of the respondents were highly educated and therefore easily answered the questionnaires without difficulty, it further showed that seconds largest percentage of respondents have master’s degree, this findings implies that that most of the respondents.
4.4 FINDINGS NUMBER OF YEARS OF WORKING
Table 3 Shows findings on number of year’s respondents have worked
| Findings on duration respondents have worked | |||||
| Frequency | Percent | Valid Percent | Cumulative Percent | ||
| Valid | Less than two years | 14 | 20.0 | 20.0 | 20.0 |
| 3-5 Years | 12 | 17 | 16.7 | 36.7 | |
| 6-10 years | 37 | 53.3 | 53.3 | 90.0 | |
| Above 10 years | 7 | 10.0 | 10.0 | 100.0 | |
| Total | 70 | 100.0 | 100.0 | ||
Source: primary data
The table shows that majority of the respondents have worked for the time period of 6-10 years, and their percentage stands at 50% of, 20% of the respondents have worked for 3-5 years, while 17% of the respondents have worked for and respondents who have worked for above 10 years have percentage of 13%, this findings implies that most of the respondents have stayed for long periods of time at Uganda Revenue Authority and this further implies that Uganda Revenue Authority is good at employee retention.
Figure 4 Shows findings on number of years respondents have worked
Source: primary data
The Bargraph shows that marjority of the respondents have worked for a period of 6-10 years at kawacom this therefore shows that marjority of the respondents have good understanding of the operations of Uganda Revenue Authority and therefore gave right answers to the questions asked by the interviewer.
4.5 LEVEL OF TAX EDUCATION IN UGANDA.
Table 4 LEVEL OF TAX EDUCATION IN UGANDA
| Minimum | Maximum | Mean | Std. Deviation | |
| URA conducts training on the new tax policies to both staff and clients | 4 | 5 | 4.60 | .498 |
| URA educates the citizens on Tax policies | 4 | 5 | 4.73 | .450 |
| Most of the URA clients are aware of the Tax policies | 4 | 5 | 4.50 | .509 |
| The tax policies by URA are fair to clients | 2 | 5 | 4.47 | .776 |
| Valid N (list wise) |
Source: primary data
From table above, the mean value of 4.60 indicates that majority of the respondents strongly agreed that URA conducts training on the new tax policies to both staff and clients; this therefore shows that the majority of the respondents agreed.
According to table above it indicates that, mean value of 4.73 shows that majority of the respondents strongly agreed that URA educates the citizens on tax policies; in achieving purchasing effectiveness, while non of the respondents, was neutral, disagreed, and strongly disagreed, this findings also shows that URA educates the citizens on tax policies.
Findings revealed in table above, shows that the mean value was 4.50 showing that most of the respondents strongly agreed and the remaining percentage this therefore shows that the respondents agree with the fact that Most of the URA clients are aware of the tax policies.
According to the table most of the respondents strongly agreed that The tax policies by URA are fair to clientswhile the only few of the respondents disagreed, while none of the respondents was neutral, disagreed or strongly disagreed, this therefore clearly shows that The tax policies by URA are fair to clients.
4.6 THE DETERMINANTS OF INCOME TAX PERFORMANCE
Table 5: Shows Determinants of Income Tax Performance
| Minimum | Maximum | Mean | Std. Deviation | |
| Tax knowledge and Education | 1 | 5 | 3.97 | 1.351 |
| Fines and penalties | 4 | 5 | 4.53 | .507 |
| Perceived opportunity for tax evasion | 3 | 5 | 4.27 | .785 |
| Tax Environment policy | 3 | 5 | 4.33 | .758 |
| Strength of a country’s currency | 3 | 5 | 4.50 | .777 |
Source: primary data
Table above reveals that most of the respondents have Tax Knowledge and Educationthis is shown by the mean value of 3.97agreeing while only a few of the remaining percentage of respondents disagreed. This therefore shows that most of the people have tax knowledge and have been educated on tax related information.
The table indicates the mean value is 4.53 indicating that majority of the respondents strongly and agreed the Uganda revenue authority imposes Fines and Penaltiesin case an individual has disobeyed the tax laws while non of the respondents was neutral, disagreed, and strongly disagreed.
According to table above, the mean value is 4.27 showing that most of the respondents strongly agreed that having knowledge on an Opportunity for Tax Evasion has a great influence on them to pay taxes.
According to researchers’ findings, most of the respondents hold the view that 4.27 of the respondents strongly agreed that Tax Environment Policy has a great influence on the performance of URA. While the rest of respondents agreed.
According to the table the mean value is 4.33 indicating that most of the respondents hold the view thatthe strength of a country’s currency has a great determination to some one’s ability to pay taxes.
4.7 POLICIES FOR IMPROVING THE PERFORMANCE OF INCOME TAX
Table 6 Shows POLICIES FOR IMPROVING THE PERFORMANCE OF INCOME TAX
| Minimum | Maximum | Mean | Std. Deviation | |
| Tax knowledge and Education | 1 | 5 | 3.97 | 1.351 |
| Fines and penalties | 4 | 5 | 4.53 | .507 |
| Perceived opportunity for tax evasion | 3 | 5 | 4.27 | .785 |
| Tax Environment policy | 3 | 5 | 4.33 | .758 |
| Strength of a country’s currency | 3 | 5 | 4.50 | .777 |
| Valid N (list wise) |
Source: primary data
From table above, the mean value of the study is at 3.97 indicating that most of the respondents hold the view that Improvement of the salary earning of government employees while the remaining while few of the respondents assert that majority of the respondents agreed that improving the salary of employees is essential in tax increment.
According to table above it indicates that the mean value 4.53 shows that most of the respondents strongly agreed that Use of up technology to enhance productivity of workers is essential in improving on tax performance.
Findings revealed in table above, shows that the mean value of 4.27 shows that most of the respondents strongly agreed and the remaining percentage this therefore shows that almost all of the respondents agree with the fact that Improvement on the skills of employees is essential in improvement of taxes of employees.
According to the table majority 4.33 of the respondents strongly agreed that Increase on the country’s earning is essential in acquiring enough taxes by Uganda revenue authority.
CHAPTER FIVE: DISCUSSION, CONCLUSION AND RECOMMENDATIONS OF FINDINGS AND AREAS OF FURTHER RESEARCH
5.0 INTRODUCTION
The study aimed at establishing the effect of tax education on income tax performance. The study was guided by research objectives and the researcher summarized the findings in consistence to the research objectives.
5.1 Discussion of findings
5.1.1 LEVEL OF TAX EDUCATION IN UGANDA
The results indicates that majority of the respondents strongly agreed that URA conducts training on the new tax policies to both staff and clients. This positive view is also in line with (Kimingu and Kileva, 2007), who states that the education component in Uganda revenue authority dealing with non-compliance practice among the taxpayers especially in the informal sector. This is based on the possibility of non-compliance being unintentional, where the taxpayer is not aware of his/her tax obligations or fails to fulfill his/her tax obligations due to ignorance of tax laws and procedures or may be intentional due to the compliance attitudes.
The results in the study indicates that URA educates the citizens on tax policies, this is also shared by Oyedele, (2009), who states that Taxpayer education program serves to: create taxpayer awareness of laws and procedures, educate taxpayers on their tax responsibilities and rights, assist and motivate taxpayer to comply voluntarily, assist taxpayers on reporting the correct income and amount of tax, maintaining close relationship between the tax authority and the taxpayer continuously, and, instill public confidence in taxation system.
The findings in the study reveals that URA clients are aware of the tax policies, this shows that URA has taken an initiative of educating the tax payers about taxes, this view is also shared by Kianuka, Kimungu and Kileva, (2007) who states that the tax authorities have given special attention on the business, by simplification of the tax laws procedures, associations, annuals taxpayers’ appreciation day, and integrity enhancement as among the strategies.
According to the table most of the respondents strongly agreed that The tax policies by URA are fair to clients these results also indicates that the Uganda revenue authority is considerate of the average tax payer.
5.1.2 THE DETERMINANTS OF INCOME TAX PERFORMANCE
The study shows that Tax Knowledge and Education has a great influence on the performance of a tax body like URA, this view is also similar to the findings of Mohd, (2010) who states that Taxation knowledge is necessary to increase public awareness especially in areas concerning taxation laws, the role of tax in national development, and especially to explain how and where the money collected is spent by the government.
The results in the study further indicate that Uganda revenue authority imposes Fines and Penalties in case an individual has disobeyed the tax laws this shows that there are rules and consequences of disobedience incase of not following the tax rules, this is also in line with Kirchler, (2007), Higher fines simply make evading taxes more hazardous for taxpayers and should deter them from evasion. Empirically, the deterrent effect of fines could not always be supported. The observed effects were weaker than expected and some studies even suggest that an increase of penalties can have undesirable effect and result in more tax avoidance.
The findings in the study indicate that having knowledge on an Opportunity for Tax Evasion has a great influence on them to pay taxes this is also in line with Webley, (2004) who states that Individuals are often mentioned as a high-risk group in terms of tax compliance because their opportunities to evade are high. Opportunity has often been documented as a major explanatory factor in non-compliance.
The findings in the study indicates that most of the respondents hold the view that Tax Environment Policy has a great influence on the performance of URA, this view is also shared by Tanzi and Zee, (2000), Compliance costs tend to increase with the number of taxes that an individual is subject to, the complexity of the tax rules, the frequency of submitting tax returns, and the number of levels of government involved in levying and collecting tax.
5.1.3 POLICIES FOR IMPROVING THE PERFORMANCE OF INCOME TAX
According to the results in the study improvement of the salary earning of government employees Davey, (1974) who states that commenting on the ability of local authorities to levy and collect tax revenues from peasant farmers, it is crucial for the local authority to have knowledge in identifying individual members of predominantly rural and self-employed population, assessing their means and extracting money from them.
The result shows that improvement on the skills of employees is essential in improvement of taxes of employees, this helps in making the employees more productive and able to achieve economic prosperity for the country there by increasing the income of the of the individuals and tax authority at large.
The results in the study shows that Increase on the country’s earning is essential in acquiring enough taxes by Uganda revenue authority.
5.2 Conclusion
According to the findings in the study indicates that URA conducts training on the new tax policies to both staff and clients, the results in the study further indicate that URA educates the citizens on tax policies.
According to the study URA clients are aware of the tax policies, this shows that URA has taken an initiative of educating the tax payers about taxes.
The tax policies by URA are fair to clients these results also indicates that the Uganda revenue authority is considerate of the average tax payer.
The study shows that Tax Knowledge and Education has a great influence on the performance of a tax body like URA, the study further indicates that Uganda revenue authority imposes Fines and Penalties in case an individual has disobeyed the tax laws this shows that there are rules and consequences’ of disobedience incase of not following the Tax rules.
The findings in the study indicate that having knowledge on an Opportunity for Tax Evasion has a great influence on them to pay taxes.
The findings in the study indicate that most of the respondents hold the view that Tax Environment Policy has a great influence on the performance of URA.
Improvement of the salary earning of government employees is essential in increasing on the amount of taxes paid by employees.
The findings conclude that Use of up technology to enhance productivity of workers is essential in improving on tax performance.
The results indicate that Increase on the country’s earning is essential in acquiring enough taxes by Uganda revenue authority.
5.3 Recommendations
The study recommends that URA should carry out tax education to both staff and clients; this will increase the level of income tax revenue collected.
URA also needs to design taxes that are fair to clients to be in position to have a better performance of the authority and staff as well.
The study also further recommends that government to strengthen the business environment so that business people are able to pay taxes.
5.4 AREAS OF FURTHER STUDY
The study made the following recommendation for areas of further study;
- The influence of the use of information and communication technology on the performance of URA staff.
- The influence of price of goods and service on the monetary value of Uganda’s currency.
- The challenges of modern technology on the performance of employees.
