CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter presents what various scholars have written about the level of tax education about Income Tax conducted, the determinants of Income Tax performance and policies for improving the performance of Income Tax in Uganda.

2.2 level of tax education in Uganda

Tax compliance is the degree to which the tax paying community meets the tax obligation as set out in the appropriate legal and regulatory provisions. He adds that compliant tax payers make timely, proper and accurate declaration to the tax authority and voluntarily settle all the due tax liabilities. Taxpayer compliance depends on economic incentives embedded in the tax structure and the effectiveness in detecting and penalizing non-compliance. At the margin, people engage in tax evasion when the expected benefits (lower taxes) are equal to the expected costs (bribes, punishment), (Maxwell, (2003).

Taxation is one of the important elements in managing national income, especially in developed countries and has played an important role in civilized societies since their birth thousands years ago, (Lymer and Oats, 2009).

In every jurisdiction, tax authorities are empowered to collect revenue from taxpayers. Although taxpayers report their income and pay their tax liabilities properly, there are many taxpayers do not bring about budgetary deficit in governments, (Torgler and Schneider, 2007).

Taxpayers’ education can be described as a method of educating the people about the whole process of taxation and why they should pay tax. Taxpayer education assists taxpayers in meeting their tax obligations to the government.  The primary existence of taxpayer education is to encourage voluntary compliance amongst taxpayers. Taxpayer education is one of the strategies of improving service delivery to the tax payers. Improving service delivery is critical to enhance voluntary tax compliance. Lack of voluntary tax compliance compels revenue authorities to use costly and coercive methods for tax enforcement (Fjeldstad and Ranker, 2003).

The education component in Uganda revenue Authority dealing with non-compliance practice among the taxpayers especially in the informal sector (Kimingu and Kileva, 2007). 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 (Christina, Deboral and Gray, 2003).

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 (Oyedele, 2009).

Thus URA tax education policy is enabling the taxpayer to understand tax laws and procedures as well as creating positive tax compliance attitude (Normala, 2007).

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 (Kianuka, Kimungu and Kileva, 2007).

Tax Education to the business owners becomes necessary when the objective of raising tax revenue, at the changing environment; particularly from the official tax assessment is considered (Normala, 2007).

2. 3 The annual income revenue collected in Uganda

Different sources of income for Uganda

Source: URA 2016

Bar graph representing key Uganda’s sources of revenue

Source: URA , 2016

From the above graph, it was noted that out of total due taxes of UGX.1,489,690,880, the taxpayer had only paid UGX.666,366,724 on importation. As a result, taxes worth UGX.823,324,156 had been under declared and not paid. Evidence that these outstanding taxes had been collected by the yearend was not provided for review.

There is a risk that the URA staff that handled the customs entries for this importer did not do due diligence to ensure proper declaration or colluded with the tax payer to dodge taxes. There is also a risk of similar undetected under declarations leading to revenue losses.

In Uganda, income tax applies generally to all types of persons who derive income, whether an individual, bodies of individuals, or corporate entities. Resident persons are taxed on worldwide income, while non-resident persons are taxed only on income derived from sources in Uganda.

Income tax is imposed on three broad categories of income; Business income, Employment income and Property income.

Most of the taxes imposed are self-assessed. The self-assessment system imposes on the taxpayer, in the first instance, responsibility for calculating taxable income and the tax due on that income. The taxpayer’s calculations may however be reviewed by revenue officials when returns are filed and may be subject to further audit.

Tax revenue is generated from taxes on income, profits and capital gains, taxes on goods and services which include value added tax (VAT) and excise duty and taxes on permission to use goods or to perform certain activities for example operating a casino or lottery organizations.
Tax rates for Individuals in Business

The income tax rate for individuals depends on the income bracket in which the individual falls. Resident individuals enjoy a tax free annual income threshold of UGX. 2,820,000 per annum. The balance is taxed at 10%, 20% or 30% depending on the income bracket. Individuals who earn above UGX 120,000,000 pa pay an additional 10% on the income above 120m. It should be noted that in April 2016, while releasing URA’s 9 months revenue performance report for the financial year 2015/16, whereas URA registered a shortfall they were confident the shortfall would be recovered in the last quarter of the financial year 2015/16. The total net revenue collections were Shs U 8.1trillion, which was Shs194.6billion below target, (URA, 2015).

URA at the time highlighted that January to March 2016 was the hardest period where the agency registered a deficit of Shs 242.6bn, whereas the total net revenue performance was at 102 per cent within the first six months of the financial year 2015/16.

The report by URA on 2015/16, it registered a 16% increment in tax collections, the FY 2015/16 tax collections fell short of the annual target of Shs 11.598bn for the same financial year. This leaves us with reservation as to whether Uganda Revenue Authority (URA) will meet the set target for the Financial Year 2016/17 of Shs12.9 trillion.

Compared to Kenya, Tanzania and Rwanda, Uganda’s tax contribution to GDP also known as the gross domestic product, is the lowest. The country’s tax contribution to the GDP which is the value of goods and services produced in a country over a period of time, which could be either quarterly or annually, is hovering at between 12.5 to 12.9 per cent.

Uganda’s revenues collected grew by 18 per cent compared to Kenya’s 10.7, Tanzania’s 14.6 and Rwanda’s seven per cent, URA collected Shs 2.5 trillion in the three months to September compared to 2.1 trillion, a 17.98 per cent increase compared to the same period last year. Both domestic and customs taxes grew, Uganda Revenue Authority, (2016).

But the tax body did not meet its Shs 2.5tn target over the same period – posting a Shs 36bn deficit. Doris Akol, URA boss, said the body was focusing on trade facilitation especially at border points to expand revenue generation.

According to the performance report, the growth in withholding tax on dividends from corporate firms and bank profits posted a surplus of Shs 46.88bn. Akol said there was general improvement across sectors, adding that the tax body had embarked on a deliberate campaign to expand the taxpayer register through tax clinics, education drives and reaching out to them at their premises.

Meanwhile, the report notes that domestic taxes were largely affected by the increased offset and inputs claim in oil and gas sector, electricity, soft drinks, telecom and beer, leading to less value added tax payable.

The tax agency attributed this to the increased capital investments in the sectors. There was decrease in sales for the locally-manufactured beer brands, which affected domestic revenues. This financial year, URA is expected to collect Shs 13.1 trillion – compared to last year’s Shs 11.3 trillion – and Akol is optimistic they will beat the target.

“URA is on the right track and confident that it will surpass the annual target through the implementation of the various policy and administrative measures,” she said.

Asked how the depreciating shilling is likely to impact on tax collection, Akol said:  “The depreciating exchange rate has been felt in dampening earnings as firms are squeezed by rising input costs and a higher cost of capital.”

“This has and is expected to largely affect corporate income tax payments due to reduced profitability of firms especially in the financial and manufacturing sectors.”

Some analysts say the exit of some firms, including Uchumi and British Airways, out of Uganda, will have a dent on Uganda’s revenues. These firms had been paying income tax and PAYE to URA.

2.3 The determinants of income tax performance in Uganda

2.3.1 Tax Knowledge and Education

The influence of knowledge on compliance behaviors has been assessed in various researches. Knowledge as one of the factors in compliance is related to the taxpayers’ ability to understand taxation laws, and their willingness to comply.  The aspect of knowledge that relates to compliance is the general understanding about taxation regulations and information pertaining to the opportunity to evade tax (Kasipillai, Norhani, and Noor, 2003).

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 (Mohd, 2010).

Attitude towards tax compliance can be improved through the enhancement of taxation knowledge.  When a taxpayer has a positive attitude towards tax, this will reduce his or her inclination to evade tax payment.

2.3.2 Fines and Penalties

Fines and penalty rates may substitute each other due to their multiplicative linkages as long as neither of them is set to zero (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 (Kirchler, 2007).

Compliance has been strongly affected by the amount of fines than by audit probabilities. Several studies however found no support for the deterring effects of fines since it was weak (Andreoni, 1998).

Some of the findings suggest that a policy based on deterrence is effective only in combination with frequent Audits (Kirchler, 2007).

2.3.3 Perceived Opportunity for Tax Evasion

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 (Webley, 2004).

Incomes are not subject to automated third-party reporting, or if taxes are not withheld at source (e.g. in cases of receiving gross incomes or cash payments), opportunities to evade taxes exist (Williams and Round, 2009).

The link between opportunity and non-compliance seems to have at least two different facets. First,  in  cases  where  people  do  not  deliberately  capitalize  on  opportunities,  the  specific circumstances leading to evasion opportunities might still lead to non-compliance. Opportunities usually come about when tax filings are not entirely automated. Through the lack of automation tax filing procedures are more likely to become error prone even without intent to capitalize on the entailed opportunities.

Consequently, opportunities may lead to an increase in intended as well as unintended non- compliance by deferent individuals to evade or avoid paying income tax. show that an experimentally induced opportunity to cheat (more possibilities to deduct non-deductible expenses) increased non-compliance regardless of whether the participants actually intended to be non-compliant or not, (Robben, 1990).

2.3.4 Tax Environment Policy

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 (Tanzi and Zee, 2000).

Most countries, individuals must contend with the income tax system (unless the individual falls under income tax exemption threshold). Business income tax also introduces complexities not relevant to an employee that pays tax only on labor income and non-business investment income. Complexities may multiply where more than one level of government is involved in levying and/or administering a tax and rules and procedures are not well co-ordinate (Thisen, 2003).

Thus, reduced compliance costs can bring improved efficiency resulting from more uniform tax treatment of individuals businesses.  A second efficiency consideration is that increased compliance, when resulting in increased tax revenues, may enable reduced effective tax rates on one or more possibly more elastic tax bases, with possible efficiency gains (Adams, 1993).

Policies for improving the performance of income tax in Uganda

2.3.5 Tax policy reforms and tax administration reforms

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, (Davey, 1974). He emphasized that taxing farmers so as to release additional output without curbing their enterprise was eminently one for local efforts, since it is only in the locality that their taxable capacity can be discovered adequately. This can be easily achieved if it is apparent to the tax payer that a substantial part of the revenue is spent on providing goods and services that benefit the rural community.

Literature Overview

The above literature has clearly established tax compliancy has direct effect on the domestic revenue collection of a country, implying that an increase in the number of tax compliant persons in a country leads to increased revenue collection. This can help the country to realize its goals and objectives as set out in the budget and that’s why the growing concern of tax administrations throughout the world is on how to simplify and encourage voluntary tax compliance. However, the literature fails to establish the effect of taxpayers’ education on income tax compliance. This creates  the  need  for  the  tax  agents  to  improve  their  image  by  building  trust  and  public confidence. The research was carried out using descriptive design in soliciting for information. From all the studies reviewed above, it’s clear that past research has tried to study the area but from a shallow perspective and no one has actually done the research in Uganda hence, the research tried to seek solutions to the problem statement which are mentioned later in chapter four and five.

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

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

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

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

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

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

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

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

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.

REFERENCES

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Taxation and Tax Modernization in Kenya Institute of Economic Affairs                                                                                                           Page 35

QUESTIONNAIRE

TOPIC: THE EFFECT OF TAX EDUCATION ON INCOME TAX PERFORMANCE

A CASE STUDY: A CASE STUDY OF UGANDA REVENUE AUTHORITY

Dear respondent

I am Tugume David a student of Kyambogo University     , am carrying out a study on the above stated topic. You are one of the respondents randomly selected to participate in the study. The information given shall be treated with at most confidentiality and shall only be used strictly for academic purpose.

SECTION A:   GENERAL DATA

1. Which department do you belong to in this organization?

• Procurement b) finance            c)  marketing             d)  Administration

• Sex: Male                              female

• Age

• 18 -29 b) 30 – 39 c)  40 and above

4. Educational level

Certificate             Diploma              Degree           Others

5. For how long have you been working with URA?

• Less than three years b) 4-7 years c) 8-10 years           d) above 11 years

Please tick one appropriate.

SECTION B: LEVEL OF TAX EDUCATION IN UGANDA

Key: SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Tick in the box where appropriate.

SECTION C: THE UGANDA ANNUAL INCOME REVENUE COLLECTED IN UGANDA

Key: SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Tick in the box where appropriate.

Mention some of the key tax payers in Uganda?

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Please specify the amount of tax Uganda revenue collects from the people.

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Explain some of the challenges Uganda revenue faces while collecting taxes from people.

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SECTION D: DETERMINANTS OF INCOME TAX PERFORMANCE

Key: SA=strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Tick in the box where appropriate.

Please mention other determinants of Income Tax performance

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SECTION E: POLICIES FOR IMPROVING THE PERFORMANCE OF INCOME TAX

Key: SA= strongly agree, A=agree, N=neutral, D=disagree, SD=strongly disagree

Please mention other policies for improving the performance of Income Tax.

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