Abstract:
The main objective of the study was to assess the challenges hindering voluntary tax payment in Tanzania by focusing on Tanzania Revenue Authority (TRA) in Ilala municipality as a case study. Specifically, the study aimed to determine knowledge of tax payers regarding taxes they are paying, to examine factors contributing to nonvoluntary payment of taxes among tax payers, to determine tax payers’ view on tax administration in Tanzania and to find out the views of taxpayers on the use of collected taxes.
This study has involved taxpayers and tax collectors of Ilala Municipality as respondents. The sample of 80 respondents was used for the study of whom 30 were TRA staff and 50 were tax collectors. In collecting data the study used primary data collection methodswhich involvedquestionnaires, interviews and observation. The study also used secondary data through documentary review. SPSS 16 was used to analyse data collected from both tax payers and tax collectors.
The study has found out that, tax compliance is low among tax payers which lead to low tax collections. The main factors contributing to non-voluntary tax payment include; high tax rate, lack of tax knowledge among tax payers, tax structure features, financial constraints and tax payers’ attitudes toward taxes. The findings as well noted that there was unfairness of tax system, poor relationship between taxpayers and tax authorities and harassment by tax collectors.
In order to have high compliance and high voluntary tax payment in Ilala Municipality, the study recommends the following measures; first the management of TRA should put more emphasis on tax education by allocating sufficient resources to its Tax Payers and Education Department that would enable the department to hire more tax education experts. Second, the government must be open to tax payers by giving all the information about the taxes collected and their uses.
