TAX ADMINISTRATION AND REVENUE GENERATION IN TORORO DISTRICT LOCAL GOVERNMENT A CASE STUDY OF MALABA TOWN COUNCIL

Table of Contents

Declaration ii

Approval iii

Dedication iv

Acknowledgement v

Table of Contents vi

List of Tables x

List of figures xi

List of Abbreviations xii

Abstract xiii

CHAPTER ONE I

INTRODUCTION TO THE STUI)Y 1

1.0 Introduction 1

1.1 Back ground to the study 1

1.1.1 Historical Perspective I

1.1.2 Theoretical Perspective 2

1.1.3 Conceptual Perspective 3

1.1.4 Contextual Perspective 3

1.2 Statement of the problem 5

1.3 Purpose of the study 6

1.4 Specific Objectives of the study 6

1.5 Research Questions 6

1.6 Research Hypothesis 7

1.7 Scope of the study 7

1.7.1 Content scope 7

1.7.2 Geographical Scope 7

1.7.3 Time 5CO~C 7

1.8 Significance of the study 7

1.9 Operational Definition of Key Terms 8

CHAPTER TWO 10

LITERATURE REVIEW 10

2.0 Introduction .10

2.1 Theoretical Review .10

2.2 Conceptual Review 11

Figure 2.1: Conceptual Framework 11

2.3 Related Literature 12

2.3.1 Level of tax administration in Uganda 12

2.3.2 Factors that Lead to a Low level of Tax administration 13

2.3.3 Measures taken by Uganda to enhance tax administration 14

2.4 Empirical review 16

2.4.1 Domestic revenue performance trends 16

2.4.2 Performance efficiency 17

2.4.3 Allocative efficiency 18

2.4.4 Collection of taxes 18

2.5 Relationship between Tax Administration and Domestic Revenue Collection 18

2.5 Research Gap 20

CHAPTER THREE 22

METHOODOLOGY 22

3.0 Introduction 22

3.1 Research Design 22

3.2 Study Population 22

3.3 Sample Size 22

3.4 Source of Data 23

3.4.1 Primary Data 23

3.4.2 Secondary Source 23

3.5 Data Collection Methods 23

3.5.1 Self administered questionnaire; An open and close ended questionnaire were constructed and this was self administered where the researcher allowed the study respondents to fill the questionnaire in the study field. The questionnaire tool collected information from tax payer and Uganda Revenue Authority employees other than the head of departments 23

3.5.2 Interview guide 24

3.6. Measurement of Variables 24

3.7 Reliability and validity 24

3.8 Research Procedure 25

3.9 Methods of Data Handling 25

3.9.1 Data editing 25

3.9.2 Data presentation 25

3.9.3 Data analysis 25

3.9.4 Interpretation of the study results 26

3. 10 Ethical Consideration 26

3.11 Limitations of the study 26

CHAPTER FOUR 28

DATA PRESENTATION, ANALYSIS AND INTERPRETATION OF FINDINGS 28

4.0 Introduction 28

4.1 Background Information 28

4.1.1 Respondents according to gender 28

4.1.2 Level of Education among the Tax Payers 29

4.1.3 Age Group among the Tax Payers 29

4.2 Level of Tax Compliance 30

4.3: Performance of l)omestic Revenue Collection 34

4.4: Relationship between Tax Administration and Revenue Collection 38

CHAPTER FIVE 41

DISCUSSION, CONCLUSION AND RECOMMENDATIONS 41

5.0 Introduction 41

5.1 Discussion of Findings 41

5.1.1 Level of Tax Administration 41

5.1.2 Performance in Domestic Revenue Collection 42

5.1.3 Relationship between Tax Compliance and Domestic Revenue Collection 43

5.2 Conclusion 45

5.3 Recommendations of the Study 46

5.4 Limitations to the study 48

5.5 Areas for Further Research 48

REFERENCES 49

APPENDIX I: QUESTIONNARE  52

APPENDIX II: INTERVIEW GUIDE 56

APPENDIX III: RESEARCH PROJECT SCHEDULE 57

APPENDIX IV: RESEARCH PROJECT BUDGET 58

Abstract 

This study focused on Tax Administration and Revenue Generation in Tororo District Local Government a case study of Malaba Town Council. The objectives of the study include; to establishing the level of Tax Compliance among Ugandan Tax payers, to assess the performance of domestic revenue collection in Uganda and to establish the relationship between Tax Compliance and Domestic Revenue Collection. The findings of the study revealed that there is a strong positive relationship between Tax Compliance and Domestic Revenue Collection. Data was collected using se(f administered questionnaires. The study used strat Wed and purposive sampling techniques to draw representative samples and 40 respondents were involved in the study The study undertook to find out the level of tax compliance and it was found out that compliance is still low among the tax payers and they attribute this to the high tax rates, taxpayers’ attitude towards URA, the large informal sector which encourages tax evasion. The low level of tax compliance was also attributed to the low compliance culture. The study also found out that the cost of revenue collection is low, Large Taxpayer ‘s Office increased domestic revenue collection, and UM experiences and registers tax arrears which also affects its performance. The study also recommends the following; tax administration so as to provide individuals and groups with guidance on how to improve bookkeeping standards and tax returns, tax counselling offices should be established county wide, procedures for filing returns and applications. Tax education to create awareness among tax payers, and awarding of prizes to compliant taxpayers.