FACTORS LEADING TAX PAYERS TO ENGAGE IN TAX EVASIONIN THE CASE OF CATEGORY “B” TAX PAYERS IN BENCH SHEKO ZONE SOUTH WEST ETHIOPIA

Abstract

The objective of this study is to identify factors leading tax payers to engage in tax evasion in the case of Bench Sheko Zone Category “B” Tax payers. Descriptive and Explanatory research design was used in this study. Questionnaire and document analysis was used to collect data. The participants of the study were 201 tax payers selected from one town administration and five woredas. Multiple linear regressions were the model used to explore the relationship between independent and dependent variables the impact of explanatory variables on dependent variable. The quantitative data were analyzed by descriptive and inferential statistics. The finding of the study shows that zonal performance of tax collection of the selected years was found to be in between 61.32% to 79.90. % This indicates the trend of tax collection is increasing but its rate of increment is very low which indicate there is tax evasion in the research study area. The five years zonal level detected tax evasion was 29,246,506 Birr with trend of increasing tax evasion from year to year. Therefore, Zone and Woreda revenue collectors and administration must use the tax revenue effectively for public infrastructure provision, control the expending of tax revenue to not wind up in some corrupted politicians pockets, and must transparently announce its expenditure to tax payers.