Published May 30, 2025 | Version CC-BY-NC-ND 4.0
Journal article Open

Effects of Taxpayers' Morale on Value-Added Tax Collection in Moshi Municipality, Tanzania

Authors/Creators

  • 1. Department of Economic and Business Studies (DEBS), Mwenge Catholic University, Moshi Tanzania.

Contributors

  • 1. Department of Economic and Business Studies (DEBS), Mwenge Catholic University, Moshi Tanzania.
  • 2. Dr. Hezron Onyancha, Department of Economic and Business Studies (DEBS), Mwenge Catholic University, Moshi Tanzania.

Description

Abstract: Academic studies have extensively studied tax morale as an influencing factor in value-added tax (VAT) collection. Governments and tax authorities face new issues due to tax evasion, fraud, tax avoidance, and insufficient tax discipline. Additionally, there is a growing need for better justice and transparency in taxation. It necessitates the development of effective and innovative methods for collecting VAT. The current study was conducted in Moshi Municipality to assess the effects of taxpayers' morale on VAT collection. The study was based on the Theory of Collection Efficiency of Value Added Tax. The study population consisted of 687 taxpayers registered for VAT in the study area. A sample of 158 individuals was selected using the Yamane formula (1964). Data was collected using a questionnaire. Face-to-face and content validity were used to verify content validity. A Cronbach's alpha coefficient test was used for reliability, where a 0.822 coefficient level was obtained. A Logistic Regression model was used to analyse data, while descriptive statistics were used to organise data. The study's findings show that taxpayers' VAT tax morale in the study area decreases with age. Additionally, the educational background of the household is strongly associated with taxpayers' tax morale. Furthermore, household affluence hurts VAT compliance among taxpayers. On the other hand, the attendance of VAT Programmes has a significant positive effect on tax morale and collection. It is concluded that various elements, including individual variables, contextual variables, and other aspects, contribute to tax morale among taxpayers. It is recommended that governments, tax authorities, and educational program designers disseminate information and provide education to both existing and future taxpayers. It will help enhance the tax culture in the study region and, ultimately, in Tanzania.

Files

B259604021124.pdf

Files (400.2 kB)

Name Size Download all
md5:7e4c1f737de6175772c5b72d1c10bc1d
400.2 kB Preview Download

Additional details

Identifiers

DOI
10.54105/ijef.B2596.05010525/
EISSN
2582-9378

Dates

Accepted
2025-05-15
Manuscript received on 09 September 2024 | First Revised Manuscript received on 28 September 2024 | Second Revised Manuscript received on 16 March 2025 | Manuscript Accepted on 15 May 2025 | Manuscript published on 30 May 2025.

References

  • Allingham, M. G., & Sandmo, A. (1972). Income tax evasion: a theoretical analysis. Journal of Public Economics 1, 323–338. doi: https://doi.org/10.1016/0047-2727(72)90010-2
  • Andriani, L., Bruno, R., Douarin, E., & Stepien-Baig, P. (2022). Is tax morale culturally driven? Journal of Institutional Economics, 18(1), 67- 84. https://doi.org/10.1017/S1744137421000072
  • Batrancea, L. M., Nichita, A., De Agostini, R., Batista Narcizo, F., Forte, D., de Paiva Neves Mamede, S., ... & Budak, T. (2022). A self-employed taxpayer experimental study on trust, power, and tax compliance in eleven countries. Financial Innovation, 8(1), 96. https://doi.org/10.1186/s40854-022-00404-y
  • Bejaković, P., & Bezeredi, S. (2019). Determinants of tax morale in Croatia: An ordered logit model. Business Systems Research: International Journal of the Society for Advancing Innovation and Research in Economy, 10(2), 37-48. https://doi.org/10.2478/bsrj-2019- 016
  • Bikas, E., & Bagdonaitė, G. (2020). Tax avoidance: The aspect of value added tax. Entrepreneurship and sustainability issues, 8(2), 590-605. https://doi.org/10.9770/jesi.2020.8.2(36)
  • Bruno, R. L. (2019). Tax enforcement, tax compliance, and tax morale in transition economies: A theoretical model. European Journal of Political Economy, pp. 56, 193–211. https://doi.org/10.1016/j.ejpoleco.2018.08.006
  • Buehn, A., & Schneider, F. (2016). Size and Developments of Tax Evasion in 38 OECD Countries: What do we (not) know? Journal of Economics and Political Economy, 3(1), 1–11. doi: https://doi.org/10.1453/jepe.v3i1.634
  • Canale, R. R., & Liotti, G. (2022). Absolute poverty and sound public finance in the Eurozone. The Journal of Economic Inequality, 20(2), 327-344. https://doi.org/10.1007/s10888-021-09498-3
  • Cirman, A., Pahor, M., & Starček, S. (2021). Addressing evasion and tax morale by educating young taxpayers. EDUvision38. Cnossen, S. (2021). Modernising value-added tax. Tax by Design for the Netherlands, p. 365. https://doi.org/10.1093/oso/9780192855244.003.0020
  • Di Gioacchino, D., & Fichera, D. (2020). Tax evasion and tax morale: A social network analysis. European Journal of Political Economy, 65, 101922. https://doi.org/10.1016/j.ejpoleco.2020.101922
  • Enachescu, J., Puklavec, Z., Olsen, J., & Kirchler, E. (2021). Tax compliance is not fundamentally influenced by incidental emotions: An experiment. Economics of Governance, 22, 345-362. https://doi.org/10.1007/s10101-021-00256-9
  • European Commission. (2018a). A huge problem. Retrieved from https://ec.europa.eu/taxation_customs/fight-against-tax-fraud-taxevasion/a-huge-problem_en.
  • European Commission. (2018b). Proposal for a regulation of the European Parliament and of the Council establishing the 'Fiscalis' program for cooperation in the field of taxation. Luxembourg: Publications Office of the European Union. https://www.eumonitor.eu/9353000/1/j9vvik7m1c3gyxp/vkp27tq5kldy
  • Fjeldstad, O. H., Kagoma, C., Mdee, E., Sjursen, I. H., & Somville, V. (2020). The customer is king: Evidence on VAT compliance in Tanzania. World Development, 128, 104841. https://doi.org/10.1016/j.worlddev.2019.104841
  • Fotiadis, K., & Chatzoglou, P. (2021). Tax Morale: Direct and Indirect Paths between Trust Factors: Empirical Evidence from Greece. Journal of Economic Issues, 55(4), 1066-1100. https://doi.org/10.1080/00213624.2021.1994788
  • Hashimzade, N., Myles, G. D., & Tran-Nam, B. (2012). Applications of behavioral economics to tax evasion. Journal of Economic Surveys, 27(5), 941–977. doi: https://doi.org/10.1111/j.1467-6419.2012.00733.x
  • Hofmann, E., Voracek, M., Bock, C., & Kirchler, E. (2017). Tax compliance across sociodemographic categories: Meta-Analyses of survey studies in 111 countries. Journal of Economic Psychology, 65, 63–71. doi: https://doi.org/10.1016/j.joep.2017.06.005
  • Joshi, A., Kangave, J., & van den Boogaard, V. (2020). Gender and tax policies in the global south.
  • Kemme, D. M., Parikh, B., & Steigner, T. (2020). Tax morale and international tax evasion. Journal of World Business, 55(3), 101052. https://doi.org/10.1016/j.jwb.2019.101052
  • Levin, J. (2001). Taxation in Tanzania (No. 2001/80). WIDER Discussion Paper. Pp19. Taxation in Tanzania - UNU Collections
  • Li, J., & Wang, X. (2020). Does VAT have higher tax compliance than a turnover tax? Evidence from China. International Tax and Public Finance, 27(2), 280-311. https://doi.org/10.1007/s10797-019-09567-4
  • Lutfi, A., Alshira'h, A. F., Alshirah, M. H., Al-Ababneh, H. A., Alrawad, M., Almaiah, M. A., ... & Alardi, M. W. (2023). Enhancing VAT compliance in the retail industry: the role of socioeconomic determinants and tax knowledge moderation. Journal of Open Innovation: Technology, Market, and Complexity, 9(3), 100098. https://doi.org/10.1016/j.joitmc.2023.100098
  • Luttmer, E., & Singhal, M. (2014). Tax morale. Journal of Economic Perspectives, 28(4), 149–168. doi: https://doi.org/10.1257/jep.28.4.149
  • Mascagni, G., Dom, R., Santoro, F., & Mukama, D. (2023). The VAT in practice: equity, enforcement, and complexity. International Tax and Public Finance, 30(2), 525-563. https://doi.org/10.1007/s10797-022-09743-z
  • Morrow, P., Smart, M., & Swistak, A. (2022). VAT compliance, trade, and institutions. Journal of Public Economics, p. 208, 104634. https://doi.org/10.1016/j.jpubeco.2022.104634
  • Ndubula, E., & Matiku, E. (2021). The effects of tax education on government revenue collection: the case of small and medium enterprises in Morogoro Municipality, Tanzania. J. Econ. Manag. Trade, 27, 28-41. https://doi.org/10.9734/jemt/2021/v27i730354
  • Olsen, J., Kasper, M., Kogler, C., Muehlbacher, S., & Kirchler, E. (2019). Mental accounting of income tax and value-added tax among self-employed business owners. Journal of Economic Psychology, 70, 125-139. https://doi.org/10.1016/j.joep.2018.12.007
  • Rahmah, R. (2021). Quality Services Moderation on Moral Impact of Taxpayers and Tax Penalties on Compliance Taxpayers. ATESTASI: Jurnal Ilmiah Akuntansi, 4(2), 155-163. https://doi.org/10.33096/atestasi.v4i2.762
  • Saiteu, B. (2022). The Administration of Value Added Tax in Tanzania (Doctoral dissertation, The Open University of Tanzania). https://repository.out.ac.tz/3768/1/BARAKA%20SAITEU%20PhD%2 0tyr.pdf
  • Sebele-Mpofu, F. Y. (2020). Governance quality and tax morale and compliance in Zimbabwe's informal sector. Cogent Business & Management, 7(1), 1794662. https://doi.org/10.1080/23311975.2020.1794662
  • Tassi, A. (2023). Vat Collection Only at the Retail Stage: Evidence on Tax Compliance. Available at SSRN 4672536. https://doi.org/10.2139/ssrn.4672536
  • Timothy, J., & Abbas, Y. (2021). Tax morale, perception of justice, trust in public authorities, tax knowledge, and tax compliance: a study of Indonesian SMEs. JTR, pp. 19, 168. https://www.semanticscholar.org/paper/Tax-morale%2C-perceptionof-justice%2C-trust-in-public-TimothyAbbas/4bd1a23c44006e00533827feb59dce9a99792141
  • Ungureanu, M. A., & Ciocanea, B. C. (2021). Tax Burden, as Determining Factor of Tax Morale in Romania and European Union. In Organizations and Performance in a Complex World: 26th International Economic Conference of Sibiu (IECS) 26 (pp. 359-371). Springer International Publishing. https://doi.org/10.1007/978-3-030- 50676-6_29
  • Williams, C., & Krasniqi, B. (2017). Evaluating the individual- and country-level variations in tax morale: Evidence from 35 Eurasian countries. Journal of Economic Studies, 44(5), 816–832. doi: https://doi.org/10.1108/JES-09-2016-0182
  • Zídková, H., & Balíková, K. (2021). The definitive VAT system and its impact on tax collection. European Journal of Government and Economics, 10(2), 146-166. https://doi.org/10.17979/ejge.2021.10.2.7803
  • Das, N. C., & Das, D. (2020). Education and Socio-Economic Development of Kaivartta Community. In International Journal of Management and Humanities (Vol. 4, Issue 6, pp. 46–48). https://doi.org/10.35940/ijmh.f0599.024620
  • Dudin, M. N., Shakhov, O. F., Shakhova, M. S., Rusakova, E. P., & Sizova, Y. S. (2019). Digital Technologies as a Driver of Intellectual Stratification of Human Resources: Socio-Economic Inequality. In International Journal of Recent Technology and Engineering (IJRTE) (Vol. 8, Issue 2, pp. 4436–4440). https://doi.org/10.35940/ijrte.b3333.078219
  • Shamsutdinov, Y. A., Bochkovskiy, P. P., Prokhorov, V. V., & Prokhorova, L. V. (2020). Performance Method for Innovative Activity on the Achieved Level of the Country's Socioeconomic Development. In International Journal of Innovative Technology and Exploring Engineering (Vol. 9, Issue 3, pp. 3678–3686). https://doi.org/10.35940/ijitee.c9129.019320