FACTORS AFFECTING FAIRNESS OF TAXATION TO CATEGORY “B” TAXPAYERS: THE CASE OF DIRE DAWA ADMINISTRATION

Abstract

Currently Ethiopia is in an era of renaissance and struggling to overcome poverty. For Ethiopia taxation is a weapon that supports this struggle and for this to happen a fair tax system is needed. This study was conducted to identify factor affecting fairness of taxation to category “B” taxpayers in Dire Dawa Administration. The study used a cross-sectional survey design. It used both primary and secondary data and adopted mixed research approach. To get the primary data self-administered questionnaire and in-depth-interview were used. To conduct the survey, from four urban kebeles 200 respondents of Category “B” taxpayers’ were selected by applying systematic random sampling technique. Descriptive statistical tools, reliability test, multicollinearity test, correlation, multiple regression and statistical package(SPSS) software, were used to analyze the survey data and thematic analysis were applied to interpret in-depth interviews. The findings show that fairness of taxation system directly related with attitude of taxpayers, beliefs of taxpayers, educational level of tax payers, age of taxpayers and gender of taxpayers significantly affect fairness of taxation system. Finally, based on the findings possible recommendations were given. These include, treating taxpayers without any discrimination, bringing non taxpayers to tax system, conducting extensive awareness creation programs and consultation sessions, creating persuasive communication with the taxpayers and providing all necessary social services to the general public, as well as maintaining the tax system fair and equitable. . Thereby, enhancing fair tax collection and providing basis for further research in a broader scope.