DRAFT

TAXPAYERS PERCEPTION SURVEY IN SIERRA LEONE (TPS-SL)

MONITORING, RESEARCH & PLANNING (MRP) DEPARTMENT

NATIONAL REVENUE AUTHORITY

CHAPTER ONE 1.0 Ba !"#$%&' Revenue mobilization is the key to the future economic and social development of our country and reducing our dependency on the international community for underpinning government spending. This can only be achieved through a combination of a modern revenue service which acts professionally, equitably and fairly towards all taxpayers and a change in the national taxpaying culture where taxpayers understand and have confidence in the revenue administration system and can see tangible evidence that their taxes are indeed improving their social and economic well beings. Since its inception in !!", the #ational Revenue $uthority %#R$& has made

considerable progress in improving the national taxation system and the taxpaying culture in Sierra 'eone by bringing together the revenue mobilization functions of the (ncome Tax and )ustoms *epartments into a single unified $uthority and increasing revenue yield year+on+year. This process of merging different cultures and reforming structures has now established a firm foundation on which to build.

The authority has set its Strategy for

!!,+ !!- which focuses on " ma.or strategic

issues / increased revenue mobilization, improving our national taxpaying culture and developing our organizational capacity through a portfolio of programmes and pro.ects with well defined aims and ob.ectives. 0ne of the ways these can be achieved is by establishing a cooperative, respectful and trusting relationship with the public. (n turn it is expected that the public will adopt a cooperative relationship with the $uthority, respecting the legitimacy of the (nstitution, trusting its processes, and accepting an obligation to pay tax. The relationship is assumed to be symbiotic, with cooperation from one party eliciting cooperation from the other.

$gainst this background, it is of utmost importance to determine taxpayers1 perceptions towards taxation in order, not only to influence 2overnment policy regarding taxation and protecting the country1s tax base but also to enable the $uthority market itself and its services more effectively to the general public. 3ence the need for this study. 1.1 A() a&' O*+, -(.,/ $0 -1, S-%'2

The main aim of this survey is to gauge the perception of taxpayers on the activities and services offered by the $uthority since its inception in !!". Specific ob.ectives are4 i. ii. iii. iv. 1.3 i. ii. iii. To assess the service delivery of the tax offices5 To find out whether the tax officers act in accordance with the standards set by the $uthority5 To assess the level of trust taxpayers have in the tax officers5 To assess the level of taxpayers education. 4%/-(0( a-($& $0 -1, S-%'2 The image and credibility of the institution5 (mprove the competency of the staff on services delivery in all the operational areas5 $ssess the level%s& of public understanding of the working environment of the institution. 1.5 O#"a&(6a-($& $0 -1, R,7$#The report is organized into four chapters. )hapter one presents the background to the study, the study ob.ectives, .ustification of the study followed by the methodology of the study which describes the scope of the survey, sampling technique and sampling size, analysis of the data and limitations to the study. )hapter two provides review of relevant literature by other scholars. (t discusses both the theoretical and empirical literature. (n the theoretical literature, various concepts, definitions about taxpayers1 perception are highlighted. 0ther findings and recommendations from various scholars on perception survey are discussed in the empirical literature.

Specifically, the research findings will help design policies in order to improve4

)hapter three comprises data presentation and analysis. (t discusses the responses from the administered questionnaires, focus group discussions and key informants1 interviews. )hapter four gives a summary of the findings, their implications and recommendations. 1.8 M,-1$'$9$"2 Research methodology is usually shaped by a number of factors including4 the nature of the problem to be investigated, finance, personnel, would+be respondents, and the type of information to be generated. The methodology used in this report recognised these factors. (t comprises a number of steps and a combination of data collection techniques. 1.8.1 S%#.,2 D,/("& The

$n empirical investigation was carried out by means of a questionnaire.

questionnaire comprised closed+ and open+ended questions. Respondents answered closed+ended questions by ticking one box representing the views closest to their own. 0pen+ended questions were also incorporated to which respondents provided unstructured replies. The questionnaire was also designed so that the data obtained from the open+ended questions can suggest patterns which might influence the perceptions of taxpayers and explain why they differ between the various population groups. 1.8.3 Sa)79, S,9, -($& The target population for this study was mainly companies, trades and importers and would be importers. These taxpayers were classified into large, medium and small based on the volume of importation and turnover. Taxpayers with a turnover of at least 'e6!! million were categorized as large while those between 'e !7 million and 'e8-million classified as medium. Small taxpayers were those whose turnover is 'e !! million and below. This includes clearing agents, petty traders and drivers %chatter+men& 7 at border crossing points. The target areas were 9reetown, :akeni, ;ono, ;enema, <o, ;abala, =endema, 2balamuya and ;ailahun. These areas were selected because

Intermediaries between business men and government officials who hire vehicles and transport goods of traders to their intended destinations.

ma.ority of our taxpayers are either resident or use these routes for trade. :ore precisely these areas are ma.or entry points and business centers. 0ut of a total of ",66> taxpayers in the country, 7, ,8 or 6>.,8 percent were

interviewed. 0f this number, 7,"!7 taxpayers or 87.8- percent resides in 9reetown whilst 7 taxpayers or ?>.?7 percent are in the provinces. Table ( below gives a breakdown of the sample frame for the study. 3igher percent of the small and medium taxpayers were interviewed because they are affected more by changes in tax administration as a result of their direct contacts with tax collectors since they cannot afford to hire a tax consultant unlike the larger taxpayers.

Taxpayers survey conducted by Income Tax epartment of !ierra "eone #ational $evenue %uthority& 2''4. This number is estimated to have increased by at least one forth during the time of the study.

Ta*9, I: N%)*,# $0 Ta;7a2,#/ R, $#',' (& S,9, -,' A#,a/<D(/-#( -/<T$=&/ L$ a-($& La#", M,'(%) S)a99 T$-a9 P,# ,&9reetown )entral 7>7 "?8 ? ,8! -.,? 9reetown @estern "8 >" ,, 7-8 ,.," 9reetown Aastern > 766 7-8 ,.," Beninsula 787 76! 6."? S%*-T$-a9 338 8>? @1A 1,501 >1.>? <o ?" 7" -! ?68 7>.?? Bu.ehun 78 "8 8! 7.-> :oyamba 8 7? !.86 :attru ? !.76 S%*-T$-a9 85 1>A 553 >55 31.15 ;enema ! 7"! 7>! ""! 7".!> ;ailahunC<ailu 7! 7! !.?! ;ono 6 87 ?6 7 " ?.>> S%*-T$-a9 8@ 1A1 35@ 8@5 1A.5@ :akeni 6 "8 7!8 7?6 8.,:agburaka 7 8 78 7 !.>" ;abalaC*ogolia 7 8 6 !. ? Bortloko 7 > "7 7. " ;ambiaC2balamuya 7 ! 7 !.>" S%*-T$-a9 A 88 1B5 33> A.?3 G#a&' T$-a9 531 A83 15>? 3,>33 100.00 S$%# ,: F(,9' S%#.,2, 300A

1.8.5 a)

Da-a C$99, -($& Questionnaire Administration

Bersonal, face+to+face interviews were conducted, at the respondents1 business centers using a structured and semi+structured questionnaire during September and 0ctober, !!>. 0ne hundred and sixty five enumerators mainly collegeCuniversity students were recruited and trained to administer the questionnaires. *uring training, several interview

simulation exercises were conducted to sufficiently prepare the enumerators for the actual one+to+one field interviews. The questionnaire was available in Anglish. *uring administration, these questions were translated by the responsible enumerators into the relevant languages of the fieldwork areas, before the fieldwork commenced. (nterviews were conducted in the respondents1 choice of language. The fieldworkers adhered to the sequence of the questions, in order to ensure that respondents are not led in answering the open+ended questions. b) Focus Group Discussions

(n order to supplement and enrich the survey data, two focus group discussions were conducted especially at each market centre and border crossing points5 one with a cross section of community leaders and the other with a cross section of traders, clearing agents and charter men in towns visited. c) Pre-testing of Questionnaire

Bre+testing of questionnaires was done mainly in 9reetown, :akeni, <o and ;enema where ma.ority of the taxpayers reside from 7 st / >th September, !!>. The purpose of the pre+visits was to test the adequacy of the questions and possible problems encountered so as to help further fine tune the data collection instrument as well as enhance the enumerators1 proper understanding of the survey instrument.

1.8.8

Da-a P#$ ,//(&" a&' A&a92/(/

9irst, two coding sheets were developed for purposes of coding the open+ended and closed/ended questions. The questions were entered into Axcel spreadsheet. The data then exported to Statistical Backage for Social Sciences %SBSS& version 76.! for cleaning and eventual analysis. $s part of the data cleaning process, consistency and validity checks were made and frequency runs on all variables to check for any existing inconsistencies and outliers. $ll the necessary data corrections were done accordingly. Then using SBSS76.! software package, data analysis was done following an analysis plan drawn up by the research team. *ata analysis basically involved univariate and bivariate analysis on selected variables of interest.

The results of the analysis are interpreted in the light of the problem statement in order to make conclusions and recommendations. 1.8.> o C$&/-#a(&-/ a&' L()(-a-($&/ $0 -1, S-%'2 The primary limitation of the study was the small sample size due to the rainy season. The study was carried out in September when most of the taxpayers were on holidays especially those dealing in weather sensitive goods such as clothing and perishables items. Thus only sixty eight percent of the total taxpayers were interviewed. $lso some of the towns were inaccessible due to bad roads. o *ata was collected by students from )ollegesCDniversities5 ma.ority had to rush because colleges were already opened. $ lot of flaws were discovered during the coding which made the data processing cumbersome.

The study faced certain constraints as stated below4

CHAPTER TCO 3.0 O.,#.(,= $0 S(,##a L,$&, Ta; S2/-,) Sierra 'eone1s tax system and its administration have undergone significant reforms from the mid+7->!s to !! . 0ver this period, the sales tax was introduced, the (ncome Tax $ct redrafted, and the scope of excise duties scaled back and simplified. The #ational Revenue $uthority %#R$& was established in !! with a view to strengthening revenue administration. )onsistent with the ob.ective to bring down tariff rates to levels in line with the )ommon Axternal Tariff %)AT& of the Aconomic )ommunity of the @est $frican States %A)0@$S&5 import duties have been reduced gradually. Sierra 'eone1s (ncome tax is relatively comprehensive and comprises taxes on profits and on individual incomes, capital gains tax on profits from sale business assets or investment, withholding taxes on a wide range of incomes and presumptive taxes on small businesses. The (ncome Tax *epartment %(T*& administers the personal income tax, corporate tax and some domestic indirect taxes like entertainment tax, restaurant tax, message tax, e.t.c. The indirect tax system comprises of the sales tax at a rate of 78 percent imposed on domestic and imported goods5 Axcise duties are levied on a few commodities such as tobacco, alcohol and a few services, including hotel accommodation and restaurant services. :ost indirect taxes namely5 import duties, sales tax %import E domestic&, excise duties, are collected by the )ustoms and Axcise *epartment %)A*& except for taxes on domestic services which are collected by the (T*. The Road Transport *epartment collects motor vehicle registration and annual licensing fees. The other charges, fines and royalties from :inistries, *epartments and $gencies %:*$1s& are collected by the #on Tax Revenue unit of the #ational Revenue $uthority. Since the inception of #R$ in ,,.>77 billion in !!", domestic revenue mobilization has been on the

increase %see table below&. *omestic revenue, minus road user charges, increased to !!" %with #R$& from 'e "7.,66 billion %Bre+#R$& or by 'e?6.!?8 billion % !F&. *omestic revenue collection improved further with the consolidation of #R$1s position to 'e "?!.77" billion in !!? from 'e ,,.>77 in !!" or by 'e6 ."!

billion %

F&. This trend has continued onto

!!> when total revenue collection

increased by " percent. )ollection of revenue from :ines and other *epartments has surged significantly. 9or instance, revenue collection from mines in !!8 amounted to 'e >.8" billion, higher than the sum of three years collection %6. ,! billion& Bre+#R$ % !!7, !! and !!"& by . 6 billion. Similar picture is shown for other non+tax revenues. (n Sierra 'eone, the :inistry of 9inance and Aconomic *evelopment %:09A*& estimated the tax gap for Sierra 'eone %excluding Road Dsers1 )harge& in ".6"F which represented !.?F of 2*B. :09A* alluded to the effect of a declining level of tax morality in the country and ascribe this to various factors. These include4 G G G G Resentment over what is regarded as unfair, burdensome or excessive taxation5 !!> at

High level of smuggling5

(neffective countering of avoidance5 and $ high scale of evasion.

#oldred, %7-- & undertook a study on the development of a voluntary compliance tax policy in Sierra 'eone on the basis of the (ncome Tax $ct and its related legislation, which if in.ected into the income tax system would increase revenue and act as a deterrent to non+compliance. Huestionnaire survey and interviews of (ncome tax officers and reports were employed in the data collected. (n analysing the data collected use was made of basic mathematical and statistical techniques+ such as ratios and percentages, tables and graphs. 3e recommended Bersonnel training, computerisation of the department and staff motivation as the way forward to increase tax revenue. Dnlike #oldred, the taxpayers1 perception survey focused on both direct and indirect taxes. (n some developing countries, extreme unwillingness to comply increases the readiness of tax payers to pay bribes in order to reduce their tax liability. $ survey conducted in !!" in Tanzania explored citizens1 views on taxation and reasons to comply or not with the local authorities in Tanzania. (t was revealed that the lower the level of tax evasion

1'

and the tax law complexity, the lower is the level of fiscal corruption in a country. %Richardson, 2rant, !!6&. 9urthermore, the high incidence of corruption among tax officials is likely to reduce tax compliance and provide incentives for corruption. )itizens1 perceptions about the role of the state, how the tax law is administered, as well as enforcement and trustworthiness of government institutions are also contributing factors to taxpayers1 behaviour. $n opinion poll conducted in =une !!6 by 2allup (nternational on behalf of Aurope aid in 2eorgia surveyed 7!!! citizens in face+to+face interviews, exploring the 2eorgian citizens1 awareness of their rights and obligations under the tax code of 2eorgia and their perceptions of the tax administration. This exercise was carried out using indicators such as perceptions of public sector corruption, levels of integrity of public officials, public level of satisfaction with the tax system, service assessment and interface with tax officials, etc. Dganda1s first #ational (ntegrity Survey, conducted in 7-->, used a Sentinel )ommunity Surveillance survey, including opinion survey, focus group discussions and key informant interviews, as well as a service workers survey, to gather corruption+related data while involving beneficiaries in the process of evidence+based planning. -?,!!! people together with 76!! service workers and 7>! key informants were interviewed in this process, gathering both quantitative and qualitative data from representative sites. $lthough not exclusively focused on the tax administration, the survey collected data on perceptions of the Dganda Revenue $uthority %DR$& services. The survey showed that the DR$ services were very good but the punishment for tax evasion was too rigid. $lso most of the transit and warehousing services had pitfalls in terms of controls and monitoring.

$lthough not specifically focused on corruption+related issues, the Tanzanian Revenue $uthority %TR$& conceived and conducted a TR$ stakeholders1 perception survey in !!", which was a baseline survey followed between =anuary and $pril !!8 by a second survey, soliciting the views of stakeholders on how they perceive TR$1s operations and tax administration as a whole in Tanzania. (t was revealed that the

11

operations and tax administration of TR$ was effective due to automation though some level of corruption was evident at the border posts. The South $frica Revenue Services %S$RS& in its pilot study of the perception of taxpayers in South $frica % !!?& indicated that although the ma.ority of respondents did not feel it is unfair to pay tax, all of the respondents were of the opinion that waste and corruption in government is high. (n addition, the ma.ority of the respondents felt that taxes are used by government for meaningless purposes and that the government does not provide enough information about how they utilize taxpayers1 money. The respondents therefore felt that tax rates should be reduced. 0ne of the most effective tools for making people more positive is to empower them with knowledge. (t is submitted that there is no better tool for government to positively influence the taxpayers of a democracy than to provide them with knowledge on how taxpayers1 money is utilised. $ny resistance or inability by government to communicate this most important area of social life, will lead to possible speculation and resistance.

12

CHAPTER THREE 5.0 PRESENTATION AND DISCUSSION OF RESULTS This chapter presents discussion and interpretation of the data collected from the field in the form of tables and charts. 5.1 D(/-#(*%-($& a&' S$ ($-, $&$)( C1a#a -,#(/-( / $0 R,/7$&',&-/ $ total of ,88> respondents were interviewed from districts and regional headquarter towns all over the country. @estern $rea accounted for more than half of the respondents %8 ." percent&, and the provinces provided ?,., percent of the respondents. The highest number of respondents from the provinces was obtained from South % 7 percent&. Aast and #orth constituted 7> and - percents respectively.

Figure 1: Distribution of Respondents

#orth /.ast 1+-

,est (2-

!outh 21-

The result thus obtained showed a clear indication that the @estern $rea has more businesses and taxpayers than any other region in the country. (n the case of the provinces, the Southern province had more businesses. S,; 0ut of a total of ,88> respondents, about 7> percent were female, a whopping > percent were male. This shows, however, and supports the fact that businesses in Sierra

13

'eone are largely owned by men. 9emale ownership and control is very minimal as manifested in the study.

Table 1: Respondents Sex Respondents Sex Percent Percent Region West South East orth !rand Total of Percent Male of Male Female Female Total of Total 1'+3 (1.4 2(4 ().4 133* +1.' 444 21.1 +/ 1/.+ (33 +3.3 3+) 1+.3 ** 1*.1 4)3 +3.4 1/( /.3 3' ).* 22( +).* 21'+ 1''.' 4(' 1''.'2((+ +2.4

Table 7 showed that the number of males interviewed throughout the country more than four times greater than female. A", Respondents were grouped into three broad categories4 between 78 and "8 %youths&, "6 and 86 middle age and the elderly or ageing %above 86 years&. The result obtained confirmed that most taxpayers %6 percent& were middle age people between ages "6 and 86 years. Iouths also constituted a significant proportion % >. percent&, whereas the elderly respondents %taxpayers& formed only 7! percent of total businesses interviewed.
() and Figure ": #ge of Respondents %bove 1'1(03( 2+1(03( 3)0() () and %bove 3)0() )2-

14

Ma#(-a9 S-a-%/ Respondents were required to tell whether they were married, single, divorced, separated or have lost a partner through death %widowCwidower&. 9rom the result, more than three+quarter %,>.7 percent& of the respondents are said to be married. @ith approximately 7- percent being single, a less than significant proportion were found to be widowCwidower %7.- percent&, separated %7., percent& and divorced %7.? percent&.

Figure $: Marital Status

!eparated 2,idow2widower 2-

ivorced 1-

!ingle 1*-

1arried *+-

:arried respondents dominated the number of respondents interviewed in all regions in the country. (n each region married respondents exceeded three+quarter of the respondents. E'% a-($&a9 L,.,9 The level of education of taxpayers or business owners is significant in the area of administration, management and control of operation and personnel and also relevant in the areas of record keeping, finance and accounting and in determining the tax liability at the end of the tax period.

1(

The study showed more than three+quarter of the taxpayers interviewed could read and write %western education&. See 9igure ? below4

Figure %: &e'el of Education of Taxpa(ers

!emi2illiterate 24-

"iterate *)-

That is, about ?6 percent of them completed secondary education and "!." percent completed tertiary level education. 3owever, a quarter could not adequately read or write simply because they never attended school %6.8 percent&, completed only primary education %8 percent&, went through Huranic %>.6 percent& or non formal education %".8 percent&. See Table 23

Table ": Educational &e'el of Respondents Percent Read Write Secondar( Tertiar( )hinese Total !rand Total and of !rand )ould not read umber Total 11*3 **( 1 1/4/ 2((+ and*or +rite #ever %ttended umber 1)) /' 134 21/ )'/

Percent of !rand Total ).( 3.( (.2 +.) "$./

4(./ school 3'.3 #on 4ormal '.' 5rimary 6uranic !tudies ,-."

1)

Huite a significant proportion of taxpayers is said to be able to read and read. (n actual fact, only " in 7! or about "!." percent could have the knack to handle the management of records and personnel since they were found to have attained tertiary education. 5.3 3.2.1 B%/(&,// E&.(#$&),&Nationalit

The business environment of Sierra 'eone has for decades been dominated by foreign nationals such as 'ebanese, (ndians, Syrians and #igerians both in terms of number and contribution to trade and growth. 3owever, in recent years, we have experienced gradual growth in indigenous interest in business. 0f the taxpayers interviewed, >percent were Sierra 'eoneans while the remaining 77 percent were other nationals. This indicates that Sierra 'eonean businesses now dominate %in number& the business arena of the country as opposed to other nationals. #evertheless, the preponderance of Sierra 'eoneans in the sector did not reflect their influence in the sector. That is, even though they dominate in number yet they were found to be engaged in small scale businesses that are less influential in the areas of productivity, trade, economic growth and contribution to tax revenue. 0ther nationals %9ullahs, :arakas, etc& were found in all regions of the country. They trade more in the @estern $rea %7". percent& and Aastern Brovince %7 .8 percent& than in the South %,.8 percent& and #orthern regions %".7 percent&.

Figure 0: ationalit( of Taxpa(ers 7ther #ationals 11-

!ierra "eoneans +/-

1*

The small fraction of other nationals appeared to be the driving force in trade, productivity, economic growth and tax payment in the country. They were found to have engulfed %- ." percent& the large and medium size businesses and thus occupy the heart of trade and investment in the country. 3.2.2 !t"er Nationals in t"e #usiness $ector of $ierra %eone

0ther #ationals, though few, were found to be very influential in the business sector of Sierra 'eone5 as over 6! percent of their businesses are large tax cases. $ total of 7" other nationals were found engaged in different types of taxable businesses all over the country. They were grouped into five4 @est $fricans, other $fricans, $mericans, Auropeans and $sians. The @est $fricans comprised of #igerians, 2uineans, 2ambians, 2hanaians, Senegalese and 'iberians. 0ther $fricans include :oroccans and Aquatorial 2uineans. $sians include 'ebanese, (ndians, )hinese, and ;oreans. Auropeans include <ritish, (talians and Spanish and the $mericans include only citizens from the DS$.

Figure -: )omposition of 1ther

ationals

%sians (1-

,est %fricans 44-

.uropeans 3-

7ther %fricans 1%mericans 1-

9rom 9igure 6, it is clear that $sians, mainly the 'ebanese %"?.? percent of total other nationals& and (ndians %7?.! percent of total other nationals& formed the largest proportion of other nationals engaged in business in Sierra 'eone. @est $fricans formed the second largest group5 with #igerians and 2uineans accounting for >." percent and 7 .8 percent of respectively. The <ritish accounted for the highest number of Auropeans %six out of a total of nine& Taxpayers in Sierra 'eone. 9rom the study it could also be noted that four nationals in the other nationals1 category+ 'ebanese %"?.? percent&,

1+

#igerians % >." percent&, (ndians %7?.! percent& and 2uinean %7 .8 percent& + accounted for a total of >-. percent engaged in taxable activities in Sierra 'eone. 5.5 D,/ #(7-($& $0 B%/(&,//,/

The variables selected for business description were location, size, nature of business and the category to which the business could be largely related as a taxpayer. <usiness could be located either in urban, rural or coastal settings. The survey considered all district and provincial headquarter towns as urban. Rural settings constitute those towns and villages that are not headquarter towns. )oastal areas are localities situated along the $tlantic 0cean or seas and rivers across the country. 3.3.1 %ocation of #usinesses

(n identifying the location of businesses, >6.7 percent of them were found to be in urban areas5 7".6 percent in rural and only !." percent in coastal areas %See 9igure , below&

Figure ,: &ocation of 2usiness

$ural& 13.)9oast al& '.38rban $ural 9oastal 8rban& +).1-

9rom this result it could be inferred that the bulk of the businesses in Sierra 'eone are found in regional and provincial headquarter towns. *etail analysis disclosed that @estern Drban and Rural has the highest proportion of businesses in its Drban and Rural $reas %8?.6 percent and "6., percent respectively& than any other region in the country.

1/

Figure /: Regional Distribution of 2usinesses )'.' ('.' 5ercent 4'.' 3'.' 2'.'
sta l 9o a 8 rb an al

$u r

rb an $u ra l

8 rb an

$u r

sta l 8 rb an

al

$u r sta 9o a

al

'.'

,est

!outh $egion

9o a

.ast

#orth

9igure > revealed that in the @estern $rea and Aastern region there are more businesses in the urban than rural areas5 where as the Southern and #orthern parts of the country have more businesses in rural than in their urban settings. <usinesses in )oastal areas were found in @estern $reas and Aastern Regions. found in the Aastern Region. 3.3.2 $i&e of #usinesses @estern area accounted for >8., percent of businesses in )oastal $reas and the remaining 7?." was

<usiness turnover was used to determine the size of the business. The turnover was obtained using the annual total sales of the business. <usinesses with turnover less than 'e !! million are categorized as small businesses. Those with turnover greater than 'e !! million but less than 'e 6!! million were considered to be medium size businesses, while large businesses are those with turnover greater than or equal to 'e 6!! million. The result of the survey showed that more than half %8? percent or 7,"> & of the businesses in the country are small businesses. :edium size business constituted "".? percent of total businesses in the country. 'arge businesses comprised only 7 .6 percent of total businesses in the country.

2'

9o a

1'.'

sta l

Figure 3: Si4e of 2usinesses

"arge& 12.)1edium& 33.4!mall& (4.'-

(t could be observed from 9igure - that small and medium sized businesses account for >,.? percent of total businesses in Sierra 'eone. But simply, seven in any eight businesses in the country are small and medium sized businesses. (t is also evidence from the study that the @estern $rea host the highest proportion of small, medium and large businesses %?6.?, 88. and 6-.> percent respectively& %See Table "&. 'able 3( $i&e of #usinesses b )egion

Si4e of 2usiness Small Medium &arge Percent Percent Region West South East ort h Total umber of total
)41 332 23) 1*3 13+2 4).4 24.' 1*.1 12.( 1''.'

Percent
)/.+ 13.4 14.3 2.( 1''.'

umber of total
4*1 1(+ 1+1 44 +(4 ((.2 1+.( 21.2 (.2 1''.'

umber of total
224 43 4) + 321

Table " revealed that medium and large businesses are concentrated in the @estern $rea which accounted for more than half of medium size businesses %88. percent& and for about , in any 7! large businesses in the country. This is pointer to the fact that 9reetown and the @estern districts are central to business activities in Sierra 'eone.

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3.3.3

Nature of #usinesses

<usinesses were broadly categorised into five sectors4 %i& Broduction and distribution of goods, %ii& service delivery, %iii& )onstruction, Real Astate and 3ousing, %iv& Barastatals and 2overnment $gencies and %v& #20s. 9igure , below illustrates that businesses in the production and distribution of goods %>, percent& formed the bulk of businesses interviewed during the survey. Service providers formed a handful of businesses %percent& interviewed. )onstruction, Real Astate and 3ousing, 2overnment $gencies and #20s formed a total of ".? percent of total taxpayers interviewed for this study.

Figure ,: ature and T(pe of 2usiness

5arastatals and %gencies '!ervice elivery /-

#:7<s 1-

9onstruction& $eal .state and ;ousing 3-

5roduction and istribution of :oods +*-

9igure ,a reveals that ma.ority of the businesses %>". F& in the JBroduction and *istribution of 2oods sector1 are trades. @hile producers %companies, agriculture and fishery, mining and artisans& comprised a meagre ".8 percent, )ompanies accounted for 7.8 percent of total taxpayers interviewed. The predominance of trades in this sector is an indication that they are ma.or players in the revenue mobilization drive of the $uthority.

22

Figure ,a: Production and Distribution of !oods

83.2

0.7 Trade Agric & Fishery

1.5 Companies

0.9 Mining

0. Artisans

The key drivers in the service sector are entertainment service providers %7.6 percent of total businesses& comprising of hotels, restaurants, bars, night clubs, casinos and pubs. 9inance and )ommunication service providers also formed an essential component of the respondents. Services not identified were grouped into K0ther ServicesL %i.e. transportation, aviation, clearing and forwarding, consultancy, accountancy, etc& and formed ?., percent of total respondents.

Figure ,b: Ser'ice Deli'er(

4.* '.3/ 1.21 1.) 1 '.1

23

3.3.* ' pe of 'a+pa er (n trying to ascertain the type of taxes respondents pay, they were required to tell whether they were importers, non importers, clearing agents or tax consultants. Responses on the sub.ect apparently indicated that about three+quarters %,6F& of our taxpayers are non+importers. (mporters represented clearing and forwarding agents %See 9igure >&. percent of the taxpayers5 whereas 7.7 percent are tax consultants or accountancy firms and about !.- percent is

Figure /: T(pe of Taxpa(er

9learing and 4orwarding %gents 1-

Tax 9onsultant2%cc ountancy 4irm 1-

Importer 22-

#on0Importer *)-

This however, implies that the commonest taxes paid in this country are the direct taxes and domestic taxes on goods and services such as company tax, personal income tax, and domestic sales tax, withholding tax on rent, excise duty, message tax, entertainment tax, hotel accommodation, restaurant tax, etc. That notwithstanding, importers usually account for the highest proportion of tax collected by #R$ over the years. That is to say, the percent of importers paying import duty, import sales tax, excise on petroleum products, and other excises accounts for more than half of total revenue collected by the $uthority over the years. 5.8 D&$=9,'", $0 Ta;7a2,#/ $n effective tax system that would raise sufficient revenue to meet government expenditure needs, requires a taxpaying public that knows the rationale and conduct of a tax system. This would basically help promote better compliance and effective tax administration. Therefore the extent of taxpayers1 knowledge is a basic core to orientate

24

and ignite a taxpaying culture which would galvanize, with ease, the desired lubricant to empower government to execute its function. The #R$ is fraught with a complex " community which has a statutory liability for paying taxes. This section illuminates the extent to which taxpayers are educated on the fundamental issues that constitute a solid tax knowledge background. 3.*.1 )aison d,-tre for Pa ing 'a+es

To determine the knowledge of taxpayers, respondents were asked why they pay taxes. Table ? presents an array of reasons among which5 a simple ma.ority %8-.8 percent& revealed for development purpose, 7 .6 percent acknowledged they pay taxes because its an obligation, ".>> percent cited to operate legally, while ".>, percent admitted to generate revenue for government and ".>7percent mentioned because they are in business. Ta*9, 8: C12 '$ 2$% 7a2 -a; (E)F R,a/$& C,/S$%-1 Ea/N$#-1 A.,#a", *evelopment 86.7 8>.? 6 ,,." 8-.8 0bligation 76.? 6.> 7". . 7 .6 To operate legally ?. 6 8. > .6 !.> ".>> 2enerate revenue ".>7 ".78.6 . ".>, <ecause ( am in business ". 8.> ?." 7." ".,*on1t ;now 7.? .!6 ".! 7.> 7.>> 0thers 7?., 7>.?8 -. , 7?.? 7?.?>

"argely illiterate& with wea= institutional structures

2(

$lthough insignificant, result shows that some taxpayers perceived other reasons for paying taxes such as5 being forced to pay, #R$ asked them, and because they are foreigners. (n addition to numerous reasons given, about know why they pay taxes. $t regional level, over half of the respondents in each region admitted taxes are paid to enable the country develop. @hile 76.? percent and 7". percent in the @est and Aast, 6.> percent and . percent in the South and #orth regions respectively say they pay taxes because it is a statutory right. @ith the exception of all other regions, !.7 percent of respondents from Aast perceived they pay taxes because they are foreigners. $lso, excluding respondents from the Aast, all other regions noted they pay taxes because they are required by #R$ to do so. $mong those who do not know why they pay taxes5 Aast recorded the highest %". percent&, followed by South % .7percent&, #orth %7.>percent&, and @est %7.?percent&. 3.*.2 ."ere do ou pa ta+/ Ta*9, >: C1,#, '$ 2$% 7a2 -a;F O00( , (ncome Tax *ept )ustoms 3ouse #on+Tax *ept 3ead 0ffice #R$ 'ocal )ouncil *on1t know $gents P,# ,&78.8 7., !.7 !.6 ,-." . , !.76 !.? percent admitted they do not

0ne of the targets of #R$ is to create an informed tax environment with strategic location of its tax offices that could attract attention and easily be accessible to taxpayers. Respondents were required to identify where they pay their taxes. Survey result reveals that on the whole, -,.? percent cited making payments to an #R$ office?.

Inclusive of those who exclusively cited #$% and #$% departments

2)

$mong the -,.? percent of respondents who mentioned that they make payments to #R$ office, ,-." percent did not specify which of the #R$ officesCdepartments they pay their taxes. (n other words, these taxpayers only said that they pay to #R$ office. 3owever, 78.8 percent reported that they pay their taxes to the (ncome Tax *epartment, 7., percent to )ustoms 3ouse, !.7 percent and !.6percent to #on Tax Revenue *epartment and 3ead 0ffice respectively. (t is evident from the analysis that ma.ority of taxpayers interviewed knows where to pay their taxes. #onetheless, a handful % . ,F& cited local councils, while !.? percent admitted that agents pay on their behalf with an insignificant percent %!.76& that could not identify where taxes are paid. 3.*.3 ' pes of ta+es paid

2overnment and #R$ are confronted with the task of enabling individuals comply with their statutory liabilities as specified in the laws of Sierra 'eone. 3owever, with a population of over ,! percent illiterate 8, the extent of taxpayers1 knowledge on the different tax categories and tax type payable at every transaction point could pose a serious constraint to tax compliance. @hen asked the type of tax paid, ma.ority %? . F& of the taxpayers identified custom duties, while "-." percent cited income tax. $bout > percent acknowledged paying all taxes and, >.6 percent could not recognize the type of tax they pay. $t regional level, respondents in western area identified most types of the taxes paid. 0ver >! percent identified paying customs duties and income tax, while 8> percent pay all taxes, 8?.? percent cited having no knowledge on the type of tax they pay. Avidenced in this, is not only the fact that western area accounts for a significant ma.ority of those who could not identify the type of tax they pay, but over 7! percent of respondents in south and east, and ".8 percent of taxpayers in the north acknowledged ignorance.

;ousing and 5opulation 9ensus 2''4

2*

Ta*9, @: T27, $0 Ta;,/ 7a(' Ta; T27, C,/- S$%-1 )ustom *uties - .! 7.? (ncome Tax >".6 -." $ll Taxes 8>." 7!.! *on1t ;now 8?.? 7!."

Ea/.! 8.> 7"." 77.>

N$#-1 ?.6 7." 7>." ".8

A99 ??. "-.8 ,.6 >.6

Though table 6 above presents tax type by ma.or categories, taxpayers are expected to know the specific taxes they are obliged to pay at every transaction point. Result shows that about 7 percent of the respondents identified import duty5 6., percent pay .8 percent sales tax and 7.> percent corporate tax, ,.! percent assessment,

withholding tax. $mong other specific taxes mentioned were entertainment tax, property tax, personal tax and travel tax5 each of which was very insignificantly cited. 5.> T27, $0 "$$'/ ,;,)7-,' 0#$) -a;,/

Tax exemptions and relief are meritorious privileges en.oyed or rights granted on an individual, group or organization for tax waiver and concession as specified by law. (t is a statutory obligation for government to provide tax exemptions for economic, social and political reasons as and when thought fit. @hen required to identify the type of goods exempted from taxes, the extent of respondents1 perceptions varied highly as a large range of items was noted. $ significant ma.ority %,?.,F& was not aware of the type of goods are exempted from taxes5 whilst ,.>6 percent revealed none is exempted %see Table ,&. Ta*9, B: T27, $0 G$$'/ E;,)7-,' G$$'/ $gricultural Aquipment 9ood :edicine <uilding :aterial :achinery and Spare parts )haritable 2oods )lothing )omputer and $ccessories C,/S$%-1 Ea/N$#-1 T$-a9 !."7 !.!? !.7 !."8 !.> .-, !. ! !.,> !.76 ?.7! 7.>> !. ! !.!> !.7 . , !."!.!> !.!! !.!! !.?, !."7 !.!! !.!! !.!! !."7 !.,> !.7 !.76 !.76 7. 7 !.7 !.!> !.!? !.!! !. " .8? !. ! !. ! !. , ". 7

2+

*rinks Rice Aducational #eeds $ll types #one *on1t ;now 0thers

!.7 !.,? !. ! 7.! .-" "6.8!.-?

!.!? !.!> !.!! !.!! 7.?8 7>.6!. ,

!.!> !."!.76 !.!? ".!8 7 .?" !."7

!.!! !.!! !.!! !.!! !.?" ,.!! !.?"

!. " 7. 7 !."8 7.!6 ,.>6 ,?.,7 7.-8

Bredominant among items which respondents identified as exempted goods were food which recorded the highest %?.7!F& followed by computer and accessories %". percent&, medicines % . ,F&, charitable goods %7. 7F& and agricultural equipment %!.> F&.

Though the sequence of thoughts for food and computer accessories looks consistently identified in all regions as goods with tax exemption, findings showcase mixed views about other goods. @estern area and east had a consensus on charitable goods, while south and north cited medicine and agricultural equipment respectively. $n insignificant proportion of respondents cited that tax is exempted for clothing, drinks, building materials, machinery and educational needs. @hat remains lucid is that respondents exhibited an apparently low knowledge on tax exemptions. 3.0.1 ."o benefits from ta+ e+emption/

To further ascertained taxpayers knowledge, respondents were required to shed light on who benefits from tax exemptions and relief. (n table > below, ma.ority %6-.7F& of the respondents admitted ignorance on who benefits from tax exemptions and relief. This situation is prevalent in all regions as most of the respondents revealed the same5 a strong indicator of the need to embark on massive taxpayer education. Ta*9, A: C1$ B,&,0(-/ 0#$) Ta; E;,)7-($&/ a&' R,9(,0F T27, $ged and )hildren *iplomats #201s Students *isabled 2overnment )itizens )onsumers C,/S$%-1 Ea/N$#-1 T$-a9 7.7, !.87 !.,! .,! 8.7! !.> !.7 !.!? !.!? 7.!! ."7 7.6! !.76 !."7 ?.?! !.-? !.7 !.-? !.76 . ! !.-! !.76 !.6" !.,! .?! 7. !."7 !.-> !.,! "."! ".!8 !."7.", !.?" 8. ! !.> !.!! !.7 !.!? 7.!!

2/

*on1t ;now #one 0thers

"8."! 7.-7.,6

76.?6 !.7 !.6"

77.7> !.87 !.87

6.7? !.!! !.-!

6-.7! .6! ".>!

3owever, for those who perceived to know, most %8. F& cited the citizens, followed by the aged and children %8.7F&, #201s %?.?F& and 2overnment %"."F&. Berceived beneficiaries such as disabled, students, diplomats, and consumers, were also cited. $n insignificant percent of other6 beneficiaries was noted, whilst " percent cited no one benefits from tax exemptions and relief. 5.@: Ta; Va9%a-($&

(n table - ma.ority %>7.,F& of the respondents admitted not ob.ecting to tax valuation, whilst 7>." percent did. 0ver ,! percent of respondents in all regions reported to be in Ta*9, ?: Ha., 2$% ,.,# $*+, -,' -$ agreement with tax valuation5 with -a; .a9%a-($&F taxpayers in the south %- .,F& recording R,"($& P,# ,&the highest. 0n the other hand, significant Y,/ N$ 7.8 ,>.8 responses were recorded in the north, west @est South ,." - ., and east for those who were not satisfied Aast 7,., > ." #orth 8.> ,?. with tax valuation. Total 7>." >7., Result suggests that ma.ority of the taxpayers were satisfied with tax valuation procedures and outcomes. #otwithstanding the high degree of satisfactory tax assessment, the result also revealed controversy especially in the north and west whose impact could be serious on tax Ta*9, 10: I0 /$ =,#, 2$% /a-(/0(,' =(-1 -1, $%- $),F R,"($& P,# ,&Y,/ N$ N$@est South Aast #orth Total compliance.
)

7-.? 7,.> "8.7!., 7-.>

76.! 8." 7 .? 7?. 7".-

a779( a*9, 6?.6 ,6.87.> ,8.7 66."

Those cited with less than one percent.

3'

@hether such controversies were resolved satisfactorily5 over half of the discontented respondents %7-.>F& admitted, while about 7? percent said no. 9or some respondents, outcomes were satisfactorily resolved whilst others remained dissatisfied with outcomes for reasons stated in box 7.

B$; 1: Ta;7a2,#/G .(,= $& Ta; a//,//),&-<.a9%a-($& <ecause dissents were rectified after reassessment Revenue generated is for development of the state

9or maintaining Reasons Reasons for dissatisfaction satisfactory outcomes

:ethod of assessment not convincing )ould not better understand the assessment approach #o action taken when reported (ncurred losses during the period Tariff levied not compatible with goods #o business for a long time

5.B

O*-a(&(&" (&0$#)a-($& a*$%- -a;,/

The #R$ has the responsibility to enlighten and keep its taxpaying public informed with relevant information that greatly influences their operations and revenue compliance. The use of different medium of information as a way of empowering taxpayers with the requisite tax education is one of the potent tools for making them more positive. Ta*9, 11: S$%# ,/ $0 I&0$#)a-($& (E) C,/".?6 ".>! 7!.-? 7.? 76."> 8.!8 !.68 ?7.,! S$%-1 7.,! 7.>6 .8" !.-8 7". , . ! !.!! .87 Ea/!.,> 7.6> 7.-8 !.?7 7!.6! .!> !. ! 7,.,! N$#-1 7.!" 7.8 7.-, !.>? 7!.8! .!8 !.7> 7>.!T$-a9 6.-, >.>, 7,.?! ".6" 8!.,6 77."> 7.!? 7!!.!!

S$%# ,/ Radio Brogrammes Radio =ingles #ewspaper $rticles #R$ 3andbills #R$ 0ffices )lientsC$gents $ll of the $bove Total

31

(n Table 77, half of the respondents claimed their main source of obtaining information is from #R$ offices. #ewspaper articles and clientsCagents though insignificantly cited are the other most obtained information sources with 7,.?percent and 77.">percent respectively. (nformation got from electronic media is very minimal. 3andbills are the least identified sources of information. #R$ offices and newspaper articles are the predominantly cited sources of information for all the regions. 9igure - presents views on the effectiveness of the different sources of information on taxation to taxpayers. $lthough radio programmes are not a prominent source of obtaining information, yet the survey revealed that it is the most effective source at % F&, followed by #R$ office %7?.6F&, while handbills %".8F& is the least. Though obtaining information from newspaper articles and clients are notably high, respondents reported that they are the least effective sources.

Figure 3: Remar5s on sources of 6nformation

12'.'' 1''.'' 5ercent +'.'' )'.'' 4'.'' 2'.'' '.''
e > in gl es bi l ls cl es s pr og ra m of fic e nt s2 ag e ar ti ha nd nt s m
"ess .ffective .ffective ?ery .ffective

sp ap er

$a di

#$

$a di

#e w

#$

!ources

32

9l ie

$pparently, respondents obtain little information from sources which could be official, more credible and educative. @hilst obtaining information from #R$ offices is the most frequent and effective source, other frequently obtained sources are very less effective. $lso noteworthy is that, taxpayers frequently obtain information from other sources , which may be unofficial and misleading. The lesson is that #R$ should be more proactive in educating taxpayers through available and widespread radio programmes and .ingles which are cited as the most effective sources of information. Respondents were asked to suggest other alternative sources of providing information on taxation. The most frequent alternative sources of information highlighted by respondents are presented in <ox . B$; 3: A9-,#&a-(., S$%# ,/ $0 P#$.('(&" Ta; I&0$#)a-($& (nformationSources of$lternative

$ tax resource centre at all #R$ department )onduct regular workshops and seminars )onduct community outreach tax programme Arect more advertisement bill boards countrywide :ore radio programmes in local languages nationwide Bublic address system 3andbills and .ournals #R$ website Street sensitization

$s an auxiliary to empowering taxpayers with better knowledge, respondents were asked to suggest issues on which #R$ should give priority in providing information to the taxpaying public. $mongst the numerous suggestions made by respondents the most reoccurring ones are outlined as follows5
*

(nformation on how revenues are spent

4riends& relatives and business partners

33

 5.A

$ list of taxable and exempted goods <enefit of complying with tax laws *ifferent categories of taxes and tax exemptions )omprehensive information about the taxes collected 2uide on how to pay taxes *etailed information on )ustoms operation )hanges in tax policy D&$=9,'", $& -a; (&/-#%),&-/ $# 7%*9( a-($&/

Tax and other revenue policy measures are enacted by law to regulate the operations of individuals and businesses. )ontents of such important documents are reviewed as 2overnment deems fit. 3.1.1 A2areness of t"e e+istence of ta+ instruments below presents the extent of awareness respondents have on the

To further gauge the knowledge of taxpayers who have the statutory liability for paying tax, Table 7 existence of such publications. :a.ority of taxpayers are ignorant about the entire regulatory instruments that specify the dictates of their daily operations. Respondents claimed to be better acquainted with (ncome Tax $ct South % ?.6F&. Ta*9, 13: D&$=9,'", $0 -1, E;(/-,& , $0 S-a-%-$#2 I&/-#%),&-/ (P,# ,&-) R,"($& I& $), Ta; C%/-$)/ C%/-$)/ Va9%a-($& N$&-Ta; !!! in all the regions. $bout ?6 percent in @estern area cited awareness about (ncome Tax $ct !!!, followed by Aast %"?."F&, #orth %"!. F&, and

F(&a& ,

@est South Aast #orth T$-a9

A - 3000 A - 1?BA C$', 1?A0 G%(', R,.,&%, A - A - 300A Ies #o Ies #o Ies #o Ies #o Ies #o Ies #o ?8.> 8?. !.> ,-. 7 .! >>.! 7 .- >,.7 7 .! >>.! 77., >>." ?. ,8.> ?.8 -8.8 7.8 ->.8 .? -,.6 7.8 ->.8 7.- ->.7 "?." 68., 78." >?., 7!. >-.> -.- -!.7 -." -!., -., -!." "!. 6-.> 77.6 >>.? 6., -"." -." -!., 6., -"." >.? -7.6 5B.? @3.1 1>.@ A8.8 ?.0 ?1.0 ?.? ?0.1 A.A ?1.3 ?.0 ?1.0

The trend is the same, despite the extremely low degree of awareness for the other statutory instruments in all regions.

34

To further find out the extent of taxpayers1 knowledge on the existence of statutory instruments, taxpayers were asked whether they are aware of other tax publications. (n response, only ?. percent admitted, while a significant ma.ority %-8.>F& said no. $mong the minority who acknowledged awareness of other tax publications, most are non #R$ related publications. Ta*9, 15a: D&$=9,'", $& -1, E;(/-,& , $0 O-1,# Ta; P%*9( a-($& (P,# ,&-) Regions Bercent Ies #o @est ?. South .> Aast ?.8 #orth 6., T$-a9 8.3

-8.> -,. -8.8 -"." ?>.A

$lthough ma.ority of the respondents specified non related #R$ tax publications, Table7"b presents the existence of other tax publications specified by respondents. $mong these, the existence of the 9inance $ct !!, was the most cited %7".7F&, while #R$ leaflets %>.?F& was the least but the only recorded existence in every region. @estern area is the only region where over half of the respondents who noted awareness of other tax publications cited the existence of all the specified instruments. Ta*9, 15*: O-1,# Ta; P%*9( a-($&/ C,/S$%-1 Ea/N$#-1 T$-a9 )ustoms Tariffs 7--8 8.6 !.!.! .> -." #R$ leaflets ?., !.7.!.>.? 9inance $ct !!, 77. !.! 7.!.! 7".7 B$IA Schedules >.? !.!.! !.7!." 0ther 7".7 78.! 7,.> 7".7 8>.-

3.1.2

Access to ta+ instruments or publications

3(

<eyond the level of awareness for the various statutory instruments, the study sought to ascertain the extent to which respondents who claimed having awareness of the existence of tax publications, actually have access to such publications.

(n Table 7?, an overwhelming ma.ority %,7.67F& maintained that they do not have access to any tax publication. 9or those who attested having access, over two+third cited (ncome Tax $ct !!!, whilst 7.- percent and 7.! percent cited )ustoms $ct 7-,> and 9inance $ct !!> respectively. $ccess to the remaining tax publications were less cited while less than 7percent have access to all. Ta*9, 18: A ,// -$ Ta; I&/-#%),&-/ P,# ,&.68 7.-" !."!.>, !.77.? !.7 !.>, ,7.67

S-a-%-$#2 I&/-#%),&-/ (ncome Tax $ct !!! )ustoms $ct 7-,> )ustoms )ode Maluation )ode #on Tax Revenue $ct 9inance $ct !!> 0ther Tax Bublic $ll #one

9igure 7! shows that access to multiple tax publications is almost impossible. This situation is not surprising as findings indicate that ma.ority are ignorant about their existence. 4igure 1'3 %ccess to @uantity of Tax Instrument

#one& *1.)1

7ne & 24./2 Two& 2.2* Three& '.34 %t least four& '.'(

%ll& '.+*

3)

3.1.3

)espondents 3ie2s on ta+ publications

(n Table 78, perceptions on tax publications revealed (ncome Tax $ct !!! as the most simple %?-.8F&, followed by 9inance $ct !!> % >.>F& and )ustoms $ct 7-,> % ".6F&. @hilst 9inance $ct !!> and #on+Tax Revenue $ct were regarded as the most current5 customs $ct 7-,> % 7.8F& was the highest cited as outdated. $lthough none of the tax instruments were significantly perceived as complicated, perceptions were closely rated for ambiguous and amendments. 3owever, 9inance $ct !!> %7".>F& is the most cited for ambiguity, whilst valuation guide %?!.,F& is the highest recorded for amendment. Ta*9, 1>: O7(&($&/ $& Ta; S-a-%-$#2 I&/-#%),&-/ (P,# ,&-)
I&/-#%),&A)*("%$%/ S()79, C%##,&O%-'a-,' R,H%(#,/ a),&'),&S a--,#,' < $)79( a-,'

(ncome Tax $ct !!! )ustoms $ct 7-,> )ustoms )ode 7->! Maluation 2uide #on+Tax Revenue $ct 9inance $ct !!>

7!.8 77.! 7!.> 77., -. 7".>

?-.8 ".6 7., 7.6 7-.7 >.>

7?.8 7 ., -.6 -." ., ".>

8.6 7.8 7,.8 7 ." 77." >.>

7,.! >., "8.8 ?!., "!.8 7."

".! .8 ?.> ?." ,.7 ".>

Tax policy should be a simple and easy to interpret and administer document so that it is easy to comply with. $ complex tax policy may impose a disproportionately high level of compliance cost on taxpayers. $lthough findings revealed that (ncome Tax $ct !!! is the most easily understood by respondents, yet none of the tax publications recorded above 8! percent as being simple.

3*

5.?:

S,#.( , D,9(.,#2

This section discusses the scope and nature of the services delivered by the $uthority to the public. 3.4.1 $atisfaction on ser3ices pro3ided b N)A

(n order to better gauge the conduct of #R$ staff, respondents were required to provide an assessment on various aspects of their operations. @ith regards to the speed of response to taxpayers needs, an overwhelming ma.ority %>6.>Ft& admitted that the speed was good, whilst about ,.! percent certified that it is poor. $lthough respondents from other regions claimed the speed of response to their needs is significantly good, about "7.7 percent from the #orth cited the contrary. $lso, with respect to the pursuit of sustaining a credible service delivery, perceptions to standard of work delivered by #R$ was significantly noted by ma.ority %>>.8F& of the taxpayers to be good. Responses from all other regions were significantly recorded to be at least good except for the north where about "!percent admitted the standard of work to be poor. 0n the basis of assessing some of these service delivery criteria, respondents1 views continue to be consistently good. This trend is evident in the opinions on attitude of #R$ staff, ability to solve problems and effectiveness in rendering services. :a.ority %>-F& acknowledged #R$ staff to be good. This result is glaringly the same for all the regions for which the south and the north consistently registered the highest and the least views respectively. 0n the whole, figures 77 and 7 present an overall outlook on the degree of satisfaction taxpayers derived from the services delivered by #R$. 2enerally, an overwhelming ma.ority %-7F& certified the conduct of services delivered by #R$ to be at least good. @hile 6percent testified to be fair, a total of ., percent noted to be poor or worst.

3+

Figure11: 1'erall conduct of ser'ices deli'ered at ational le'el )'.' ('.' 5ercent 4'.' 3'.' 2'.' 1'.' '.' ?ery good :ood $esponse 5oor ?ery poor 1.3 1.4 2).( (*.1

The regional outlook is that, the south recorded the highest %-6.?F& in noting that the overall satisfaction they derived from services rendered by #R$ is good. 0n the contrary, the north recorded poor to very poor in describing the overall conduct services rendered by #R$ to taxpayers. The overall results show that at least >!percent of respondents %at every region& admitted the level of satisfaction to be good.

Figure1": 1'erall conduct on ser'ices deli'ered b( R# at regional le'el *'.' )'.' ('.' 4'.' 3'.' 2'.' 1'.' '.' ?ery good :ood $esponse ,est !outh .ast #orth 5oor ?ery poor

5ercent

3/

3.4.2

)easons 2" ser3ices pro3ided are fair or 2orse

9or those who rated services provided by #R$ to be fair or worse, box " presents the most frequent explanations provided to .ustify their claims. B$; 5: R,a/$&/ 0$# Ra-(&" S,#.( ,/ P#$.(',' *2 NRA a/ Fa(# $# C$#/, Speed of @ork $ttitude of #R$ workStandard of $lways lethargic in executing their duties *elay in reacting to my needs *elay in solving problems :anual processing of documents The system procedures are outdated <ureaucracies are unnecessarily many )omplex process )entralised documentation process 'acks consistency Sometimes guess in assessment $lways bribe them to do their work @e always run after them to pay our taxes *elay in reacting to my needs )ustom official are always on phone Mery arrogant with customers Regular errors on my assessment *elays a lot in responding to issues 'acks basic knowledge on the issues *ifficult to cope even with explanations

$bility to solve problems

4'

Affectiveness

*elay unnecessarily Bartial in executing duties Mery slow to make their presence felt in other areas They only respond when bribed

3.4.3

5omplaint and response b N)A

(n an effort to improve on its communication with the public, the #R$ instituted complaints and suggestion boxes in every department and regional office. This is a subsidiary to ease the burden on those who for one reason or the other could not access the relevant authorities to express their grievances or complaints. @hether respondents complained their grievances, ma.ority %8,F& attested no. This situation is similarly prevalent in all regions5 where at least ,8 percent of respondents admitted they never complained their grievances. To further evaluate the degree at which #R$ addresses complaints by taxpayers, figure 78 shows that over half of those who complained noted their complains were never treated satisfactorily. @hile $bout 7.! percent stated that theirs were treated satisfactorily. .!percent could not evaluate.

Figure1$: Reaction of R# on complaint #one 22!atisfactory 21-

8nsatisfactory (*-

41

2enerally, 9igure 7? shows an apparent prevalence of unsatisfactory treatment to the degree at which complaints are dealt with countrywide. (n western area, where over 8!percent of the taxpayers are found, 6 .,percent of respondents reported unsatisfactory treatment of their complaints. The situation is similar in the north on this issue. Significant number of respondents could not however evaluate whether there grievances were dealt with satisfactorily by the $uthority.

Figure 1%: Reaction of

R# on complaint at regional le'el

+'.' 5ercent )'.' 4'.' 2'.' '.' ,es t !outh $egion !atis factory #o on<t =now .as t #orth

3.4.*

#e"a3iour of N)A staff to 'a+pa ers

2ood human relations is a desirable constituent in the operational life blood of any organization5 especially those that interface with the public. 0ver half of #R$ staffs especially those in the revenue collection agencies, interfaces with the public on a daily basis. Though there is a code of ethics to regulate staff behaviour, the study sought to know how compatible staff behaviour is to the conduct of goodwill for the $uthority. Table 76 presents respondents perceptions on the degree of staff helpfulness and friendliness in the discharge of their duties.

42

Ta*9, 1@: H$= '$ 2$% a"#,, $# '(/a"#,, =(-1 -1, 0a -1a- I/-a00 =,#, 0#(,&'92 a&' 1,970%9I (P,# ,&-). #one Strongly Strongly of the Region agree $gree *isagree disagree above @est 76.> ,?.? 8.6 7.! . South 7 .7 >".6 .!. 7. Aast 7.> , .7 ?., !.!.? #orth ., 66.8 >.6 7.6 !.8 Total 7,. ,8. 8.7 !.7.6

:a.ority %,8. F& subscribed that #R$ staff are helpful in the discharge of their duties. @hilst relevant to note that ma.ority %- .?F& at least reported on the affirmative, about 6.! percent disagree and strongly disagree that #R$ staff are helpful. 9indings show consistency of respondents in agreement to the significant degree of staff helpfulness in all regions. 3owever, the #orth %7!F& recorded the highest number of respondents who at least disagreed. The study further revealed a significant level of consistency in response in agreement to staff politeness. Table 7> shows that about - ., percent of the respondents reported that staff were courteous in the discharge of there duties.

43

Ta*9,1B: H$= '$ 2$% a"#,, $# '(/a"#,, =(-1 -1, 0a - -1a- I/-a00 =,#, 7$9(-, a&' $%#-,$%/I(P,# ,&-). Strongly Strongly #one of the . 7.6 .6 !.6 .7

Region agree $gree *isagree disagree above @est 76.? ,8.?., !.> South 7 ." > .> "." !.! Aast !.> ,7.8 ?.! 7.7 #orth 76., ,?.7 6.7., Total 76.? ,6." ?.? !.>

3.4.0

5omparing N)A to t"e pre3ious ta+ administration s stem.

Revenue generation was flawed by numerous leakages as a result of pervasive inefficiencies in the previous tax administration system. The #R$ was instituted in !!" Ta*9, 1A: D(' 2$% 7a2 -a; as a corrective measure to forestall and sustain *,0$#, -1, NRA =a/ strategies that could generate sufficient tax revenue ,/-a*9(/1,'F to meet government expenditure needs. Ies #o Region @est South Aast #orth Total %F& %F& 8 .? ?,.6 ?".> 86. 8,." ? ., 87.> ?>. 87.8 ?>.8

@hether the inception of the #R$ has brought desirable service delivery was an issue for the taxpayers to decide. @hen asked whether they paid taxes before, Table 7>

44

shows that a slight ma.ority %87.8F& admitted they did, whilst ?>.8 percent said no. 9or those who reported paying taxes before, ma.ority %8,."F& are recorded in the east, whilst the west and north recorded 8 percent each. 0n the contrary, 86. percent of respondents in south cited not paying taxes before. Those who reported paying taxes before were required to compare both regimes >. 9indings indicate that %?>. F& of the respondents admitted that the present tax administration- to be better. @hilst >.! percent cited no value is added 7!, 78.8 percent described services provided now as worse. 3owever, >."percent acknowledged they Ta*9, 1?: C$)7a#(&" NRA -$ 7#,.($%/ -a; a')(&(/-#a-($& Region <etter @est 87.? South ?7.Aast ?".6 #orth 8".> Total ?>. could not compare regimes. $t regional level, the score card shows two regions for each administration. Slightly over half of the respondents in west and north, and less than 8! percent each in south and east admitted the present #R$ is better %see Table 7-&. 0n the whole, although the overwhelming degree of satisfaction reported from services rendered by #R$, yet findings indicate there is a significant degree of respondents who are of the view that #R$ is yet to deliver a conspicuous and desirable level of services that could show the difference for which they were created. To substantiate their assessment in comparing #R$ to the previous tax administration service delivery, respondents provided numerous reasons. <ox ? presents .ustifications for those who believed #R$ is providing better services. Same 8." "8.6 "7.76., >.! @orse 7?." 78." 78.> 6.78.8 *onNt know -.! ,. >.> .6 >."

+ /

Tax administration Aefore #$% and #ow. #$% 1' #o difference

4(

B$; 8: R,a/$&/ 0$# P,# ,(.(&" NRA Ta; A')(&(/-#a-($& a/ *,--,# -1a& -1, P#,.($%/ Ta; A')(&(/-#a-($& There is significant growth in revenue collection 3igh level of accountability and transparency Misible computerized system 'ot of tax education <etter monitoring and disciplinary actions Misible presence of tax officials and district tax branches )orruption is minimized

@ith respect to respondents who perceived #R$ tax administration as worse or the same in service delivery as the former tax administration, <ox 8 below presents reasons to substantiate their claims. B$; >: R,a/$&/ 0$# P,# ,(.(&" NRA Ta; A')(&(/-#a-($& a/ C$#/, $# -1, /a), a/ *,0$#, 3.4.6 #o improvement in assessment procedures (ntroduced many taxes @e now pay tax for every little thing Tariffs are high 0fficials are arrogant %e3el of 7mpro3ement in $er3ice Deli3er

$bout >6.6 percent of respondents reported that #R$ provides services in the assessment of business, whilst 8>." percent and ,., percent admitted for issuance of tax clearance and, on the examination and valuation of imported items respectively. Taxpayers further noted that other services provided by #R$ include4 $dvice to enhance smooth business transaction )autious reminder on timely payment of tax5 and Anforcing receipts are received after transactions

4)

$s stated in the $uthority1s Strategic Blan, the $uthority is desirous of transforming its operations to a modern tax administration, which would mobilise revenue effectively and efficiently. This hinges on reviewing structural and technical mechanisms that would improve its operations. @hether the services provided by #R$ have improved since its inception, figure 78 presents a national outlook of respondents1 views on the levels of improvement needed for services specified.
Figure 10: &e'el of impro'ement on ser'ice deli'er(
1''.'' +'.'' 5ercent )'.'' 4'.'' 2'.'' '.'' Tax .xam. and Aus. 9oll. .nforce<t clearance ?aluation assess<t 5rocedure certificate !ervice #o imp rovement "ittle imp rovement 1 uch imp rovement

@ith the exception of services provided on the examination and valuation of imported goods for which over half of the respondents admitted need some form of improvement, more than 6!.! percent of respondents attested the remaining services need no improvement. @hilst an average of 8." percent and 76.6 percent of the respondents indicated all the specified services need little and much improvements respectively5 over half stated no improvement was required.

4*

Figure 1-: 6mpro'ement on s er'ice deli'er( at regional le'el

1''.'' +'.'' 5ercent )'.'' 4'.'' 2'.'' '.'' ,est !outh $egion #o improvement "ittle imp rovement 1 uch improvement .ast #orth

Regionally, the eastern region recorded the highest %,7.7F& on average of those who acknowledged the services specified needed no improvement. $lthough the ma.ority % 6.,F& of those who cited that all services specified needed much improvement are found in the north, findings indicate that about fifty percent of the respondents in western area, which hosts over half of the taxpayers interviewed, admitted services delivered by #R$ need at least little improvement. (n support of the $uthority1s service delivery transformation drive, respondents outlined issues that could provide the desirable framework for an improved service delivery. The most frequently cited explanations as to why little or much improvements are needed in service delivery are stated in box 6. B$; @: C12 '$ S,#.( ,/ &,,' 9(--9, $# M% 1 I)7#$.,),&-/F $ lot of delays in the issuance of tax clearance certificate Brocedures in the valuation of goods are still cumbersome and unexplainable <usiness assessment is not based on profit but rather turnover $ssessments are based on the size of the shop or store rather than content Taxpayers are not consulted and involved in the assessment of their businesses Boor records management There are exemptions in the enforcement of tax laws #o transparency in the valuation and assessment of goods Bayment period is unreasonably short

4+

:ost taxpayers are ignorant about the operations of #R$

3.4.8

$ecuring t"e ser3ices of a ta+ agent Taxpayers

Some businesses or individuals employ the services of agent%s& who are thought to possess the expertise in providing professional services for their clients. therefore place huge confidence on agents in providing relevant tax knowledge and information in their transactions with the $uthority. This could pose serious problems when information is misrepresented as a result of conflict of interest.

Figure 1,: Respondents +ho secured ser'ices of tax agents at national &e'el Bes& 1).+ #o& +3.2

#ationally, 9igure 7, depicts that ma.ority of the respondents %>". F& reported they do not secure the services of tax agents to facilitate their operations, while about 7,percent admitted they did.

4/

Figure 1/: Secured ser'ices of tax agents

12' 1'' 5ercent +' )' 4' 2' ' ,est !outh $egion Bes #o .ast #orth

@estern area recorded the highest % 8.,F& among businesses that secure the services of tax agents. 3owever, findings revealed significant number of businesses across regions that do not employ the services of tax agents %see 9igure 7>&. $mong several reasons given, a significant ma.ority of the respondents were consistent in listing the following for securing tax agents. They provide us expert tax knowledge and information $gents provide us speed and accuracy in preparing our books of account They expedite the process of clearing goods and provide relevant clearing information They discuss more with relevant tax authorities Their services release burden on us

Several suggestions were outlined by respondents for the improvement of the specified services delivered by #R$. <ox , below presents the most frequently provided suggestions by respondents, among which the need for taxpayers1 education on the procedures of the services specified was highly prevalent. B$; B: S%"",/-($&/ 0$# ()7#$.(&" -1, /7, (0(,' /,#.( ,/

('

(ssuance of Axamination and tax clearance valuation certificate

Tax clearance certificate should be issued immediately after payment )ertificate to be issued for at least 8 years :onitor the business of the certificate issued (nsist on 7!! percent of thorough examination Request for price list Aducate taxpayers on the procedures involve Amploy and train more staff Axamination officers should be well paid to avoid bribery Should be based on the value of the goods To be carried out before the assessment period Should be done quarterly $ssessment should be based on the profit and not turnover Reduce tax rate Aducate taxpayers on the procedures 9requent inspection of business Amploy trained and qualified staff to do the assessment *eploy staff in border areas @e should pay taxes to the bank $ccept installment payment Axplain collection procedures Securitized receipts and stamps Staff to be polite and courteous Target small businesses to improve collection Review tax laws 'evy fines on defaulters after which confiscate assets (mprove on monitoring without compromise Aducate tax payers on possible distress actions )lose businesses that evade taxes Bursue court action

<usiness $ssessment

)ollection procedures

5.10: OFFICE ENVIRONMENT

Anforcement

(1

3.19.1 :isitation of 'a+pa ers and Assessment of !ffice ;n3ironment Misiting tax offices could help bridge the gap between taxpayers and tax collectors through interaction, tax education and sensitization. To this end, a good number of taxpayers %>?.8F& confirmed they have visited #R$ offices around the country in contrast to 78.8 percent who haven1t. Taxpayers in the @est and Aast regions %-!.7F and >6F respectively& were believed to have visited #R$ offices more than those in the South and #orth %,?.-F and ,7.7F respectively&. 3.19.2 5on3enience of !ffice %ocation (n general, - in every 7! taxpayer respondents agreed that the location of the tax offices all over the country is convenient. 3owever, those who strongly agreed formed 7percent as compared to those who .ust agreed %,7.8F&. 0n the contrary, those who disagreed formed a total of -.8 percent and were mostly taxpayers from the #orth, @est and South.

Figure 13: )omment on the &ocation of 1ffice

!trongly 3.) disagree isagree (.+ !trongly agree %gree isagree %gree !trongly agree *1.( !trongly disagree

1/

This indicated that ma.ority of the taxpayers are pleased with location of the tax offices all over the country. 3.19.3 5leanliness of t"e !ffice ;n3ironment )leanliness and hygiene is a necessary factor that attracts andCor discourages people from visiting a particular place. 0nce clean, people would be encouraged to sit longer or

(2

wait patiently to be attended to. The survey revealed that a total of -7.

percent of

taxpayers agreed with the cleanliness of #R$ offices, although very small fraction appeared to strongly agree %7>F&. 0nly >.> percent disagreed, most of who strongly disagreed %8."F of >.>F&. The assessment by taxpayers interviewed regarding the cleanliness of the office environment of tax offices could lead to the conclusion that such offices are kept clean and in line with office cleaning standards nationwide.

5.11

R,/7$&',&- P,# ,7-($& $0 -1, Na-%#, $0 Ta; C$)79(a& ,

This section reveals how respondents perceived the obligation to pay tax in terms of willingness to pay taxes5 willingness of others to pay taxes5 reasons for paying or not paying taxes5 the taxes they are willing or unwilling to pay5 fair or unfair tax rates5 ideas about tax administration right down to suggestions that may improve tax compliance. 3.11.1 .illingness to Pa 'a+es (t was revealed that there exists an overwhelming enthusiasm to pay tax amongst taxpayers in the country. $n average of -6.7 percent respondents answered yes to the willingness to pay tax. Axplicitly, -8.7F, ->.,F, -,.>F and - .!F were the responses

F("%#,$rea, 30: C(99(&"&,// & U&=(99(&"&,// -$ Pa2 Ta;,/ from the @estern Southern, Aastern and #orthern Brovinces respectively.
7 ! P,# ,&7!! >! 6! ?! ! ! @estern $rea Southern Brovince R,"($& (3 @illingness to Bay Tax %F& Dnwillingness to Bay Tax %F& Aastern Brovince #orthern Brovince

$lthough over -! percent of taxpayers interviewed nationwide reported to be willing to pay tax, it does not reflect in revenues generated. $part from the western area where over >! percent of domestic revenue is generated, revenue generated from the other regions does reflect the overwhelming willingness of taxpayers to pay taxes.

3.11.1.1 )easons for t"eir .illingness to Pa 'a+es Taxpayers were asked Jwhy the willingness to pay taxO1 :ost responded that the willingness to pay tax is borne in the desire to develop the country. 9ew said that, it is a law and that they want to protect their businesses. 3.11.1.2 .illingness to Pa 'a+es b !t"er #usiness People :ost %,".?F& taxpayers demonstrated their ignorance of the willingness of other business people to pay taxes. 3owever, among the few % 6.8F& who attested knowledge of the willingness of others to pay tax, only ".6F agreed on their willingness to pay taxes. Ta*9, 30: C(99(&"&,// -$ Pa2 Ta;,/ *2 O-1,# B%/(&,// P,$79, A#, $-1,# *%/(&,// 7,$79, 2$% !&$= R,"($& @estern Brovince Southern Brovince Aastern Brovince #orthern Brovince =(99(&" -$ 7a2 -a;F Y,/ N$ (E) ".? 7?.7 6.> ?7." (E) .? .6 ".?.D$&G- !&$= (E) ,?." >"." 6-." 8".>

(4

A.,#a",

35.@

3.?

B5.8

3.11.1.3 'a+es t"at !t"er #usiness People are least 2illing to pa The respondents were asked about which taxes they were least willing to pay. Some %" .7F& said that they are least willing to pay import duties. Similarly, !.- percent exhibited their unwillingness to pay import sales tax. 0n the part of excise duties, ?." percent registered their least willingness to pay this indirect tax. *omestic sales tax recorded 6,.? percent of respondent who are willing to pay it and "7. percent who are least willing to pay this form of tax. $lso, .6 percent responded that they were less willing to pay corporate tax whilst ,,.? percent emphasized their readiness to pay same. 9or personal income tax, "?.8 percent responded that they are less willing to pay whilst 6 ., percent recorded a willingness to pay this type of tax. $lmost every taxpayer agreed that willingness to pay taxes is beneficial to the country.

F("%#, 31: Ta;,/ P,$79, a#, 9,a/- C(99(&" -$ Pa2

7!! >! 6! ?! ! ! (mport *uties (mport Axcise Tax *omestic Sales Tax Sales Tax Ta;,/ @illingness to Bay Taxes by 0ther <usiness Beople %F& Dnwillingness to Bay Taxes by 0ther <usiness Beople %F& )orporate Bersonal Tax (ncome Tax

3.11.1.* 'a+es <not $pecif abo3e) t"at !t"er #usiness People are least 2illing to pa 'ocal tax was listed amongst taxes that business people are least willing to pay. 3owever, this tax does not go into the )onsolidated Revenue 9und, and it is not collected by #R$.

P,# ,&-

((

3.11.1.0 )easons for t"e =n2illingness to Pa 'a+es $ good number of respondents %88.6F& singled out high tax rates as the reason for their unwillingness to pay taxes. 0thers advanced factors ranging from inadequate public services %7". F&, misuse of revenue by 2overnment %7!.7F&, multiple tax rates %8. F& right down to lack of trust in tax collectors %78.-F&. F("%#, 33: Ra-($&a9, 0$# -1, U&=(99(&"&,// -$ Pa2 Ta;,/

78.-!F

3igh Tax Rates (nadequate Bublic Services :isuse of Revenue by 2overnment :ultiple Tax Rates

8. !F 7!.7!F

88.6!F

3.11.1.6

7". !F

in Tax )ollectors .illingness to pa more if t"e $ stem *istrust 2as Fairer

Dpon asking the respondent about their willingness to pay more if they felt the system was fairer, -! percent replied that they would be willing to pay more if the system was fairer. 0nly 7! percent said they will not be willing to pay more even if the system was fairer. Ta*9, 31: C(99(&"&,// -$ 7a2 )$#, (0 -1, Ta; S2/-,) =a/ Fa(#,# R,"($& Y,/ @estern $rea Southern Brovince Aastern Brovince #orthern Brovince A.,#a", >,.> -8.7 >>.> -"." ?0.0 P,# ,&N$ 7 . ?.77. 6., 10.0

3.11.2 'a+pa ers> Description of t"e 5urrent 'a+ and Non-'a+ )ates in t"e 5ountr

()

$bout ?8 percent taxpayers expressed that the tax and non+tax rates are high. 9urthermore, ?.6 percent emphasized that the rates are very high. 3owever, >.? percent and 7., percent said that the rates are fair and low respectively.

F("%#, 35: Ta;7a2,#/J D,/ #(7-($& $0 -1, C%##,&- Ta; a&' N$&-Ta; Ra-,/
6! P,# ,&?! ! ! @est South R,"($& Mery 3igh %F& 3igh %F& 9air %F& 'ow %F& Aast #orth

3.11.2.1 )easons for t"e Notion about 'a+ and Non-'a+ )ates Respondents were asked to give reasons for the answers given above. 0ver half the respondents advanced the slow nature of business %8>F& coupled with high tax rates % >F& as the sole reasons. The most frequent response was Kbusiness is too slow and the tax rates are highL. $lso, making very low profits as a result of high taxes %7"F& was another reason put forward by some respondent. The remaining few %7.!F& stated that the tax rates are affordable. F("%#, 38: R,a/$&/ 0$# -1, O7(&($& a*$%- Ta; a&' N$&-Ta; Ra-,/ /-a-,' (& 8.1.B a*$.,
Bercent

Slow nature of business 7"F 7F 3igh tax rates >F 8>F Mery low profits as a result of high taxes Tax rates are affordable

(*

3.11.3 Assessment of t"e 'a+ Administration $ stem :ost %,".8F& respondents agreed that the tax administration system is simple. 9ew %7,.!F& differ from this view, and think that the system is complex. The remaining respondents only emphasized that the tax system is very simple %".7F& and very complex %6.?F&.

Ta*9,31: A//,//),&- $0 -1, Ta; A')(&(/-#a-($& S2/-,) R,"($& @estern $rea Southern Brovince Aastern Brovince #orthern Brovince A.,#a", V,#2 C$)79,; (E) 8.6 .! .,., 6.? C$)79,; (E) 7.8 -.? 7"., 7".> 7,.! S()79, (E) ,!., >?., ,>.6 8?.8 ,".8 V,#2 S()79, (E) .7 ".?., ?.! ".7

3.11.* Possible $olutions to t"e Alleged 5omple+ Nature of N)A 'a+ $ stem Respondents were asked to suggest possible solutions to the alleged complex nature of the tax system in the country. $mong the proposals put forward, adequate education for the tax paying public was most glaring %with a frequency of 7,8!!&. $lso, some %?8! respondents& recommended the use of computerized system in tax administration. Similarly, reduction of Brotocols and straight forwardness of the system were advanced as other possible solution. The remaining few stated that they do not know what to suggest as would+be solutions. 3.11.0 7mpro3ement of 'a+ 5ompliance $mong a total of ,8 respondents interviewed, !!! respondents consented that #R$ should make a reduction in tax rates in order to improve tax compliance. $bout "!!

(+

recommended

that

the

$uthority

should

embark

on

thorough

tax

educationCsensitization. Anforcement of tax laws was another popular suggestion made by 8 percent of the respondents whilst the remaining few %?F& made several suggestions that were categorized as others.
F("%#, 3>: S%"",/-($&/ -$ I)7#$., Ta; C$)79(a& ,

"!!, 7 F

, 8F 7!!, ?F

!!!, ,-F

Reduction in Tax Rates Anforcement of Tax 'aws

AducationCSensitisation 0thers

5.13: TRUST This section discusses issues relating to trust by the public for the $uthority in carrying out its national mandate. Revenue mobilization function of the #R$ is considered very sensitive and therefore requires KtrustL by the public who pay their taxes. Therefore, in its revenue mobilization drive, the $uthority has over the years endeavoured to establish a cooperative, respectful and trusting relationship with the public by urging its staff to be of impeccable and respectable character and credible beyond reproach in the performance of their duties. <y so doing, it is expected that the public will in turn adopt a cooperative relationship with the $uthority, respecting the legitimacy of the institution, trusting its processes and procedures, and accepting an obligation to pay tax. The survey therefore attempted to measure the extent of trust the public has in the $uthority through key variables like the legitimacy of #R$ as a revenue collection institution, accountability for revenues collected by tax officials, and valuation or assessment done by officers at the )ustoms and Axcise *epartment and the (ncome Tax *epartment. 3.12.1 'rust in N)A as a )e3enue 5ollection 7nstitution

(/

2enerally, it is believed that trusting the legitimacy of #R$ as a revenue collection institution goes a long way in making taxpayers honour their tax obligations as and when they fall due. 9indings from the study revealed that -".? percent of taxpayers interviewed have trust in #R$ as a revenue collection institution. This was reflected in the regional analysis as over -! percent of taxpayers interviewed in the @est %-".6F&, South %-".6F&, Aast %-".8F&, and #orth %-7.6F& reported to have trust in the $uthority. Thus, such a favourable response regarding trust in the $uthority by taxpayers could be said to be closely correlated with the increase in revenue yield yearly since the inception of #R$. 3owever, an illustration in 9igure 6 below shows that less than - percent of taxpayers interviewed, regionally, do not have trust in the $uthority as a revenue collection institution.

F("%#,3@:.T#%/- (& NRA a/ a R,.,&%, C$99, -($& I&/-(-%-($& *2 R,"($&

7!! >! P,# ,&6! ?! ! ! @est South R,"($& Ies #o Aast #orth

9rom analysis in 9igure 6 above, it is apparent that the taxpaying public interviewed greatly recognizes the role of the $uthority and that the level of trust they have in the $uthority does not vary much across regions. Respondents were then asked to give reason why they have trust in #R$ as a revenue collection institution. $mongst the multitude of reasons advanced, the most frequent ones were4 #R$ is a government entity established to collect tax #R$ is collecting revenue for government (ssue receipt for every transaction

)'

Staff of #R$ are competent and are willing to work There has been an improvement in revenue collection #R$ is reliable 2reat difference in the present administration compared to the previous administration.

$lthough ma.ority of the respondents stated to have trust in #R$ as a revenue collection institution, there were few of them %6.6F& who mentioned that they do not have trust in #R$. @hen asked to give reasons why they distrust the $uthority, the following were common amongst others4 There has been no improvement since #R$ started :ost officers of the #R$ are corrupt #R$ collect revenue to develop themselves $ccountability of the office in unknown by the grass root *oes not know how #R$ uses our taxes collected *ue to frequent rumors of corruption

2iven the above reasons why some respondents do not trust #R$ as a revenue collection institution, one would infer that the $uthority has some lapses relating to staff integrity and professionalism, and information dissemination. 3ence, there is need for the $uthority to improve on these issues. <y disseminating information about the operations of the $uthority, coupled with rigorous audit and monitoring exercises, it is very likely that issues on staff integrity, the $uthority1s accountability and use of taxes collected could not be questioned by the taxpaying public. 3.12.2 Accountabilit of 'a+ !fficials )egarding )e3enues 5ollected To further assess the extent of trust taxpayers have for #R$, the survey attempted to gauge taxpayers1 perception regarding accountability of revenues collected by tax officials. To this end, respondents were asked to state whether they strongly agree, agree, somewhat agree, disagree, or strongly disagree with the statement that J tax officials account for the revenues collected1. 2enerally, whilst 8>.? percent of the respondents were of the opinion that tax officials strongly account for revenues collected, only 6.- percent strongly believed that revenues collected by tax officials are

)1

not accounted for. (n other words, whilst >." percent strongly agree, -.> percent agree, and !." percent somewhat agree that tax officials strongly account for revenues collected, the remaining "?., percent of respondents indicated that they do not know whether revenues collected by tax officials are strongly accounted for as shown in 9igure , below4

F("%#, 3B: A

$%&-a*(9(-2 $0 R,.,&%, C$99, -,' *2 NRA O00( (a9/

>F "8F "!F

F 8F !F

Strongly $gree *isagree

$gree Strongly *isagree

Somewhat $gree *onNt ;now

$ccording to responses by respondents in 9igure

, above, it can be observed that

about one+ third %"8F& of taxpayers interviewed do not know whether tax officials strongly account for revenues collected. This is consistent with earlier report that respondents who do not trust #R$ said they don1t know how #R$ uses tax revenues. This implies that a good number of taxpayers are not informed about the operation of the $uthority, an issue that needs urgent attention of the #R$. 0n the regional front, the analysis revealed that taxpayers in the north %6,. F& are of the strongest opinion that tax officials account for revenues collected followed by taxpayers in the west %67.6F& and east %8>.7F& respectively. Taxpayers in the south are of the least opinion, comparatively, regarding accountability of revenues collected by tax officials because the ma.ority %?6.7F& of those interviewed mentioned that they do not know whether tax officials account for revenues collected %see Table & below.

)2

Ta*9, 33: A R,"($&

$%&-a*(9(-2 $0 R,.,&%,/ C$99, -,' *2 R,"($& A"#,, (E) " .! 7.7 " ." -.> S$),=1aA"#,, (E) 7. 7.8 78.? !." (E) ?.6 .6 8.-., D(/a"#,, S-#$&"92 D(/a"#,, (E) 7., ". . ".! D$&GD&$= (E) " .7 ?6.7 "".> !.! A"#,, (E)

S-#$&"92

C,/S$%-1 Ea/N$#-1

>.? 8.8 7!.? >."

(t can be observed from analysis in Table

above that very few taxpayers %7.,F& in the ! percent of taxpayers

west strongly disagree and .6 percent in the south disagree that tax officials strongly account for revenues collected. 3owever, the fact that over interviewed in all regions don1t know whether tax officials account for revenues collected signifies that a good number of the taxpaying public lacks knowledge about the operations of the $uthority. 3.12.3 'rust in t"e :aluation of 7mport at 5ustoms and ;+cise Department The survey also endeavoured to gauge the extent of trust taxpayers have in the valuation of import done by )ustom 0fficers. Maluation is a mechanism used by )ustom 0fficers to determine the amount of tax to be paid on goods imported into the country. $ccording to the survey data, the extent of trust taxpayers interviewed have in this process is generally not impressive. @hilst !.6 percent of respondents fairly trust this process, >.> percent have trust in it to a large extent and very few %7.? percent& acknowledged having trust in this process to a very large extent. 3owever, those who perceived valuation done by )ustom 0fficers as poor accounted for 6., percent. 2iven that only percent of taxpayers interviewed were importers, more than half %6 .8F& could not give their opinion on valuation done at )ustoms. 9igure > below shows the extent of trust taxpayers have in the valuation of import at )ustoms and Axcise *epartment.

)3

F("%#, 3A: T#%/- (& Va9%a-($& $0 I)7$#- a- C%/-$)/

,! 6! 8! ?! "! ! 7! ! 6 .8

$nalysis by region shows that taxpayers in the west have more trust in valuation than those in the provinces. @hile 7!.6 percent of respondents in the west trust this process to a large extent, 8." percent in the south, > percent in the east and >.> percent in the north have similar trust in this process. $lso, respondents who regarded this process as being fair were highest in the west % 6.6F&, compared to less than 7> percent in each of the other regions. This is a reflection of the fact that more importers %" .8F& were interviewed in the @estern area compared to 8.> percent in the #orthern and 7 .8 percent in the east. The Jnot applicable1 cases were also in the ma.ority in all the regions since over half of the taxpayers interviewed were non importers with little or no knowledge in this process %see Table " below&. Ta*9, 35: T#%/- (& Va9%a-($& $0 I)7$#- a- C%/-$)/ *2 R,"($& V,#2 La#", E;-,&R,"($& @est South Aast #orth (E) 7." 7.7., 7.7 La#", E;-,&(E) 7!.6 8." > >.> Fa(# (E) 6.6 -.6 7,.8 7,.8 P$$# (E) >.? ".6 ". 7".7 N$A779( a*9, (E) 8".7 ,-.6 6-.6 8-.8

$ccording to data in the above table, taxpayers who perceived valuation of import at )ustoms to be poor were highest in the north at 7".7 percent compared to >.? percent in

7,# ,&-

!.6 7.? Mery 'arge Axtent >.> 'arge Axtent 9air 6., Boor #ot $pplicable

R,/7$&/,

)4

the west, ".6 percent in the south and ". percent in the east. (n summary, taxpayers in the west are found to have the highest trust in valuation of import at ">.8 percent, followed by those in the north % ,.?F& and east at ,. percent. 3.12.* 'rust in t"e Assessment of #usiness b 7ncome 'a+ Department 'ike valuation of import at )ustoms, assessment of business by (ncome Tax *epartment is a process during which tax officials assess businesses in order to determine the tax to be paid by such businesses. Thus, respondents were asked to indicate whether they have trust in this process. Responses by respondents revealed that ?6., percent regarded this process as being fair, another -.- percent trust it to a large extent, while 6. percent to a very large extent have trust in assessment of businesses. 9igure below shows that - percent of taxpayers interviewed however reported that assessment of businesses by tax officials is poor.

F("%#, 3?: T#%/- (& -1, A//,//),&- $0 B%/(&,//,/ *2 I& $), Ta; O00( ,#/
8! ?! "! ! 7! ! Mery 'arge Axtent 'arge Axtent 9air Boor #ot $pplicable

P,# ,&-

R,/7$&/,

(t can be depicted from 9igure - above that unlike valuation of import at customs5 the Jnot applicable1 cases for assessment of businesses by (ncome Tax 0fficials were very few. This indicates that more taxpayers responded to this question, a reflection of the fact that over ,! percent of taxpayers interviewed comprised of non+importers compared to the percent of importers interviewed. $lthough responses in favour of trust in the assessment of businesses carried out by (ncome Tax 0fficials could be regarded as encouraging, the $uthority needs to improve on this process in order to further reduce on the percent of taxpayers who perceived it as being poor.

)(

Regarding regional analysis, it is observed that taxpayers interviewed in the north recorded the highest responses % !.?F&, followed by those in the east at 8.8 percent and then the west %?.-F& who trust assessment of businesses to a very large extent. The south followed by the west recorded the highest responses "?. and -.? percents of respondents that have trust in this process to a large extent. 2reater percent of respondents, who regarded this process as fair, were in the east at 8!.- percent closely followed by those in the west %see Table ? below&. Ta*9, 38: P,# ,7-($& $0 T#%/- (& A//,//),&- $0 B%/(&,//,/ *2 I& $), Ta; O00( (a9/ *2 R,"($& V,#2 E;-,&R,"($& @est South Aast #orth (E) ?.".8.8 !.? La#", La#", E;-,&(E) -.? "?. -.! ?.? Fa(# (E) ?-.7 ??.! 8!."!. P$$# (E) 7!. 8." >." 7 .! N$A779( a*9, (E) 6.? 7 .6 6." 7 .-

Table ? above also shows that the north had the largest percent %7 F& of taxpayers, followed by those in the west %7!. F& and the east %>."F&, who referred to assessment of businesses as being poor. 0verall, regional ranking of taxpayers who have trust regarding assessment of businesses by (ncome Tax 0fficials, put taxpayers in the east in lead at >?.8 percent, next to those in the west at >".? percent and then the south %> .7F& and north %,8F& respectively. Since ma.ority of the taxpayers interviewed were non importers, it can be observed from the data in Table ? above that less than 7" percent of respondents in all regions could not give their opinion about assessment of businesses.

))

5.15:

ETHICS AND STANDARDS

*iscussions in this section deal with ethics and standards required by all staff of the $uthority in the execution of their various responsibilities. $s contained in the K)odes of AthicsL of the $uthority, there are provisions that govern the codes of conduct of every staff which they are expected to uphold at all times. ;ey areas investigated during the survey were maintenance of integrity, confidentiality of information, public comments, and appearance and conduct in the working environment. Taxpayers interviewed were asked to either rate or give their views on the above issues. Responses that emanated from the findings are discussed below. 3.13.1 )ate on ;t"ics and $tandards of N)A $taff Respondents were asked to rate #R$ staff on professionalism, respectability, reliability, honesty and fairnessCimpartiality in the execution of their duties. 2enerally, ethics and standards of staff were rated positively by taxpayers interviewed. @hilst ?-.? percent of respondents rated staff Ta*9, 3>: Ra-(&" $& S-a00 E-1( / a&' S-a&'a#'/ (& professionalism made similar as high, P,# ,&Mery 3igh Brofessionalism Respectability Reliability 3onesty 9airnessC(mpartiality 3igh $verage 'ow Mery 'ow

over half %8?.>F& of them response staff 3owever, relating to regarding respectability. responses

78.? 7 .> ,., 6.? ,.-

?-.? 8?.> "-." "?., "".-

" .>." ??., ?-. ?>.8

7.. 8.8 8.6.>

!.? 7..> ".> .-

reliability, honesty and fairnessCimpartiality were less than ?! percent %see Table 8&. Brofessionalism and respectability were rated very high by respondents at 78.? percent and 7 .> percent respectively whilst those for reliability, honesty and fairness were less than > percent. $lthough ma.ority of the responses regarding ethics and standards of staff were very encouraging, there were few taxpayers %less than 7!F& who rated these ethical standards as low and very low. Thus, of the above ethical standards, it can be observed in Table 8 that staff professionalism and respectability got the best rating, while fairness and honesty were rated the least.

)*

Regional data regarding staff professionalism shows that more taxpayers interviewed in the east considered #R$ officials as professionals in the execution of their duties compared to the other regions. $s a result, analysis revealed that while ,7.> percent of respondents in the east hold staff professionalism in high esteem, 8-.- percent in the west and , .> percent in the north regarded staff as professionals. $lthough rating by respondents in the south is less than ratings in the other regions, @est South Aast #orth Ta*9, 3@: Ra-(&" $& S-a00 P#$0,//($&a9(/) *2 R,"($& (& P,# ,&Mery 3igh 3igh 7?. 77.? 7.7>.> ?8., 8,.! ?-.8?.! $verage ",., >.! ,." ?.> 'ow .7 .> !., 7. Mery 'ow !." !.> !. 7.

responses by over -! percent of taxpayers in favour of staff professionalism also indicates that #R$ staff are professionally doing their .ob. This is evidenced by an insignificant number of respondents %i.e. less than "F& in any of the regions who considered staff professionalism as being low or very low.

(n terms of respectability, ratings indicate that over 6! percent of taxpayers interviewed in the west, south and east perceived #R$ staff as respectful in the course of their duties. Respondents in the north, however, rated staff respectability the least as more than 7! percent mentioned that staffs of #R$ are not respectful compared to less than ? percent of similar response by respondents in the other @est South Aast #orth Ta*9, 3B: Ra-(&" $& S-a00 R,/7, -a*(9(-2 *2 R,"($& (& P,# ,&Mery 3igh 3igh 7!., -.? !.76.7 8?.8 8>.? 86." 88.7 $verage " ., >. 7.? 76.! 'ow 7.6 ".! 7.7 8.? Mery 'ow !.8 7.! !." ,.?

regions. 3owever, the fact that over half of the taxpayers interviewed in all the regions rated #R$ staff as respectful portrays a good image of the $uthority to the tax paying public.

)+

Taxpayers1 responses regarding reliability of #R$ staff in performing their duties was also very impressive. Table > shows that over 8! percent of taxpayers in the west, south and east reported that officials of #R$ are reliable. Results from the east revealed that respondents greatly consider #R$ staff as reliable compared the other regions. $s a result, while 7".6 percent and 8!. percent of respondents rated staff reliability very high and high, less than > percent and ?! percent made Ta*9,3A: Ra-(&" $& S-a00 R,9(a*(9(-2 *2 R,"($& (& P,# ,&Mery @est South Aast #orth 3igh 6. 6.? 7".6 ,.6 3igh "-.8 "!.> 8!. "8." $verage ?6., 88. "7.7 "8., 'ow ?.> 6.? ?.> -.? Mery 'ow .> 7. !." 7

similar responses in the other regions. 'ike respectability, respondents in the north rated staff reliability the least as more taxpayers % 7.?F& questioned the reliability of #R$ staff compared to similar ratings in the west %,.6F&, south %,.6F&, and east %8.7F&.

3onesty of #R$ staff was also rated positively by respondents in all the regions. The eastern region had the highest number of taxpayers interviewed who reported that staffs of #R$ are honest. #ext to the east was the west and north with "-.8 percent and ">.? percent respectively in favour of staff honesty. $gain the north was found to have more taxpayers who reported that staff honesty was low at > percent and very @est South Aast #orth Ta*9, 3?: Ra-(&" $& S-a00 H$&,/-2 *2 R,"($& (& P,# ,&Mery 3igh 8.! 6. 77.8 8.? 3igh "?.8 8.> ?6.6 "".! $verage 8 .? 6!. "?. "8." 'ow 8. 6.! ,.! >.! Mery 'ow .7.> !., 7>."

low at 7>. " percent. 3owever, over ">.? percent of respondents in the north regarded staff of #R$ as honest in executing their duties, an indication that the ethics and standards of the $uthority are being upheld by staff to a large extent

)/

9airness, being very key in any good tax administration, was also evaluated during the survey. Respondents were therefore asked to rate the extent of fairness with which staff of #R$ carries out their duties. 'ike the other ethical standards, fairness of #R$ staff was rated positively by over half of the respondents regionally. Table "? indicates that the south and eastern regions rated fairness by staff of the $uthority very high at 7".7 and 7". percents respectively. 0ver half %8!.-F& of respondents in the west and 8-.- percent in the south considered staff fairness to be on the average. Respondents who rated staff fairness as being low were highest in the north followed by those in the west, while those who rated it as very low were highest in the south and north respectively %see Table "!&. Ta*9, 50: Ra-(&" $& S-a00 Fa(#&,// *2 R,"($& (& P,# ,&Mery @est South Aast #orth 3igh 8.8 ,. 7".7 7". 3igh "".8 ?.> ? .? ?!.6 $verage 8!.8-."8.8 "".> 'ow ,." ?.> 6.-. Mery 'ow .> "." .7 ".

3.13.2 !ffering of Gift or ?ospitalit to 'a+ !fficials before 'ransaction The acceptance of gifts and or any hospitality by any staff of the $uthority that has the tendency of influencing decision making is against the codes of ethics of the $uthority. The survey therefore sought to find out whether this practice does exist in the $uthority and if it does, is it before or after transaction, the type of gift or hospitality offered and what are the possible reasons for its existenceO Thus, taxpayers interviewed were asked whether they offer gift or hospitality to tax officials before transaction. (n response, -?." percent reported that they do not offer gift or hospitality to tax officials before transaction. 3owever, 8., percent of respondents acknowledged that they do offer gift or hospitality to tax officials before transaction as shown in 9igure "! below.

*'

F("%#, 50: O00,#(&" $0 G(0- $# H$/7(-a9(-2 -$ Ta; O00( (a9/

7!! P,# ,&>! 6! ?! ! ! Ies R,/7$&/, #o 8., -?."

9igure "! indicates that though this act is highly cautioned by the $uthority, some tax officials do accept gift or hospitality from taxpayers. *iscussion on the type of gift or hospitality accepted by tax officials is presented in the section below. Responses by region shows that this act is more prevalent in the west where ,.7 percent of respondents mentioned that they offer gift or hospitality to tax officials before transaction. #ext to the west is the north and east with 6., and ?.8 percents of taxpayers interviewed who offer gift or hospitality to tax officials before transaction. $s depicted in figure "7, acceptance of gift or hospitality is least practiced by tax officials in the south.

*1

F("%#,51: O00,#(&" $0 G(0- $# H$/7(-a9(-2 -$ Ta; O00( (a9/ *,0$#,

T#a&/a -($& *2 R,"($& 7!! >! 6! P,# ,&?! ! ! - .-,." -8.8 -"."

,.7 @est

.,

?.8

6., #orth

South Aast R,"($& Ies #o

The 8., percent of respondents who reported that they offer gift or hospitality to tax officials before transaction were asked to give reasons for doing so. $mongst the various reasons advanced are4 R,a/$&/ 0$# $00,#(&" "(0-/ $# 1$/7(-a9(-2 B,0$#, -#a&/a -($& $ kind of gesture So that they can give me a better service To reduce delayCspeed my work RequestCdemand for it 0ut of free will To avoid harassment To reduce my tax :y work will not be properly done 9orced to do so at times They tend not to do my work ?.!F >.-F "?. F 77.!F 7!."F .7F .,F .7F .,F .7F P,# ,&-a", $0 R,/7$&',&-/

(t is apparent from the above reasons that ma.ority of taxpayers who offer gift or hospitality to tax officials before transaction do so in order to speed up their transaction or reduce delays in doing business.

*2

3.13.3 !ffering of Gift or ?ospitalit to 'a+ !fficials after 'ransaction Taxpayers interviewed were also asked to indicate whether they offer gift to tax officials after transaction. @hile >.7 percent of respondents said yes to this act, -7.- percent denied offering gift or hospitality to tax officials after transaction. 9igure " below shows the percent of taxpayers who offer gift to tax officials after transaction.

F("%#,53: O00,#(&" $0 G(0- $# H$/7(-a9(-2 -$ Ta; O00( (a9/ a0-,# T#a&/a -($& 7!!
P ,# , &-

>! 6! ?! ! !
>.7 -7.-

Ies R,/7$&/,

#o

$nalysis of the Jbefore and after1 acts of offering gift or hospitality to tax officials shows that more taxpayers %>.7F& offer gift or hospitality to tax officials after transaction than those %8.,F& who do so before transaction. Dnlike the before transaction act, taxpayers who do this act after transaction were highest in the north at ! percent followed by the west at - percent. $ccording to the survey data, this act is less practiced in the south and east as shown in 9igure ""4

*3

F("%#,55: O00,#(&" $0 G(0- $# H$/7(-a9(-2 -$ Ta; O00( (a9/ a0-,# T#a&/a -($&
P,# ,&7 ! 7!! >! 6! ?! ! ! -7 -6.> -?.?

>!

@est

".
South

8.6
Aast

#orth

R,"($&
Ies #o

Taxpayers who reported that they offer gift or hospitality to tax officials after transaction were asked to give reasons why they do so. $lthough diverse reasons were given, the ones that were very common are listed below4 R,a/$&/ 0$# $00,#(&" "(0-/ $# 1$/7(-a9(-2 a0-,# -#a&/a -($& $s a sign of appreciation <ased on friendship or Dsage <ased on their performance 0ut of free will 9or future transaction 2ive them transport Bart of traditionCcourtesy 0fficials create the environment @e assist them every year to celebrate )hristmas 3.13.* ' pe of gift or "ospitalit offered to 'a+ officials Staff of the #ational Revenue $uthority are cautioned very strongly on the issue of acceptance of gift or hospitality in the course of executing the respective duties. 2iven that tax officials are found to be accepting gift or hospitality from taxpayers, the survey sought to find out the type%s& of gift or hospitality that are being accepted. 0ver half %66.?F& of respondents mentioned that they offer moneyCcash, while "!.8 percent said that they offer food and drink. Bercentage of response relating to other types of gift or hospitality offered to tax officials are household items % .7F&, building materials %!.,F&, 7.6F 7?.!F .,F 7,.-F 78.-F 7.!F 7.!F 7.!F !.8F P,# ,&-a", $0 R,/7$&',&-/

*4

and clothing %!."F&. (t is observed from the analysis that moneyCcash, and food and drink are offered more to tax officials by taxpayers %see 9igure "?&.

F("%#,58: P,# ,&-a", R,/7$&/,/ $& -1, T27,/ $0 G(0- $# H$/7(-a9(-2 O00,#,' -$ Ta; O00( (a9/
!." !., .7 "!.8

66.?

9ood and *rink <uilding materials

)ashC:oney )lothing

3ousehold items

(n terms of the regional data, analysis revealed that taxpayers who offer cashCmoney to tax officials are highest in the south at >>.- percent followed by the west at 66., percent compared to the north %68.?F& and east %67.>F&. Table "7 also indicates that food and drinks are the second common types of gift or hospitality offered to tax officials in all the regions. Ta*9,51: T27,(/) $0 G(0- $# H$/7(-a9(-2 $00,#,' -$ Ta; O00( (a9/ *2 R,"($& R,"($& F$$' & D#(&! (E) @est South Aast #orth >., 77.7 ">. ""." 66., >>.67.> 68.? ".8 ! ! ! Ca/1<M$&,2 (E) H$%/,1$9' I-,)/ (E) B%(9'(&" Ma-,#(a9/ (E) !.6 ! ! 7." !.6 ! ! ! C9$-1(&" (E)

$nalysis in Table"7 above shows that gift or hospitality in the form of household items and clothing are only offered to tax officials in the west by very few taxpayers, while a small number of taxpayers in the west and northern region offer building materials to tax officials.

*(

@ith the above revelation, it is apparent that provisions governing the acceptance of gift or any hospitality %the )odes of Athics& by #R$ officials are not being strictly adhered to. 3.13.0 Acceptance of 'o@en <5as") b after 'ransaction )ash is considered to be the most tempting gift or hospitality that can easily influence decision making. $s a result, the survey investigated whether cash is accepted by #R$ officials from taxpayers during or after transaction. 9urther investigation was also done to find out the likely effects if taxpayers do not give cash to #R$ officials. @hile >.> percent of respondents reported that #R$ officials accept cash during or after transaction, over half %8?."F& mentioned that #R$ officials do not accept cash. 3owever, a reasonable percent %"6.-F& of responses indicated that the issue of accepting cash by #R$ officials does not apply as shown in 9igure "8 below. N)A !fficials from 'a+pa ers during or

F("%#,5>: A

,7-a& , $0 Ca/1 *2 NRA O00( (a9/ '%#(&" $# a0-,# T#a&/a -($& -F

",F

8?F Ies #o #ot $pplicable

9rom the regional front, data revealed that more taxpayers interviewed in the north %7".>F& reported that #R$ officials accept cash during or after transaction than those in the west %7!. F&, east %6.!F&, and south %8.?F&. @hile over half of the respondents in the west, east and north stated that #R$ officials do not accept cash during or after transaction, only " ." percent reported similarly in the south. TableP shows that a good number of taxpayers especially those in the south could not ascertain whether #R$ officials accept cash during or after transaction.

*)

Ta*9,53: P,# ,&-a", R,/7$&/,/ $& A NRA $00( (a9/ '%#(&" $# a0-,# T#a&/a R,"($& Y,/ N$ @est 7!. South 8.? Aast 6.! #orth 7".>

,7-a& , $0 a/1 *2 N$- A779( a*9, "7.7 6 ." "!., ?.?

-($& 8>., " ." 6"." 67.>

@hen asked to indicate what will happen if they do not give cash to #R$ officials, >".> percent of taxpayers mentioned that their work will be delayed while the remaining 76." percent said that #R$ officials will abandon their work. @hile -!.8 percent of taxpayers in the east reported that their work will be delayed if they fail to give cash to #R$ officials, >".- percent responded similarly in the west. The south and north also recorded over ,! percent of similar responses as shown in figure "6 below.

F("%#,5@: O%- $), $0 &$- "(.(&" Ca/1 -$ NRA O00( (a9/ *2 R,"($&
7!! >! 6! ?! ! !

P,# ,&-

@est

South Aast R,"($&

$bandon my work

#orth

*elay my work

(t can be depicted from 9igure"6 that respondents who reported that #R$ officials will abandon their work if they do not give cash to them were highest in the south at 8 percent. #ext to the south was the north and west where . percent and 76.7 percent

**

of taxpayers gave similar response. The above analysis is a clear indication that staff of #R$ do not strictly adhere to the provision governing acceptance of gift or any hospitality as stipulated in the code of ethics of the $uthority. This implies that decision making by #R$ officials is being influenced which could have its consequences on the mandate of the $uthority. 3.13.6 'a+pa ers> Perception on t"e Acceptance of Gifts b N)A $taff Taxpayers were asked to give their opinion on whether they consider gifts to #R$ staff as acceptable. (n response, ma.ority %,,. F& of the respondents stated that they do not consider this act as acceptable, while offer gifts to #R$ staff. .> percent acknowledged that it is acceptable to

F("%#,5B: P,# ,7-($& $& -1, A

P,# ,&-

,7-a& , $& G(0-/ *2

NRA /-a00
7!! >! 6! ?! ! ! .> ,,.

Ies

#o

R,/7$&/,

Taxpayers who thought that it is acceptable to offer gift to #R$ staff were in greater number % >.!F& in the north. The eastern region followed next where 8., percent of respondents hold similar view as those in the north regarding the offering of gift to #R$ staff. 9igure ", shows that taxpayers in the west who perceived the offering of gift to #R$ as acceptable were very few % !.-F& compared to the other regions. This is a reflection of the fact that taxpayers in the west are better aufait with the processes and procedures of the tax administration in the country compared to those in the other regions. Therefore, respondents in the western area who reported that it is not acceptable to offer gift to #R$ staff were the largest compared to similar responses in the other regions %see 9igure ">& below.

*+

F("%#,5A: P,# ,7-($& $0 Ta;7a2,#/ $& A ,7-a& , $0 G(0- *2 NRA /-a00 *2 R,"($&
,-.7 >! 6! P,# ,&?! ! ! @est South Aast #orth !..8., > ,,.7 ,?." ,

R,"($& Ies #o

5.18

C$&0(',&-(a9(-2 $0 I&0$#)a-($&

(nformation is a very important tool used by the $uthority to conduct its business. (n the course of duty, employees have access to sensitive and confidential information about their clients. 2iven that the public expects their dealings with #R$ to be based on professional values, employees are required to uphold the confidentiality and security of client information, as security of information is critical to the $uthority1s effectiveness and service delivery. $gainst this background, the survey attempted to gauge the perception of the tax paying public on the use of information by #R$ staff. Thus, keeping of information, use of information for private or personal gains, and disclosure of information about clients to third parties by #R$ staff were the key issues investigated. 3.1*.1 Aeeping of 7nformation Respondents were asked to assess #R$ officials regarding keeping of information. 2enerally, taxpayers interviewed considered keeping of information by #R$ officials to be good as reported by over -! percent with an insignificant percent % .6F& who assessed it as poor. (n other words, while 7>.8 percent of respondents assessed keeping of information by #R$ officials as excellent, more than "! percent viewed it to be very goodCgood and , percent assessed it as fair. 9igure "- shows the assessment made by taxpayers about keeping of information.

*/

F("%#, 5?: Ta;7a2,#/J a//,//),&- $& !,,7(&" $0 (&0$#)a-($& *2 NRA O00( (a9/
?! "8 "! 8 ! 78 7! 8 !

P,# ,&-

"?.7

",.>

7>.8 , .7
Axcellent Mery good 2ood R,/7$&/, 9air Boor

!.8
Mery poor

Table "" indicates that more taxpayers in the eastern and #orthern provinces hold the view that #R$ officials keep information very well compared to those in the western area and southern province respectively. 3owever, taxpayers who mentioned that #R$ staff do not keep information well were highest in the south at "." percent and west at " percent compared to less than the percent of similar responses in the north and east.

Ta*9, 55: P,# ,&-a", $0 Ta;7a2,#G/ A//,//),&- $& D,,7(&" $0 I&0$#)a-($& *2 NRA O00( (a9/ Mery @est South Aast #orth Mery

Axcellent good 2ood 9air Boor Boor 7?.7 " .?!.> -. .7 !..8 " ."8., 8.6 " !." 8.6 "?."?.". 7.7 !." . ??." ,.> ? 7., !.!

3.1*.2 =se of 7nformation for Pri3ate or Personal Gain

+'

#R$ strictly forbids employees of the $uthority from the use of information for private or public gain. $ccording to the survey data the assessment made by taxpayers indicates that this rule is being flouted by some employees. $lthough over half of the respondents are of the belief that employees of the $uthority do not use information for private or personal gain, a reasonable percent think otherwise as shown in 9igure ?! below.

F("%#, 80: Ta;7a2,#/J A//,//),&- $& -1, %/, $0 I&0$#)a-($& *2 NRA /-a00 0$# P#(.a-, $# P,#/$&a9 Ga(&
?! "8 "! 8 ! 78 7! 8 !

P,# ,&-

"?.? 7."

76., 6.7
Axcellent Mery good 2ood

76.? 8.7

9air

Boor

Mery poor

R,/7$&/,

(t is apparent from 9igure ?! above that 7.8 percent of the respondents reported that employees of #R$ use information for private or personal gains. This is quite a reasonable number and an indication that some employees of the $uthority do not adhere to this rule. This does not only undermine the $uthority1s professionalism but also impact negatively on its service delivery. $nalysis of the regional data also indicates that a good number of respondents acknowledged that employees of #R$ use information for their private or personal gains. The north had the largest respondents %,,.7F& who hold this view, followed by the east %67.?F&, west %8-."F& and south %?7.-F&. 3owever, some taxpayers hold contrary view regarding the use of information by employees of #R$ %see Table "?&.

Ta*9,58: P,# ,&-a", $0 -a;7a2,#/G A//,//),&- $& -1, U/, $0 I&0$#)a-($& *2 E)79$2,,/ $0 NRA 0$# P#(.a-, $# P,#/$&a9 Ga(&/ R,"($& E; ,99,&- V,#2 "$$' G$$' Fa(# @est ?.7> "6.? !. South ?. -." >.? ?!.> Aast 77 76.> "".6 6.7 #orth > "!. ">.7!.8 P$$# 76.8 7?.8 !.? 7!.8 V,#2 P$$# ? .> 7 .7 7.-

+1

3.1*.3 Disclosure of information about clients to t"ird parties )onsidering the sensitivity of information handled by the $uthority and the confidentiality code of ethics, employees are strongly forbidden to disclose any information about their clients to third parties. Therefore, taxpayers were asked to assess the extent to which this rule is being preserved. The overall responses indicated that ma.ority %,7.8F& of the respondents consented that employees of #R$ do not disclose information about clients to third parties. 9igure ?7 below however shows that a reasonable percent % >.8F& of taxpayers believed that information about clients are being disclosed to third parties by employees of #R$.

F("%#, 81: Ta;7a2,#/J A//,//),&- $& D(/ 9$/%#, $0 I&0$#)a-($& a*$%- C9(,&-/ -$ -1(#' Pa#-(,/ *2 E)79$2,,/ $0 NRA "8 P,# ,&"! 8 ! 78 7! 8 ! Axcellent Mery good 2ood R,/7$&/, 9air Boor Mery poor 6 78 -.> !., 7>., -.>

+2

$ssessment on disclosure of information about clients to third parties was very poor by taxpayers in the east compared to the other regions. This should be noted, as nearly half %?7."F& of respondents in the east are of the belief that employees of #R$ disclose information about clients to third parties. This leads to a breach of the fairness and equity rule of any good tax administration and consequently reduces the level of confidence taxpayers have in the tax system. 3owever, taxpayers who believed that information about client is not being disclosed to third parties were greater in the north %>!.8F& compared to the ,6.- percent in the south, , . percent in the west, and 8>., percent in the east.

Ta*9,5>: P,# ,&-a", $0 Ta;7a2,#/G A//,//),&- $& D(/ 9$/%#, $0 I&0$#)a-($& a*$%- C9(,&-/ -$ -1(#' Pa#-(,/ Axcellent Mery good 2ood 9air Boor Mery Boor @est 8.6 7,." "7. 7>.7 ! ,.> South ?.6 ,.?.6 "-.> 7>. ?.Aast > 7 .? "!.7 >. 7>..? #orth >.? 6 "".> 7 ." -.7 7!.?

5.1>

C$)),&-/ *2 NRA S-a00

Amployees of the #ational Revenue $uthority are cautioned very strongly to be mindful of comments made regarding the administration, the public and government policy. To this end, the survey attempted to find out how taxpayers view comments made by #R$ staffs with respect to the administration, to the public, and to government policy. 3.10.1 N)A !fficials 5omment 2it" )espect to t"e Administration of t"e Aut"orit .

+3

@hen asked how taxpayers interviewed view comments by #R$ officials relating to the administration of the $uthority, ,?., percent viewed it as positive, while ".7 percent remained neutral. 3owever, an insignificant percent % .7F& of respondents viewed comments by officials of #R$ with respect to the administration negatively. This negative perception was held by more taxpayers in the west % .8F& compared to the the east, 7.6 percent in the south, and !.- percent in the north. percent in

9igure ? 4 Taxpayers view of #R$ 0fficials C$)),&-/ =(-1 #,/7, - -$ -1, A')(&(/-#a-($& $0 -1, A%-1$#(-2
7!! >! P,# ,&6! ?! ! ! @est South R,"($& Bositive #eutral #egative Aast #orth

9igure ? above depicts that greater percentage of taxpayers who had a positive view regarding comments by officials of #R$ about the $uthority1s administration are in the south %> . F&, while those who were neutral on this issue were present in the north at "".6 percent more than those in the other regions. 3.10.2 N)A !fficials 5omments 2it" respect to t"e Public Responses regarding #R$ official1s comments with respect to the public revealed that ?>.8 percent of respondents viewed it as positive, while 8., percent were negative. The remaining ?8.> percent of respondents were neutral. :ore taxpayers %8-.?F& were positive about #R$ official1s comments relating to the public in the #orthern Brovince compared to the other regions. Respondents who were neutral on this issue were highest %8,.,F& in the south. 9igure ?" below also shows that taxpayers in the north who viewed comments about the public by staff of #R$ negatively were in greater percentage %>.-F& than the > percent with similar view in the south, 8.8 percent in the west and .6 percent in the south.

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F("%#,85: Ta;7a2,#/J V(,= $& NRA O00( (a9/ C$)),&-/ =(-1 #,/7, - -$ -1, P%*9(
B er ce nt
6! ?! ! ! @est South Aast #orth >!

Region
Bositive #eutral #egative

9igure ?" above indicates that staffs of #R$ are to a large extent mindful about comments regarding the public as stipulated in the $uthority1s code of ethics. 3.10.3 N)A !fficials 5omments 2it" respect to Go3ernment Polic This is another area of significance to the $uthority given the fact that it is a government institution. Staffs are therefore cautioned to be mindful of comments made relating to government policies. To find out whether staffs of #R$ adhere to this rule, taxpayers were asked how they view comments by #R$ officials on government policies. The overall response was quite encouraging as over half %6,.,F& of respondents had positive view on this issue. @hile ,.7 percent were neutral, 8. percent were not satisfied with #R$ officials comment with respect to government policy. The western region recorded the least percent %6".,F& of respondents who viewed comments on government policy by #R$ staff positively compared to similar responses in the south, east and north respectively %see 9igure ??&. $lthough over half of the taxpayers in the north had positive view on this matter, this region recorded the highest percent of respondents with negative view regarding #R$ officials1 comments about government policy compared to the other regions.

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F("%#,88: Ta;7a2,#/J V(,= $& NRA O00( (a9/ C$)),&-/ =(-1 #,/7, - -$ G$.,#&),&- P$9( 2
P,# ,&7!! >! 6! ?! ! ! @est South R,"($& Bositive #eutral #egative Aast #orth

5.1@

D#,// a&' A77,a#a& , $0 NRA O00( (a9/

Service delivery of #R$ is such that a good number of officers relate directly with the tax paying public. Therefore, staffs are required to be tidy at all times especially during office hours. To find out whether this rule is being upheld, respondents were asked to give their views on the dress and appearance of #R$ officials. @hile ?".7 percent of respondents viewed #R$ officials as very tidy, 88. percent viewed them as tidy. 3owever, very few %7.,F& of respondents reported that staffs of #R$ are untidy.

F("%#,8>: Ta;7a2,#/J .(,= $& -1, D#,// a&' A77,a#a& , $0 NRA O00( (a9
F ?"F

88F

Mery Tidy

Tidy

Dntidy

(t is apparent from 9igure?8 above that taxpayers1 perception about the tidiness of staffs of #R$ is very good. Regional analysis shows that all the taxpayers interviewed in the

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east viewed #R$ officials as either very tidy %?-."F& or tidy %8!.,F&. (n other words, no respondent in the east viewed #R$ officials to be untidy. Ta*9, 5@: P,# ,&-a", $0 Ta;7a2,#/J .(,= $& D#,// a&' A77,a#a& , $0 NRA O00( (a9/ Region @est South Aast #orth Mery Tidy ? ." "". ?-." 86.Tidy Dntidy Mery Dntidy 86.8 7.7 !.7 68. 7.6 ! 8!., ! ! "".> -." !

Table "6 shows that taxpayers who viewed dress and appearance of #R$ officials as very tidy were highest in the north, while those with the view that #R$ officials are tidy were highest in the east. $lthough few respondents in the west, south and north reported that #R$ officials are untidy, the western area was the only region that had respondents who viewed staffs of #R$ to be very untidy. 5.1@ NRA O00( (a9/G C$))(-),&- -$ =$#!

Taxpayers were asked to indicate their views on staff commitment to work in the $uthority. 2enerally, >8.7 percent of taxpayers interviewed are of the view that #R$ officials are committed to their work. 3owever, less than ? percent reported that staff1s commitment to work is poor. )omparatively, Table ", shows that more taxpayers in the north viewed staff commitment to work as excellent, while more taxpayers in the south viewed it as very good, and more taxpayers in the west perceived staff commitment to work to be good. Ta*9, 5B: P,# ,&-a", .(,= $& NRA O00( (a9/ $))(-),&- -$ =$#! C,/S$%-1 E; ,99,&- V,#2 G$$' G$$' Fa(# P$$# V,#2 P$$# 7 .7 >.> ?!.6 7?.? ".7 7.7 77.6 ",."-.7 7.6 !.>

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Ea/N$#-1 T$-a9

7." 6.> 7?.-

"!.6 -.7 "7

"-.6 "!.8 "-.

6." -.7 77."

. ".6 .,

! !.!.>

$ccording to data in Table ", above, the north and west recorded the highest percent of respondents who viewed #R$ officials1 commitment to work as poor at ?.8 percent and ?. percent respectively. Responses regarding staff commitment to work in the $uthority were very encouraging, and therefore an indication of the $uthority1s commitment to the achievement of its goals. Respondents were asked to give reason why they view #R$ officials1 commitment to work as excellent, very good, good, fair, poor, or very poor. So many reasons were advanced but the frequently reoccurring ones are presented in <ox > below. B$; A: A--(-%', -$=a#'/ C$#! Axcellent 0 0 0 Mery 2ood 0 0 0 0 0 0 2ood 0 0 0 0 0 0 9air 0 0 0 0 0 #R$ officials always attend to my work #R$ always speed up my work They are focused in doing the .ob They respond to us well They always do my work The officials are always in the position to help They do attend to us quickly They do my work without asking for tip They are always willing to perform their duties #R$ officials are highly trained and qualified The #R$ officials always treat me well They are hard working They only ask us for the tax money ( always meet them in their offices They encourage us to pay They are polite and knows how to talk to people They are trying to some extent They are not committed unless money is given 'et them improve on their ability to attend to people There is no development and there is delay in doing their .ob

++

Boor

0 0 0 0 0 0

( pay tax that does not reflect on my businessCcountry #R$ do not attend to me in time )ommitment to work is low They should come to our shops (mprovement needed in the services they render Some officials delay transaction with taxpayers unnecessarily. Response to work is slow Some staff are very corrupt Some staff delay your work if you don1t give them money :ost staff are not honest

Mery Boor

0 0 0 0

(t is important to note some of the reasons advanced by those taxpayers who viewed staff commitment to work as poor or very poor. :ore needs to be done to improve on integrity of staff in order to ensure that the taxpaying public fully complies with their tax obligations.

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CHAPTER FOUR 8.0: DEY FINDINGS AND RECOMMENDATIONS The report assessed taxpayer1s perception about the tax administration of the #ational Revenue $uthority in Sierra 'eone. $ number of significant findings of this work are presented below4

8.1 D,2 F(&'(&"/ o $lthough quite a significant proportion of taxpayers is said to be able to read and write, only "!." percent have the knack to handle the management of records and personnel. 3ence most of the businesses do not keep proper records of their transactions, making field audit difficult. o <usinesses in the country are dominated %in number& by Sierra 'eoneans. 3owever, the preponderance of Sierra 'eoneans in the sector does not reflect on their influence in the sector. That is, even though they dominate in number, they were found to be engaged in small scale businesses that are less influential in the areas of productivity, trade, economic growth and contribution to tax revenue. o The small fraction of other nationals appeared to be the driving force behind trade, productivity, economic growth and tax payment in the country. They were found to have engulfed %- ." percent& the large and medium size businesses and thus occupy the heart of trade and investment in the country. o (t is evidenct that about 6! percent of the taxpayers at both national and regional level have better knowledge on the need to pay taxes. Taxes are paid for development purpose and as an obligation, are the most perceived reasons for paying taxes. o Result indicates that there is a good spread of tax offices in the country which would ease taxpayers1 transactions. #onetheless, the #R$ should be mindful of the fact that some taxpayers are yet to differentiate the type of taxes #R$

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collects and that of local councils, and also there are intermediaries who discharge tax obligations on behalf of taxpayers. o :ost Taxpayers are ignorant of who and what items benefit from tax exemptions and relief. $mong the beneficiaries stated by respondents, most of them are not within the existing relevant tax codes. o The study revealed that a good number of respondents in the #orthern and @estern part of the country are uncomfortable with tax valuation and are yet to compromise dissents with #R$ tax valuation procedures. o Aven though @estern area is more knowledgeable on the existence of every tax publication, result shows that overall5 tax payers are highly ignorant about the existence of those policies that govern their operations.

o $pparently, respondents obtain little information from sources which could be

official, more credible and educative. @hile obtaining information from #R$ offices is the most frequent and effective source, other frequently obtained sources are very less effective. $lso noteworthy is that, taxpayers frequently obtain information from sources77 which may be unofficial and misleading. o 0n the whole, not even half of those who claimed awareness about the existence of tax publication %#R$ $cts, )ustoms and (ncome Tax $cts& have access to them5 revealing how seriously taxpaying population could be uninformed or misinformed. Taxpayers heavily relied on other sources for tax information other than statutory publications. o The quintessence of creating a communication platform between #R$ and taxpayers is yet to materialise. 9indings show that although #R$ has instituted strategies %suggestion boxes, phone lines etc& that would enhance a better flow of communication nationwide, ma.ority of respondents have never attempted to present their protests through them. $lso, results further indicate that dissent addressing mechanism has been significantly unsatisfactory5 which perhaps
11

4riends& relatives and business partners

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could be a strong reason why respondents had decided not to forward their grievances. o Responses are remarkably positive in assessing services rendered by #R$ to the public. This shows high degree of compatibility with the administrative transformation ob.ective and strategy of the $uthority1s modernisation programme. $lthough the south stands tallest on positive responses, about 7!percent7 of respondents in western area where the greater parts of services are provided and also hosts ma.ority of taxpayers noted that services provided are fair or worse. o Though results at national level are encouraging, apparently there is significant response for little and much improvement in the delivery of the services specified. This situation is more glaring and demanding in the western area where a greater part of the services provided are carried out. This poses a significant bottleneck in fast tracking the transformation operations for revenue mobilisation. :ost of the explanations forwarded in request for improvement in service delivery are on assessment and valuation of goods or businesses. o Results indicate an overwhelming consensus in the prevailing good conduct of staff, which is strongly compatible with #R$ code of ethics. 2iven that staff courteousness is desirous in the sustenance of a good relationship in tax administration, suffices a potent mile stone in achieving #R$ modernisation drive. o :a.ority of the taxpayers are pleased with location of the tax offices all over the country. o (t was revealed that there exists an overwhelming enthusiasm to pay tax amongst taxpayers in the country. $n average of -6.7F respondents answered yes to the willingness to pay tax.

12

!econd worse

/2

$mong those who expressed their unwillingness to pay taxes, a good number %88.6F& singled out high tax rates as the reason for their unwillingness to pay taxes. 0thers advanced factors ranging from inadequate public services %7". F&, misuse of revenue by 2overnment %7!.7F&, multiple tax rates %8. F& right down to lack of trust in tax collectors %78.-F&.

The respondents were asked about which taxes they were least willing to pay. Some %" .7F& said that they are least willing to pay import duties. #ext was sales tax % !.-F& followed by domestic sales tax.

'ocal tax was listed amongst taxes that business people are least willing to pay. 3owever, this tax does not go into the )onsolidated Revenue 9und, and it is not collected by #R$.

$lthough ma.ority of the respondents stated to have trust in #R$ as a revenue collection institution, there were few of them %6.6F& who mentioned that they do not have trust in #R$. @hen asked to give reasons why they distrust the $uthority, the following were common amongst others4 :ost officers of the #R$ are corrupt #R$ collect revenue to develop themselves $ccountability of the office in unknown by the grass root *oes not know how #R$ uses our taxes collected *ue to frequent rumors of corruption

:ost of the responses regarding ethics and standards of staff were very encouraging5 there were few taxpayers %less than 7!F& who rated these ethical standards as low and very low. 0f the above ethical standards, it can be observed that staff professionalism and respectability got the best rating, while fairness and honesty were rated the least. Taxpayers interviewed were asked whether they offer gift or hospitality to tax officials before transaction. (n response, -?." percent reported that they do not offer gift or hospitality to tax officials before transaction. 3owever, 8., percent of

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respondents acknowledged that they do offer gift or hospitality %cash& to tax officials in order to speed up transactions. #R$ strictly forbids employees of the $uthority from the use of information for private or public gain. $ccording to the survey data the assessment made by taxpayers indicates that this rule is being flouted by some employees. $lthough over half of the respondents are of the belief that employees of the $uthority do not use information for private or personal gain, a reasonable percent think otherwise. The overall responses indicated that ma.ority %,7.8F& of the respondents consented that employees of #R$ do not disclose information about clients to third parties. 3owever, a reasonable percent % >.8F& of taxpayers believe that information about clients are being disclosed to third parties by employees of #R$. @hile ?".7 percent of respondents viewed #R$ officials as very tidy, 88. percent viewed them as tidy. 3owever, very few %7.,F& of respondents reported that staffs of #R$ are untidy. 8.3 R, $)),&'a-($&/

<ased on the findings the following are recommended4 1. Ta; ,'% a-($& 2enerally the findings reveal a very frail capacity of taxpayers to classify the different taxes they pay. The situation is more appalling and challenging when over half of those who failed to indicate the type of taxes they pay are found where about two+third of transactions are carried out. This would undermine the essence of categorizing taxpayers by sectors and poses estimation problems on the contributions of various sectors and taxes to revenue generation. #R$ should be more proactive in educating taxpayers through available and widespread radio programmes and .ingles which are cited as most effective sources of

/4

information. #R$ should also ensure a nationwide distribution of tax publications5 as a tool to empower taxpayers with the requisite knowledge that would minimize tax evasion and trigger compliance. . E& $%#a", (&'(",&$%/ *%/(&,//,/ $mong a total of ,?76 respondents, an amount of !!! respondents consented that #R$ should make a reduction in tax rates in order to improve tax compliance. Therefore in order to encourage indigenous businesses, 2overnment should promulgate policies such as reduction in tax rates and types of taxes to attract local businesses. ". I)7#$., /,#.( , ',9(.,#2 #R$ should improve on its service delivery by automating the entire system so as to encourage internet tax assessment and paying. ?. I&-,"#(-2 :ore needs to be done to improve on integrity such as monitoring and verification of assets declared by staff, life style, accountability and conduct of staff within and outside work places.

>.

P#$7,# #, $#' !,,7(&" #R$ in collaboration with :inistry of 9inance and Aconomic *evelopment should conduct training workshops on basic bookkeepingCaccounting skills to teach clients how to keep proper books of accounts. This training should be reviewed on yearly basis.

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