Taxpayers views Ethiopia

Wollela A. Yesegat

Addis Ababa University, Ethiopia and

Odd-Helge Fjeldstad ICTD and Chr. Michelsen Institute

ICTD Annual Mee-ng, December 7-‐9, 2014, Arusha, Tanzania

}  Tax revenue performance is poor (≈ 13% of GDP)

}  Important to understand taxpayers compliance behavior

}  Tax compliance attitudes affect actual

compliance behavior (Torgler 2001)

}  Assess the association between views of paying taxes and factors that determine tax compliance attitudes


}  Survey covering 500 businesses in Addis Ababa

}  The survey used a five point Likert scale ranging from Strongly agree=1 to Strongly disagree=5

}  Dependent variable: }  Compliance attitude measured by responses to the

question “How frequently do you think taxpayers evade taxes in Ethiopia?”

}  Responses range from very frequently=1 to never=5


}  Independent variables: ◦  Perception of audit, penalty and rates ◦  Perception of others’ compliance decision ◦  Discrimination by the government (tax adm.) ◦  Perception of government services ◦  Corruption in the tax administration ◦  Trust in government (tax administration) ◦  Satisfaction with tax adm. procedures & practices ◦  Business size and sector ◦  Age, sex and education of respondents


}  Dependent variable (compliance attitude) takes values 1=very frequently; 2=frequently, 3=not so often; 4=sometimes and 5=never

}  Considering the ordinal nature of the dependent variable, we used ordered probit model

}  Wald test results show that the regression is statistically significant (P-value = 0.0000)


Ø  Marginal effects were calculated; Oprobit regression results.doc

Ø  Results show statistically significant association

between compliance attitude and: Ø  Perception of audit (+) Ø  Penalty (-) Ø  Others’ compliance (+) Ø  Satisfaction with the tax administration procedures (-) Ø  Corruption (+) Ø  Gender

Ø  Results show negative relation b/c compliance attitude and education


}  Observations: ◦  The role of enforcement measures

◦  The importance of addressing issues in the tax administration and also building positive attitude

}  Important to examine why education is

negatively related with compliance attitude


Thank you!

Comments and suggestions are very welcome


Taxpayers views Ethiopia

Government & Nonprofit

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