The influence of social norms and tax system on tax compliance

Mutatembwa, William (2013) The influence of social norms and tax system on tax compliance. Masters thesis, The Open University of Tanzania.

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Abstract

Governments derive its major part of revenue from tax. A tax is compulsory and mandatory contribution to the government from its subjects. It is mandatory to the sense that there is a legal document giving the government the mandate to collect such contribution. Imposition of tax, therefore, creates a tax liability upon those who are liable to pay the imposed tax .A tax liability is always expressed in monetary terms, and it is worth noting here that any monetary liability creates burden. Although it is said that the only things certain in life are death and taxes it is unmistakable that taxes are far from inevitable .Individuals do not like paying taxes and they take variety of actions to reduce their tax liabilities. The problem of tax compliance is as old as taxes themselves. Therefore this explains that tax non compliance started when taxes started. Non tax compliance is a serious problem that cannot be studied and understood by simple analysis. This was the basis for the researcher to investigate how social norms and tax system influence the level of tax compliance among small and medium taxpayers in Tanzania Specifically in Tanga city using descriptive and correlation analysis. Data was collected from representative sample of 108 small and medium taxpayers in Tanga city under categories of retailers, wholesalers, manufactures and service providers. Using descriptive and correlation analysis for components of social norms and tax compliance, tax system and tax compliance and lastly social norms and tax system it was determined that there is positive relationship between the selected components of social norms and tax compliance, tax system and tax compliance and lastly social norms and tax system The study concludes that, there is significant existence of positive relationship between social norms, tax system and tax compliance.

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