The Effect of Taxpayer Education on Tax Compliance a Case of Selected Small and Medium Enterprises in Katwe Butego Division Masaka Municipalit

Abstract

Taxpayer Education Programs are widely recognized as being very important in any Revenue Authority that calls for success in its daily undertakings. Revenue collected from taxes enables a country to provide services for its citizens and also development of its economy. However, Uganda does not collect as much revenue as it should. SMEs in particular have the potential of generating a lot of revenue for the government but this is not the case. This poses a significant problem to the government and the country’s growth as a whole. Therefore, this study aimed at assessing the effect of taxpayer education on tax compliance in Katwe Butego division, Masaka Municipality. The study objectives included to determine the effect of electronic taxpayer education on tax compliance, to determine the effect of print media tax payer education on tax compliance and to determine the effect of stakeholder sensitization on tax compliance. The study was inspired by the prospect theory by two German psychologists, Konheman and Amos Tversky (1979). The target population was SMEs in Katwe Butego division, Masaka Municipality. Data was collected by administration of pretested questionnaires to the owners of SMEs. Data was analyzed using both descriptive and inferential statistics. The nominal and ordinal data was collected using questionnaires and later subjected to quantitative analysis using Statistical Package for Social Sciences. Data was presented in the form of frequency distribution tables and graphs. The study findings showed that indeed; electronic taxpayer education, print media tax payer education, and stakeholder sensitization, influence tax compliance among SMEs in Katwe Butego division, Masaka Municipality. Correlation Matrix was done to determine the correlation between the independent variables. The results showed that print media taxpayer education had the highest correlation coefficient of 0.944. The study recommended that; there was need to improve on tax compliance in SMEs because they are below average, through intensive tax. For Small and Medium Enterprises to improve their tax compliances, those involved in their tax matters need knowledge and skills to interpret the various tax laws and regulations. Tax compliance procedures should be simplified because in most cases they are found to be very complicated by SMEs, especially for those who do not keep proper books of account and sometimes do not understand the tax laws in order to reduce the compliance costs in terms of money and time. Small and Medium Enterprises should be levied lower amounts of taxes. The government should consider increasing tax incentives and exemptions. Reduce compliance costs, curb corruption, and improve on accountability and accessibility of Uganda Revenue Authority service

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