CHAPTER 8 SYNTHESIS, CONCLUSION AND RECOMMENDATIONS OF THE
8.4 Implication of findings and Recommendations
This section discusses the implication of the current study to the economy of Tanzania, and stakeholders of the revenue authority.
i.) Economic perspective
In July 2020 the World Bank declared Tanzania as a lower-middle income country. This position occurs for the first time since Tanzania obtained her independence in 1961. It is the focus of Tanzania to meet its next target of progressing to the upper-middle income category of countries. This is achievable through ensuring that the nation expands and improves different economic activities of the country to increase the GDP. The expansion of economic activities depends on numerous factors, including the establishment of critical infrastructure such as those for transportation and sources of power. Furthermore, the government can establish critical infrastructure through adequate funds, which are obtained through revenue collection and other sources.
The current study focused on the relevance of EFDs in tax compliance. Findings showed that the fear of whistle-blowers affects the rate of EFD use. On the other hand, the rate of EFD use affects and determines the perceived level of transparency and the perceived level of fairness in taxation which are important determinants of tax compliance. In this regard, the study provides information of relevance for enhancing the rate of EFD use and
eventually tax compliance. In this context, EFD use will go a long way to enhancing government revenue income emanating from taxation. The ultimate result will be getting adequate revenue to build the infrastructure necessary to boost the national income.
ii.) Implications for stakeholders of the current study
The revenue authority involves different stakeholders in meeting its mandate of collecting tax. These stakeholders include the revenue authority, which represents the government of Tanzania. The revenue authority uses tax officers to carry out its mandate in the taxation process. The first implication of this study is that whistle-blowing as a TRA initiative/effort and its associated incentives is producing the desired results. This is pertinent when the multiplier effect of EFD use is put into consideration. The current study is beneficial to the revenue authority and tax officers because it provides factors for enhancing EFD use and eventually tax compliance in an EFD-enabled environment. The second implication is that the introduction of EFDs is a good initiative by the TRA to promote the fundamental characteristics of a good tax system such as fairness and transparency. Additionally, findings imply that EFD is capable of achieving the intended objective such as accuracy and efficiency in tax management, addressing tax and poor record-keeping. This will eventually simplify the process of tax auditing and revenue collection in general.
The second category of stakeholders in the current study is that of taxpayers. Taxpayers are to use EFDs in making different transactions in their businesses. They enable the system to capture all information necessary for taxation process. The information becomes useful to them in ensuring that the correct tax amount is deducted from their income. By implication, the current study is important because it informs taxpayers that the use of EFDs makes the tax process fair and more transparent to both the TRA and taxpayers.
Policymakers comprise the third category benefiting from the results of the current study.
Policymakers can use the current study to develop policies, which will enable the smooth implementation of EFDs countrywide. For example, they can use the findings to make policies on punishment and its impact to the adoption of EFDs. In addition, they can use the findings to enhance policies that will advocate the use of EFDs, so as to achieve fairness and transparency in the taxation process. Accordingly, they can use the findings to
make policies to enhance transparency and fairness in taxation; factors which are important in ensuring tax compliance.
Researchers form a further category of individuals expected to benefit from the current study. This study adds knowledge to the area of EFD use and tax compliance, especially among small business owners of Tanzania, and related developing economies. This knowledge is the point of reference to future studies.
8.4.1 Recommendations of the Study
This subsection provides recommendations to different tax stakeholders based on findings presented between Chapters 4 and 7. The recommendations are expected to benefit groups such as taxpayers, the revenue authority, policymakers, the general population and researchers.
i.) Taxpayers
Overall, the study focused on collecting data from taxpayers. It was the intention to understand their different perceptions of EFD use and tax compliance. A general observation was that not all taxpayers are comfortable with using EFDs. The recommendation is that taxpayers should deliberately invest effort in making sure that they understand the use of EFDs. Also, the study recommends voluntary compliance to taxation.
ii.) Policymakers
Policymakers are key group of stakeholders of taxation. They make policies guiding the taxation process and tax formula. Policymakers are to know that tax compliance is still a problem since not all respondents in the research were compliant. Furthermore, they have to know that some taxpayers do not value the use of EFDs, which is why they are not compliant. In this regard, policymakers should introduce measures for enhancing compliance, other than punishments or the fear of whistle-blowers.
iii.) Revenue authority
Employees of the revenue authority are key in carrying out the government‟s agenda on taxation. The main recommendation is on creating awareness to taxpayers on the value of EFDs in ensuring a fair taxation process. The revenue authority must equally advocate for
transparency and fairness in the audit process. In this case, EFD use has an impact on these two factors.
iv.) Citizens
Citizens are the clients of different businesses. Part of the money they give as payment for their purchases is deducted as tax, according to the national law. It is unfortunate that there are times where business owners do not want to provide EFD receipts to their customers.
The current study recommends the use of whistle-blowing opportunities, through channels established by the revenue authority, to uncover misconduct by businesses.
v.) The government
The current study recommends that the government should enhance whistle-blowing in other areas of its operations in different entities to increase the rate of use of a system or technology in Tanzania, and other similar developing economies. This will address challenges arising due to the lack of cooperation when it comes to the use of a new technology introduced by government. In addition, the study recommends other government agencies to consider the adoption of relevant technology in operation areas where transparency, fairness and compliance are desirable. Inclusion of other sectors that are not currently captured by EFD use will be a step in the right direction.