Abstract:
The main objective of this study is to analysis the challenges of tax revenue collection by Jimma City Administration Revenue Authority in Jimma town. Both quantitative and qualitative research design were adopted. The research used secondary data which was obtained from the yearly financial report in respect of the total tax revenue collected and plan from the direct and indirect taxes for the period of 2006-2012. The population of the study constitutes Tax revenue official and category “C” tax payer in sub-city one. Three kebele tax payers, and tax office Departments were selected. The major findings shows thatno trust of tax payer'sstatement caused by poor communication and understanding between the tax authority and taxpayers and over taxation as result of over estimation of daily/annual income and lack of fairness or equity of taxation among similar businesses of category ”C” and On the other hand, the study found out that there is taxpayer resistance, low tax morale on part of the citizenry, low level of literacy rates of taxpayers using technology and the findings suggest that improving staff integrity while increasing taxpayers versus JCARA administrative capacity in terms of IT requirements and authority and likewise challenge of availability of low level of literacy rates to taxpayers regarding the utilization of technology in paying taxes and the respondent argued in avoidance of tax evasion which the use of legal means to reduce one’s tax liabilities while tax evasion is the use of illegal means to reduce the tax liabilities. More over the findings from the study indicated that, the sample respondents of category ‘C’ taxpayers have negative perceptions of exchange fairness, procedural fairness, horizontal fairness, compliance fairness, simplicity and the administrative capacity of the tax and recommendation, government to ensure that equal taxes are levied on individuals who have equal income and authority must also actively involve taxpayers or their representatives while estimating the daily sales and the authority build, the enhancement of taxpayer education on tax laws and procedures, building public support and effective publicity through various ways such as media is important for the facilitation of voluntary tax compliance
