CHAPTER FIVE
SUMMARY, DISCUSSION, CONCLUSION AND RECOMMENDATIONS
This chapter focuses on the discussion of the findings of the study and their relation to the research objectives the summary of the ideas developed from the findings of the study, conclusion with final remarks on the findings and their significance on the research topic, recommendations derived from the findings and areas for further study.
The findings of the data analysis in chapter four is discussed in this section. The section contains three parts. The first part describes the frequency distribution of five demographic characteristics of the respondents in this study. The second part presents the results of the descriptive statistical analysis of the research variables of tax compliance and tax administration (Tax education, tax registration, tax assessment and tax compliance costs). The last part is the result of regression analysis between tax compliance cost and tax compliance among SMEs in Lira municipality.
5.2. Demographic characteristics
The study considered five demographic characteristics including the gender of the respondents, age, education level of the respondents, Nature of business and number of years spent in business by the respondents. Majority of the respondents were male (54.3%) while the rest were female (45.7%). This could imply that many business operators in SMEs are male as many females are more into business of home managers. Most of the respondents (28.3% and 27.2%) were in the age brackets 26-35 years.
Again, the majority of the respondents had Ordinary level certificates and (28.3%) while few had just University degree (13.9%). The implication is that majority of the respondents had general education. Does level of general education translate or fix a person with tax knowledge? This may not be so. It is tax education that fixes a person with tax knowledge. However, general education may prepare a person to get a better understanding of tax laws through tax education.
5.2.1 Summary of major findings
5.2.1 Relationship between tax education and tax compliance among SMEs in Lira Municipality
The findings revealed a negative significant relationship between tax awareness and tax filing and tax reporting since their respective p-values (0.039 and 0.018) are less than 0.05. Tax awareness is not significantly associated with tax payment since their p-value (0.820) is greater than the significant value of 0.05.
Tax education channels used by Uganda Revenue Authority is seen to have a significant positive relationship with tax filing and tax reporting. This relationship is supported by their p-values (0.04 and 0.036) being less than the significant level of 0.05. But this is not significantly associated with tax payment, since the p-value between them is 0.079 which is greater than 0.05.
Additionally, positive significant relationship exist between the skills of the tax enforcers and tax filing and tax reporting of the tax payers. Their significant relationships are supported by their p-values 0.025 and 0.004 which are less than the significant level of 0.05. This implies that the tax payers tend to develop other means of evading taxes if they are not approached well and sensitized to comply with the tax laws and tax compliance.
5.2.2 Relationship between tax registration and tax compliance
The findings revealed that identification of legal tax payers was established to be statistically significant and positively correlated to tax compliance (tax filing, tax reporting and tax payment) at 99% level of significance.
Identification of legal tax payers is significantly associated with tax compliance (tax filing, tax reporting and tax payment) since their p-values (0.000, 0.001, 0.002) are less than the significant level 0.01 (1%) respectively.
Issuing Tax Identification Number (TIN) is significantly related with tax compliance (tax filing and tax reporting). This is because their p-values (0.000 and 0.003) are less than 0.01. This is not statistically significantly associated with tax payment as shown by its p-values (0.240) which is greater than 0.01.
While assessing the relationship between location and addresses of tax payers and their tax compliances in terms of tax filing, tax reporting and tax payment, it is evidenced from the that location and identification of tax payers is significantly related to all the three components of tax compliance (tax filing, tax reporting and tax payment) , since their p-values (0.000, 0.000 and 0.000) are less than 0.01 respectively.
5.2.3 Tax assessment and tax compliance
The findings also revealed that tax assessment components (record keeping, skilled personnel of URA on tax assessment, information requirement by tax payers and tax assessment methods used by URA) are seen to have a significant relationship with tax compliance (tax filing, tax reporting and tax payment). Their significances are backed by their respective p-values which are 0.000, 0.016 and 0.012 which are less than the 0.05.
It can also be seen that among the four components of tax assessment (record keeping, skilled personnel of URA staff , information requirement by tax officers and tax assessment methods used by URA), information requirement needed by the URA officers during the assessment have high positive correlation with tax compliance .
5.2.4 Tax compliance cost and Tax compliance
Tax compliance cost was used to evaluate its effect on tax compliance. The findings in table 10 indicate that, cost of compliance has a positive effect on tax compliance and it does have a significant predication on tax compliance since its p-value (0.000< 0.05). Therefore, a unit increase in the cost of filing a return would lead to an increase in the compliance rate on average by 20%. This implies that tax payers who incur cost of hiring tax consultants in filing and assessing tax payable would always be compliance on average by 0.20, other than their counterparts who don’t invest in tax consultants.
5.3 Discussions of major findings of the study.
5.3.1 Relationship between tax education and tax compliance
The first objective of the study was to examine the relationship between tax education and tax compliance among SMEs in Lira Municipality. The study confirms that there is a negative significant relationship between tax awareness and tax filing and tax reporting. Implying that a decrease in tax awareness will mean a fall in tax compliance. Therefore when most of the tax payers fail to know the techniques of manipulating the loopholes in the tax law, their compliance in tax reporting and filing will reduce significantly.
Tax awareness is not significantly associated with tax payment implying that knowing tax matters does not imply paying the taxes due to the tax payers, but rather motivation to pay taxes.
It is also evidenced that the relationship is negligible or very weak between tax awareness and tax filing as well as tax reporting although significant in this study.