Challenges Facing Revenue Collection Using Electronic Payment System In Tanzania

Governments worldwide need resources in form of revenues to perform various functions both social and economic activities.Tax is the main source of revenue for any government and taxes are compulsory payments to government without expecting direct benefit or return by the tax payer.Tanzania Revenue Authority has been facing various challenges which make it not to attain the projected targets in order to meet the target the Authority introduced electronic payment system-Electronic Fiscal Device(EFD).However,this study aimed to assess the challenges facing the use of electronic payment system such as Electronic Fiscal Device(EFD)in tax collection in Tanzania.Tax collection challenges to most of the developing countries like Tanzania are often worsened by poor revenues collection.The use of electronic payment system has been proved by many developed countries to be the best way of accruing revenue but this practice has been attributed by major challenges like low skilled personnel and illiteracy rate in IT and other challenges in Tanzania since its implementation.In Tanzania the system to a great extent assisted in sealing loopholes of tax evasion in Tanzania.The system had also assisted in improvement on tax compliance.The study established that the Authority is still experiencing some resistance to change from both internal and external customers.The study used the explanatory case study method to get to know individuals in their natural surroundings and obtain reflective understanding of what things are happening the way they do.Data was obtained from observation and partial structured interviews of 120 participants.Out of 120 respondents give the question,only 89 responded and returned the questionnaire.It was found,that the trend of revenue collection started going higher after TRA have started using electronic payment systems especially from 2010.Thus,through major findings of the study;it has been indicated that electronic payment system(EFD system)had a lot of challenges which hinder the revenue collection and these challenges include lack of a reliable and accessible internet service,lack of adequate financing to set up the appropriate infrastructure in tax offices,challenges of intermittent power supply,ICT knowledge among taxpayers seems to be very low since very few taxpayer can use the system,Lack of enough awareness among tax payers here most of the tax payer they have a little knowledge on taxation issues and challenge that were identified by the user were Management challenges whereby they complain that some of the TRA Staff they are corrupt and complicate the process of getting any help lastly the breakdown of system anytime seems to be another challenging issue where by the system can collapse any time without any notesAlso,the findings showed that TRA tax collectors agreed that the use of modern technology has eased tax revenue collection but still face low skilled personnel on the use of the electronic payment system.The study recommends that stakeholders need more awareness of the system and friendly environment of using electronic payment system and IT workshops for TRA workers should be encouraged to further improve the efficient use of electronic payment systems which will boost revenue and increase economic growth.