Government spending transparency and tax compliance among informal-sector taxpayers in Tanzania

Asha Ramadhani Jumanne; Joseph Kiria; Juma Buhimila

doi:10.51867/ajernet.7.4.49

Authors

Asha Ramadhani Jumanne Mzumbe University https://orcid.org/0009-0004-4591-265X
Dr. Joseph Kiria Mzumbe University https://orcid.org/0000-0002-0415-423X
Dr. Juma Buhimila Mzumbe University https://orcid.org/0000-0001-5053-6071

DOI:

https://doi.org/10.51867/ajernet.7.4.49

Keywords:

Government Spending Transparency, Government Accountability, Informal Sector, Tax Compliance Behaviour, Trust in Government, Tanzania

Abstract

Tax compliance among informal-sector taxpayers remains a major challenge in Tanzania despite government efforts to broaden the tax base and strengthen domestic revenue mobilisation. Limited visibility of public expenditure, concerns about government accountability, and low trust in government institutions may weaken taxpayers’ willingness to comply with tax obligations. Consequently, this study examined the influence of government spending transparency on tax compliance behaviour among informal-sector taxpayers in Tanzania, focusing on visibility of government expenditure, government accountability, and trust in government. Guided by Equity and Fairness Theory, the study employed a mixed-methods cross-sectional design involving 384 informal-sector business operators in Dar es Salaam, Dodoma, and Morogoro. Quantitative data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM), while qualitative data were analysed using directed content analysis. The findings indicate that visibility of government expenditure positively and significantly affects registration compliance willingness (β = 0.457, p < 0.001), income disclosure intention (β = 0.133, p = 0.002), and tax payment readiness (β = 0.111, p = 0.018). Trust in government also positively and significantly affects registration compliance willingness (β = 0.328, p < 0.001), income disclosure intention (β = 0.505, p < 0.001), and tax payment readiness (β = 0.435, p < 0.001). However, government accountability has no statistically significant direct effect on the three dimensions of tax compliance. Qualitative findings further show that visible public expenditure, clear communication, responsible use of public resources, and trust in government institutions shape taxpayers’ willingness to comply. Therefore, the study recommends strengthening the visibility of public expenditure, improving accountability and communication mechanisms, and building institutional trust to promote voluntary tax compliance among informal-sector taxpayers in Tanzania.

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Author Biographies

Dr. Joseph Kiria, Mzumbe University

School Of Business,Department of Accounting and Finance
Dr. Juma Buhimila, Mzumbe University

Mzumbe University, School of Business, Department of Accounting and Finance

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