| Abstract: | Introducing internal revenue generating projects particularly tax administration is very important to reduce dependence on foreign aid and borrowing in developing countries. The study was conducted on analysis of tax administration effectiveness regarding Education & knowledge, Government policy, Authority capacity,& Tax fairness of Arada sub city. the study raised major research questions related to tax assessment, collection, government policy, tax fairness, education and knowledge of both tax payers and employees, and authority capacity. To achieve this objective the researcher used in depth interview with selected tax authority in Arada sub city. the researcher also distributed self-administered semi structured questionnaires to category “A” tax payers found in Arada sub city.. In order to address the questions, descriptive research method and convenience and purposive sampling were employed to gather data. And to achieve the objectives 50 samples were taken. The information gathered witnessed that certain factors were found to be the main constraints or challenges faced in respect of tax administration in Arada dub city among this: there exist inefficiency and insufficient number of tax assessment and collection in the Arada sub city, the sub city doesn’t have sufficient and modern facilities, employees doesn’t provide the exact service promised, employees of the sub city are not business oriented, employees are not fair and accountable for the decisions they make in their areas of responsibilities, and the tax payers doesn’t get adequate training on how to use sales register machine. Moreover, most taxpayers lack sufficient knowledge of tax assessment and collection procedures. Thus, most of taxpayers do not know why they are paying taxes; what types of taxes are expected from them; and the applicable rules and regulations. Due to this, negligence, delay in tax payment is taken by taxpayers as solution to escape from payment of taxes |
