Assessing the Effectiveness of Government Electronic Payment Gateway on Internal Local Government Authorities' Revenue Collection in Tanzania:

Abstract

Government Electronic Payment Gateway (GePG) has been proven by numerous studies to have a potential influence on internal government revenue collection. However, existing studies did not investigate in detail the effectiveness of government electronic payment gateways in internal revenue collection by local government authorities, as a large proportion of LGAs are facing a problem of low revenue collections and funds to meet social services' rising needs. This study assessed the effectiveness of the GePG system on LGA's internal revenue collection in Tanzania. Secondary data for a period of 42 months was used, consisting of 21 months before GePG and 21 months after GePG, and a quantitative approach was used. A multiple linear regression model was employed with regression results of 86.01% R square (R2) before GePG and 84.40% R square (R2) on the model after the GePG implementation. At the 5% level of significance, the model before GePG was introduced was positive-related, with a P-value of less than 5% level of significance for tour operator fees, business licences, bus stand charges, fines and penalties, and hotel levy and insignificance on service levy, while after GePG implementation, the P-value was less than 5% level of significance for tour operator fees, business licences, bus stand charges, fines and penalties, and hotel levy and insignificance on service levy, but improved compared with before. It is concluded that the introduction of GePG is useful for effective LGA internal collection. Therefore, the study recommended that the government should increase the tour operator fee, service levy, business licensee, bus stand charges, fines and penalties, and hotel levy to enhance revenue under LGAs.