Effect of Customs System Automation on Revenue Collection Performance

Abstract

The study assessed the effect of customs system automation on revenue collection performance in Kilimanjaro, Tanzania. Specifically, it examined the impact of integrated cargo management technologies on customs revenue performance, the influence of capacity building on customs revenue collection performance, the moderating effect of capacity building on the relationship between integrated cargo management technologies and customs revenue collection performance, and the challenges faced during the transition from traditional to automated customs systems in Tanzania. A cross sectional research design was used to collect data from 141 sampled customs officials and clearing agents who were selected using random sampling and cluster- sampling technique from customs stations in Kilimanjaro. Self-administered survey questionnaire and interviews were used as methods for data collection. Descriptive statistics, content analysis and multiple linear regression model were used to analyse data. Findings indicated that customs system automation, particularly through electronic cargo tracking systems, positively affects compliance rates by improving transparency, accountability, and traceability, while cargo scanner technology and cargo valuation systems have limited influence. Compliance is influenced by various factors, including training, enforcement, regulations and monitoring. The extensive use of electronic tracking systems may negatively impact transparency, necessitating additional measures such as effective governance, monitoring, and controls. Capacity building efforts, including collaboration, risk management, and staff training, significantly contribute to compliance rates and revenue collection performance, although the impact on transparency may vary depending on the context. Challenges during the transition from traditional to automated systems, such as system breakdowns, political will, and staff shortages. Thus concluded the influence of electronic cargo tracking systems on customs compliance. However, challenges persist, necessitating complementary measures for effective governance and capacity building. Therefore, the study recommends that the Tanzania Revenue Authority (TRA), the Customs Department, industry associations, and relevant stakeholders prioritize the implementation and utilization of electronic cargo tracking systems, along with investing in cargo scanner technology, the cargo valuation system, comprehensive controls, governance mechanisms, training programs, collaboration, information sharing, risk management practices, transparency measures.