Improving Municipal Revenue Outcomes Through Tax Awareness: Strengthening Compliance for Better Collection Performance

Abstract

This study assessed the relationship between Local Business Tax (LBT) awareness and municipal collection efficiency in the Municipality of Oras, Eastern Samar for Calendar Year 2025, with declared gross sales treated as a mediating variable. Using a descriptive–correlational design and total enumeration of 394 active registered businesses, data were obtained from a structured awareness survey and municipal administrative records on declared gross sales and collection efficiency indicators. Results show that the local business sector is predominantly micro enterprises (95.94%) and largely sole proprietorships (95.18%), with most registrations classified as renewals (84.26%). Overall LBT awareness was moderate-to-high (M = 3.26, SD = 0.68), with higher familiarity in payment procedures and documentation requirements and comparatively lower understanding of technical areas such as the legal basis, business classification, and gross sales computation. Declared gross sales exhibited a right-skewed distribution, with most establishments clustered in the lowest declared sales bracket (≤ ₱400,000), a modest share in the middle bracket (₱400,001–₱1,000,000), and only a few in the highest brackets (above ₱1,000,000), reflecting the municipality’s micro-enterprise economy. Correlation and mediation analyses indicate that LBT awareness is positively associated with declared gross sales (r = .28, p < .001) and collection efficiency (r = .21, p < .001), while declared gross sales is strongly related to collection efficiency (r = .44, p < .001). Mediation results confirm partial mediation, indicating that improved awareness contributes to better collection efficiency partly through more credible gross sales declarations. The findings support the need for targeted taxpayer education and standardized municipal procedures focused on classification and computation under Republic Act No. 7160, Section 143 to strengthen declaration quality and improve revenue administration outcomes.