Effect Of Tax Administration Reforms On Tax Collection At The Kenya Revenue Authority

Abstract

This study aimed at evaluating the effect of tax administration reforms on tax collection at the Kenya Revenue Authority. Specifically, the study determined the effect of internal processes reforms, taxpayer segmentation reforms, staff welfare reforms and tax audit reforms on tax collection in Kenya. Kenya’s tax regime experienced several failures in their attempt to raise the level of taxes leading to many unsuccessful tax reforms as proposed by World Bank as well as the Kenya government. However, the studies did not point out tax administration reforms as key to improved tax performance. Therefore, a gap exists in this field of study that can be filled through a Kenyan study. The researcher therefore wanted to establish the effect of tax administration reforms on tax collection at the Kenya Revenue Authority. The study was anchored on Wagner’s law of increasing state activity theory which advocates for increased public expenditure for economic growth. However, this will not be possible without funds. Therefore, the government must raise enough revenues to support the public expenditures. Wagner’s law of increasing state activity was also supported by Peacock and Wiseman theory of public expenditure as well as Clark’s critical limit hypothesis. These theories also advocate for increased taxation to finance the public expenditure. Similarly, both Lindhal’s and Pigou’s models of taxation were inculcated as both try arguing for the limits of state activity as well as tax burden seeking an equilibrium for expenditure versus revenue collection. In order to achieve the study objectives, the researcher adopted a descriptive research design. A sample of 128KRA staff was selected using stratified sampling technique. Data was collected using structured questionnaire through a drop-and-pick method. The data collected was analyzed using descriptive statistics and multiple regression analysis with the help of Statistical Package for Social Scientists (SPSS, ver.20). The findings from the study were that internal processes reforms and taxpayer segmentation reforms had a negative effect on tax collection at the Kenya Revenue Authority while staff welfare reforms and tax audits reforms had a significant and strong positive effect on tax collection at the Kenya Revenue Authority. The study recommends for further research in this field and advice government policy makers to investigate on why tax reforms have not achieved the intended purposes in Kenya.