Demographic Factors Influencing Tax Collection In Kenya

Abstract

Tax collection is essential to a country’s capability to finance public goods and services due to the expansive number of needs. However, developing economies such as Kenya are registering, low level of tax collection, significantly compromising economic development. This has prompted the Government of Kenya to seek for ways of increasing tax collection through legislation and amendments to the tax laws. However, the tax collection has not sufficiently supported the country’s revenue collection objective. Most of the challenges facing tax collection are associated with certain demographic factors. Despite the wide array of literature on demographic factors affecting tax collection, there is no conclusive evidence of age, gender, taxpayer education and income level being determinants of tax collection in Kenya. The available empirical literature yields mixed results flawed with a lot of inconsistency; a knowledge gap this study identified. This research sought to identify the demographic factors influencing tax collection in Kenya and specifically to; establish the effect of income level on tax collection in Kenya, establish the effect of education level on tax collection in Kenya, assess the effect of age on tax collection in Kenya and ascertain the effect of gender on tax collection in Kenya. The research adopted a descriptive research design using quantitative approach. Its target population were the taxpayers in Nairobi County between the years 2008 and 2018. The study used census, a non-probability method, for its sampling since the data was readily accessible and to ensure homogeneity. Secondary data was gathered from the Kenya National Bureau of Statistics and Kenya Revenue Authority websites for period between the year 2008 to 2018. Data was analyzed with the help of STATA 13 to yield descriptive statistics (frequencies, mean, standard deviation, minimum, maximum, percentage as well as inferential statistics). The study revealed that at 5% significance: income level has a statistically significant positive effect on tax collection in Kenya, level of education has a statistically significant positive effect on tax collection in Kenya, age significantly affects tax collection in Kenya, and gender has a statistically significant positive effect on tax collection in Kenya with the females contributing slightly more than the males. The study recommends that Kenya Revenue Authority in collaboration with the Government of Kenya should; understand taxpayers’ motivation, design its taxpayer education programs, concentrate much of their effort in creating awareness on the benefits of tax to the Kenyan youth: friendly tax compliance policies those that do not hurt the youths, and carry out a nationwide tax awareness and education targeting males.