Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi

Ndemo Alfonce Mosomi

doi:doi:10.11648/j.ijefm.20150305.25

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Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi

Ndemo Alfonce Mosomi

Published in International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 5)

Received: 17 September 2015 Accepted: 19 October 2015 Published: 30 October 2015

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Abstract

The study sought to investigate the determinants of tax efficiency perceptions by domestic taxpayers in Kenya with emphasis on Nairobi. To increase the amount of revenue, the government has in the recent past introduced excise duty on mobile money transfer, seen VAT bill passed and operationalized with campaigns to encourage Kenyans to pay taxes. The big issue in the study was that Kenya’s tax system was characterized by low efficiency, high collection charges, waste of time for taxpayers and the staff, low amounts of taxes raised and deviation of optimum allocation of resources. The specific objectives for the study were to determine the effect of given factors on tax efficiency such as the digitization of tax records to ensure transparency and credibility of records; implementing integrated tax collection system to credibly consolidate revenues by various Kenya Revenue Authority agencies to ensure proper accounting for taxes raised by the agencies; organizational restructuring by increasing the number of offices and agents of tax collection to make it easy to collect taxes and embracing electronic payment methods to make it easy for taxpayers to make payments. To meet the research objectives, a descriptive research design was used to gather information on the understanding of tax, challenges encountered in paying and collecting taxes and ways of enhancing efficiency. A linear regression model was used together with SPSS software for data analysis giving t-statistic values of 4.527, 3.346, 8.159 and 8.086 for digitization, organization restructuring, electronic methods and integrated system respectively all of which were greater than two meaning that the variables were statistically significant in explaining tax efficiency. The coefficients for digitization, organization restructuring, electronic methods and integrated system were 0.297, 0.204, 0.348 and 0.302 respectively. All of them being positive meant that there was positive relationship between each independent variable and the dependent variable, tax efficiency. The study recommended that Kenya Revenue Authority should educate taxpayers on matters to do with Kenyan tax system; seek to raise more revenue from the informal sector; increase the number of tax collecting offices and agents in some specific areas that have income generating activities; simplify the electronic payment methods and implement an integrated tax system.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 5)
DOI	10.11648/j.ijefm.20150305.25
Page(s)	541-545
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Domestic Taxes, Integrated Tax Collection System, Electronic Payment System, Digitization, Organization Restructuring, Tax Efficiency

References

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[2]	Moyi, E., and Ronge, R. (2006), “Taxation and tax modernization in Kenya: A diagnosis of performance and options for further reforms,” Nairobi: Institute of Economic Affairs.
[3]	Muriithi, M., and Moyi, D. (2003), “Tax reforms and revenue mobilization in Kenya,” African Economic Research Consortium Research Paper No 131, pp.130-134.
[4]	Wawire, N. W. (2003), “Trends in Kenya’s tax ratios and tax effort indices and their implication for future tax reforms,” In Illiera E.V. (Ed). Egarton Journal 4, pp.256-279.
[5]	Wawire, N. W. (2006), “Determinants of tax revenues in Kenya,” Unpublished Ph.D. thesis. Nairobi: Kenyatta University.
[6]	Wawire, N. W. (2011, March), “Determinants of value added tax revenue in Kenya,” In proceedings of the 11^th Tax Mobilization Conference, Nairobi, Kenya.
[7]	Farzbod, J. (2000), “Investigation of the effective factors in the tax efficiency,” Unpublished M.A. thesis. Tehran: Governmental Management Training Center.
[8]	Ole, A. M. (1975), “Income elasticity of tax structure in Kenya: 1962/63-1972/73,” Unpublished M.A research Paper. Nairobi: University of Nairobi.
[9]	Osoro, N. E. (1993), “Revenue productivity: Implications of tax reforms in Tanzania,” Africa Economic Research Consortium Research Paper no. 20, pp.71-75.
[10]	Osoro, N. E. (1995), “Tax reforms in Tanzania: Motivations, directions and implications,” Africa Economic Research Consortium Research Paper no. 38, pp.53-59.
[11]	Ariyo, A. (1997), “Productivity of the Nigerian tax system: 1970 – 1990,” African Economic Research Consortium Research Paper no. 67, pp.57-58.
[12]	Okech, T., and Mburu, P. (2011), “Analysis of responsiveness of tax revenue to changes in national income in Kenya between 1986 -2009,” International Journal of Business and Social Science Vol. 2 No. 21 [Special Issue – November 2011].
[13]	Shahroodi, S. M. (2010), “Investigation of the effective factors in the efficiency of tax system,” Unpublished M.A. Thesis. Tehran: Shahroud Industrial University, Faculty of Industrial Engineering and Management.
[14]	Wilford, S.D. and Wilford, W.T. (1978), “Estimates of revenue elasticity and buoyancy in Central America: 1955- 1974,” In Toye, J.F.J (Ed.), Taxation and Economic Development. London: Frank Cass & Co. Ltd. Pp. 83 - 100.
[15]	Kusi, N. K. (1998), “Tax reforms and revenue productivity in Ghana,” African Economic Research Consortium Research Paper no. 74, pp.62-67.
[16]	Milambo, M. (2001), “Elasticity and buoyancy of the Zambia tax system,” Unpublished M.A. Research Paper. Nairobi: University of Nairobi.
[17]	Njoroge, J. W. (1993), “Revenue productivity of tax reforms in Kenya 1972/73-1991/92,” Unpublished M.A. Research Paper. Nairobi: University of Nairobi.
[18]	Nyandieka, K. M. (2013), “Impact of tax reforms on revenue productivity in Kenya,” Unpublished M.A. Research Paper. Nairobi: Kenyatta University.
[19]	World Bank (2012), “Kenya: A policy agenda to restore growth,” Washington D.C: The World Bank.
[20]	Government of Kenya (GoK) (2013), “Economic recovery strategy for wealth and employment creation, 2013–2017,” Nairobi: The National Treasury.

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Ndemo Alfonce Mosomi. (2015). Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi. International Journal of Economics, Finance and Management Sciences, 3(5), 541-545. https://doi.org/10.11648/j.ijefm.20150305.25

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ACS Style

Ndemo Alfonce Mosomi. Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi. Int. J. Econ. Finance Manag. Sci. 2015, 3(5), 541-545. doi: 10.11648/j.ijefm.20150305.25

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Ndemo Alfonce Mosomi. Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi. Int J Econ Finance Manag Sci. 2015;3(5):541-545. doi: 10.11648/j.ijefm.20150305.25

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@article{10.11648/j.ijefm.20150305.25,
  author = {Ndemo Alfonce Mosomi},
  title = {Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {5},
  pages = {541-545},
  doi = {10.11648/j.ijefm.20150305.25},
  url = {https://doi.org/10.11648/j.ijefm.20150305.25},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150305.25},
  abstract = {The study sought to investigate the determinants of tax efficiency perceptions by domestic taxpayers in Kenya with emphasis on Nairobi. To increase the amount of revenue, the government has in the recent past introduced excise duty on mobile money transfer, seen VAT bill passed and operationalized with campaigns to encourage Kenyans to pay taxes. The big issue in the study was that Kenya’s tax system was characterized by low efficiency, high collection charges, waste of time for taxpayers and the staff, low amounts of taxes raised and deviation of optimum allocation of resources. The specific objectives for the study were to determine the effect of given factors on tax efficiency such as the digitization of tax records to ensure transparency and credibility of records; implementing integrated tax collection system to credibly consolidate revenues by various Kenya Revenue Authority agencies to ensure proper accounting for taxes raised by the agencies; organizational restructuring by increasing the number of offices and agents of tax collection to make it easy to collect taxes and embracing electronic payment methods to make it easy for taxpayers to make payments. To meet the research objectives, a descriptive research design was used to gather information on the understanding of tax, challenges encountered in paying and collecting taxes and ways of enhancing efficiency. A linear regression model was used together with SPSS software for data analysis giving t-statistic values of 4.527, 3.346, 8.159 and 8.086 for digitization, organization restructuring, electronic methods and integrated system respectively all of which were greater than two meaning that the variables were statistically significant in explaining tax efficiency. The coefficients for digitization, organization restructuring, electronic methods and integrated system were 0.297, 0.204, 0.348 and 0.302 respectively. All of them being positive meant that there was positive relationship between each independent variable and the dependent variable, tax efficiency. The study recommended that Kenya Revenue Authority should educate taxpayers on matters to do with Kenyan tax system; seek to raise more revenue from the informal sector; increase the number of tax collecting offices and agents in some specific areas that have income generating activities; simplify the electronic payment methods and implement an integrated tax system.},
 year = {2015}
}

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TY  - JOUR
T1  - Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi
AU  - Ndemo Alfonce Mosomi
Y1  - 2015/10/30
PY  - 2015
N1  - https://doi.org/10.11648/j.ijefm.20150305.25
DO  - 10.11648/j.ijefm.20150305.25
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
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PB  - Science Publishing Group
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AB  - The study sought to investigate the determinants of tax efficiency perceptions by domestic taxpayers in Kenya with emphasis on Nairobi. To increase the amount of revenue, the government has in the recent past introduced excise duty on mobile money transfer, seen VAT bill passed and operationalized with campaigns to encourage Kenyans to pay taxes. The big issue in the study was that Kenya’s tax system was characterized by low efficiency, high collection charges, waste of time for taxpayers and the staff, low amounts of taxes raised and deviation of optimum allocation of resources. The specific objectives for the study were to determine the effect of given factors on tax efficiency such as the digitization of tax records to ensure transparency and credibility of records; implementing integrated tax collection system to credibly consolidate revenues by various Kenya Revenue Authority agencies to ensure proper accounting for taxes raised by the agencies; organizational restructuring by increasing the number of offices and agents of tax collection to make it easy to collect taxes and embracing electronic payment methods to make it easy for taxpayers to make payments. To meet the research objectives, a descriptive research design was used to gather information on the understanding of tax, challenges encountered in paying and collecting taxes and ways of enhancing efficiency. A linear regression model was used together with SPSS software for data analysis giving t-statistic values of 4.527, 3.346, 8.159 and 8.086 for digitization, organization restructuring, electronic methods and integrated system respectively all of which were greater than two meaning that the variables were statistically significant in explaining tax efficiency. The coefficients for digitization, organization restructuring, electronic methods and integrated system were 0.297, 0.204, 0.348 and 0.302 respectively. All of them being positive meant that there was positive relationship between each independent variable and the dependent variable, tax efficiency. The study recommended that Kenya Revenue Authority should educate taxpayers on matters to do with Kenyan tax system; seek to raise more revenue from the informal sector; increase the number of tax collecting offices and agents in some specific areas that have income generating activities; simplify the electronic payment methods and implement an integrated tax system.
VL  - 3
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Author Information

Ndemo Alfonce Mosomi

School of Business and Management, KCA University, Nairobi, Kenya

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Ndemo Alfonce Mosomi. (2015). Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi. International Journal of Economics, Finance and Management Sciences, 3(5), 541-545. https://doi.org/10.11648/j.ijefm.20150305.25

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ACS Style

Ndemo Alfonce Mosomi. Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi. Int. J. Econ. Finance Manag. Sci. 2015, 3(5), 541-545. doi: 10.11648/j.ijefm.20150305.25

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AMA Style

Ndemo Alfonce Mosomi. Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi. Int J Econ Finance Manag Sci. 2015;3(5):541-545. doi: 10.11648/j.ijefm.20150305.25

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@article{10.11648/j.ijefm.20150305.25,
  author = {Ndemo Alfonce Mosomi},
  title = {Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {3},
  number = {5},
  pages = {541-545},
  doi = {10.11648/j.ijefm.20150305.25},
  url = {https://doi.org/10.11648/j.ijefm.20150305.25},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150305.25},
  abstract = {The study sought to investigate the determinants of tax efficiency perceptions by domestic taxpayers in Kenya with emphasis on Nairobi. To increase the amount of revenue, the government has in the recent past introduced excise duty on mobile money transfer, seen VAT bill passed and operationalized with campaigns to encourage Kenyans to pay taxes. The big issue in the study was that Kenya’s tax system was characterized by low efficiency, high collection charges, waste of time for taxpayers and the staff, low amounts of taxes raised and deviation of optimum allocation of resources. The specific objectives for the study were to determine the effect of given factors on tax efficiency such as the digitization of tax records to ensure transparency and credibility of records; implementing integrated tax collection system to credibly consolidate revenues by various Kenya Revenue Authority agencies to ensure proper accounting for taxes raised by the agencies; organizational restructuring by increasing the number of offices and agents of tax collection to make it easy to collect taxes and embracing electronic payment methods to make it easy for taxpayers to make payments. To meet the research objectives, a descriptive research design was used to gather information on the understanding of tax, challenges encountered in paying and collecting taxes and ways of enhancing efficiency. A linear regression model was used together with SPSS software for data analysis giving t-statistic values of 4.527, 3.346, 8.159 and 8.086 for digitization, organization restructuring, electronic methods and integrated system respectively all of which were greater than two meaning that the variables were statistically significant in explaining tax efficiency. The coefficients for digitization, organization restructuring, electronic methods and integrated system were 0.297, 0.204, 0.348 and 0.302 respectively. All of them being positive meant that there was positive relationship between each independent variable and the dependent variable, tax efficiency. The study recommended that Kenya Revenue Authority should educate taxpayers on matters to do with Kenyan tax system; seek to raise more revenue from the informal sector; increase the number of tax collecting offices and agents in some specific areas that have income generating activities; simplify the electronic payment methods and implement an integrated tax system.},
 year = {2015}
}

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TY  - JOUR
T1  - Determinants of Tax Efficiency Perceptions by Domestic Taxpayers in Kenya: The Case of Nairobi
AU  - Ndemo Alfonce Mosomi
Y1  - 2015/10/30
PY  - 2015
N1  - https://doi.org/10.11648/j.ijefm.20150305.25
DO  - 10.11648/j.ijefm.20150305.25
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 541
EP  - 545
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20150305.25
AB  - The study sought to investigate the determinants of tax efficiency perceptions by domestic taxpayers in Kenya with emphasis on Nairobi. To increase the amount of revenue, the government has in the recent past introduced excise duty on mobile money transfer, seen VAT bill passed and operationalized with campaigns to encourage Kenyans to pay taxes. The big issue in the study was that Kenya’s tax system was characterized by low efficiency, high collection charges, waste of time for taxpayers and the staff, low amounts of taxes raised and deviation of optimum allocation of resources. The specific objectives for the study were to determine the effect of given factors on tax efficiency such as the digitization of tax records to ensure transparency and credibility of records; implementing integrated tax collection system to credibly consolidate revenues by various Kenya Revenue Authority agencies to ensure proper accounting for taxes raised by the agencies; organizational restructuring by increasing the number of offices and agents of tax collection to make it easy to collect taxes and embracing electronic payment methods to make it easy for taxpayers to make payments. To meet the research objectives, a descriptive research design was used to gather information on the understanding of tax, challenges encountered in paying and collecting taxes and ways of enhancing efficiency. A linear regression model was used together with SPSS software for data analysis giving t-statistic values of 4.527, 3.346, 8.159 and 8.086 for digitization, organization restructuring, electronic methods and integrated system respectively all of which were greater than two meaning that the variables were statistically significant in explaining tax efficiency. The coefficients for digitization, organization restructuring, electronic methods and integrated system were 0.297, 0.204, 0.348 and 0.302 respectively. All of them being positive meant that there was positive relationship between each independent variable and the dependent variable, tax efficiency. The study recommended that Kenya Revenue Authority should educate taxpayers on matters to do with Kenyan tax system; seek to raise more revenue from the informal sector; increase the number of tax collecting offices and agents in some specific areas that have income generating activities; simplify the electronic payment methods and implement an integrated tax system.
VL  - 3
IS  - 5
ER  -

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