Influence of Perception of Corruption on Tax Compliance Among Manufacturers in Makadara Sub-County in Nairobi County
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Date
2022-09-01
Authors
Isaiah, Gitonga Nyaga
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
In Kenya, both electronic and print media have continuously reported many incidents of corruption, cases of public spending wastage and high perception of corruption in the government. Corruption in the government institutions including KRA cannot be ruled out. As a result, the government and the Authority have adopted mechanisms for addressing this problem in order to reduce the perception of corruption. The mechanisms were clearly spelt out in the KRA 7th Corporate Plan for the period 2018/19-2020/21 under the theme of ‘Integrity Programme’. The Authority aimed at reducing Corruption Perception Index (CPI) to bolster its
corporate image and improve on tax compliance. The CPI increased from 32% in 2017 to 39%
in 2019, while it reduced to 34.2 % in FY 2020/21. This was contrary to the expectations that it would have reduced with 10% by the end of FY 2020/21. Several corruption surveys undertaken by the Authority have established that contrary to expectations, the CPI had increased (KRA, 2019; KRA 2021). Based on the above observations, the researcher initiated this study with an aim of establishing how perception of corruption influences tax compliance the among listed members of KAM in Makadara Sub- County, Nairobi County. The study was carried out among Members of KAM in Makadara sub–County in the County of Nairobi. Makadara Sub County was purposively selected as it hosts most of the industries (166 or 29.5
% of the 562 listed by KAM in the County) were located there. The study utilized both primary data and secondary data. Simple Random sampling techniques was used and sample size of 116 members was selected from the target population of 166 manufacturers. The instrument used for data collection were Questionnaires which were distributed to the sampled respondents while secondary data was gotten from the public sources, library, internet and KAM office among other sources. The study achieved a response rate of 85.3% (99 respondents of 116 responded). The results were tested for reliability using the Cronbach’s alpha which was estimated at 0.826 (86.2%). Analyses was done using Excel and SPSS tools and results
presented using descriptive and inferential statistics. The results of this study showed that the overall Corruption Perception Index among the KAM members was 1.06 (35.2%), at the range of 0 to 3. This value shows a moderate corruption levels in KRA. From measures of corruption indices analyzed, Corruption Practice Index was found to be 1.01 or 33.7%, Corruption Pressure Index at 0.87 or 29.0%, Corruption Spread Index at 1.09 or 36.3% while the future corruption index was 1.25 or 41.7%. These indices point to moderate levels of corruption in KRA. In addition, the findings of the study showed that corruption pressure, Magnitude of corruption and future expectation of Corruption had a significant contribution to tax compliance (p-value = .023 , P <.001, and .012 respectively). However, the result show that the p-value for corruption practices, 0.163, is greater than 0.05 significant level. The study recommends that KRA need to address the existing forms of corruption by tightening the anti corruption measures envisaged in the 8th KRA Corporate Plan.
Description
Tax Administration
Keywords
Tax Compliance