Effect of debt management strategies on revenue collection in Kenya Revenue Authority
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Date
2019
Authors
Sheikh, Ibrahim Umukaltuma
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
In Kenya, high tax debt limits the government’s capacity to raise revenue required for recurrent expenditure purposes and development. Besides the increasing needs for financial resources, tax compliance remains low. The KRA is currently faced with the challenge of enhancing its tax collection efforts, henceforth; the authority has adopted different debt management strategies such as tax penalties, tax collection by suit and tax waivers. Despite the authority’s efforts, the country’s tax debt has been increasing over the years. Thus, the current research sought to investigate the impact of debt management strategies on revenue collection in KRA. The specific objectives of the study were to determine the effect of tax penalties, tax collection by suit and tax waivers on revenue collection in KRA. The research used an explanatory research design. The target area of interest was all the 58 staff working in KRA, West of Nairobi station as well as 27 clients served in a day.Stratified random sampling technique was employed for a representative sample selection. The size of the sample was 42 respondents while the needed data for this research was retrieved from primary and secondary sources. The researcher obtained the data from KRA annual reports while the questionnaires were used to collect primary data. The research instrument generated quantitative and qualitative data. Qualitative data analysis was coded thematically for ease of understanding and presented in prose form. Descriptive and inferential statistics were adoptedfor analysis of quantitative data through the aid of statistical package for social sciences (SPSS version 22). Descriptive statistics comprised of mean, frequency distributions, standard deviation and percentages. Graphs and tables were used to present the findings for easy understanding and comparison purposes. The researcher made use of a correlation and regression models to deduce the existing association between the dependent and independent variables of study. The research showed that tax penalties significantly affected revenue collection in KRA. The also established that tax collection by suit significantly affected revenue collection in KRA. The results also revealed that tax waiver significantly affected revenue collection in KRA. The research recommends that KRA should develop user friendly revenue collection system, appropriate regulations and rules and increase human capital to enhance tax compliance which ultimately results to improvement in revenue collection. Moreover, the study found that the KRA should offer continuous onjob training, coaching and mentoring as well as outdoor training to enhance its staff competency skills consequently leading to improvement in revenue collection. Further, the research showed that the study recommends that the KRA should streamline waiver process, encourage the use of iTax platforms and adopt favorable tax waiving policies so as to encourage debt payment thus improving on revenue collection.
Description
PROJ 336.2009 UMU
Keywords
Tax penalties, Tax waiver