Effects of Tax Policy Reforms on Tax Compliance of Family Owned Business in Mombasa County
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Date
2020-11
Authors
Ngima, Catherine
Journal Title
Journal ISSN
Volume Title
Publisher
KESRA/JKUAT - Unpublished research project
Abstract
This study sought to investigate the effect of tax policy reforms on tax compliance of family owned businesses in Mombasa County. The study sought to address the following specific objectives; to examine the effect of tax administration reforms on tax compliance of family owned businesses in Mombasa county, to examine the effect of tax enforcement reforms on tax compliance of family owned businesses in Mombasa county and to examine the effect of technological reforms on tax compliance of family owned businesses in Mombasa county. The study was anchored on three theories; Economic Deterrence Model, fiscal psychology model and the Allingham and Sandmo theory. The research adopted descriptive research design. The target population of this study comprised of 48,187 family owned businesses. Stratified sampling was used to select the sample size of 382 from the different business/activity sectors. This study used questionnaires with fixed choice formats, as well as interviews as the main data collection instruments. A pilot study was undertaken on 10 of the respondents to test the reliability and validity of the questionnaire. Quantitative data were analyzed using SPSS version 25 where relationships between the variables were assessed using correlation and regression analysis. Stratified sampling technique was used to select the sample size of 382 from the different business/activity sectors. Simple random sampling was then used to select the sample. Both primary and secondary data were collected. The questionnaires were the primary tools used for collection of data where they were self-administered by the researcher and response of 309 was obtained. A pilot study was undertaken on 10 of the respondents to test the reliability and validity of the questionnaire. Quantitative data were analyzed using SPSS version 25 where relationships between the variables were assessed using correlation and regression analysis. The study found out that there was a positive and significant relationship between tax administration reforms and tax compliance. Further, the results revealed that there was a positive and significant relationship between tax enforcement reforms and tax compliance. Lastly, there was a positive and significant relationship between technological reforms and tax compliance. Based on the findings, the study concluded that tax administration reforms, tax enforcement reforms and technological reforms have a positive and significant effect on tax compliance. The study recommends emphasis should be increased on improving tax administration to broaden the tax base so that existing tax rates can be reduced without affecting government revenues. There is need for a well-functioning tax enforcement system to increase tax compliance, tax audits and tax assessment. In embracing new technological reforms, KRA should keep in mind their primary purpose of improving taxpayer compliance and adopt new technologies in a systematic manner that supports their business direction and compliance initiatives.
Description
Project
Keywords
Tax Compliance, Tax Enforcement, Tax Reforms, Tax Avoidance, Family Business