iTax and Revenue Collection By Kenya Revenue Authority In Western Region, Kenya

Abstract

Efficiency and accountability in taxation systems has heightened the clamour for modernization of tax systems across the globe. However, despite the introduction of iTax in Kenya, the Kenya Revenue Authority still continues to post revenues short of the treasury targets. The current study sought to establish the effect of iTax implementation on revenue collection in Western Region, Kenya. The study employed a correlational research design which was longitudinal in nature as the study covered a period of five years. The study was guided by the following objective; to establish the effect of iTax on revenue collection in Western Region, Kenya. The current study was underpinned by The Neo-Classical theory, and the Unified Theory of Acceptance and Use of Technology. This study made use of secondary data obtained from the tax collections by KRA’s western regional offices covering the periods 2012-2016 calendar years. Event study methodology was used to determine abnormal variations in revenue collected before, during and after the implementation of iTax. Data gathered was coded and tabulated to facilitate analysis using quantitative statistical packages for social sciences (SPSS) version 20. Descriptive statistics included percentages and measures of central tendency. Paired t-test was used to establish any significant differences in revenue collection before, during and after the implementation of iTax. The study established that iTax implementation led to an increase in the variability of the revenue return for the periods during, and after the implementation of iTax. In particular, iTax implementation had a positive effect on the average quarterly revenue collection for the period during and after its implementation. The findings suggest no significant difference in the revenue collected in the Year 2012 (M= 1.1144 and SD=0.17161) and the year 2013 (1.1728, SD= 0.20067; t=- 1.141, p=0. 337). Nonetheless, there was a significant difference in the revenue collected before the implementation of iTax (M=1.1436, SD=0.17955) and during the implementation of iTax (M= 1.9126 and SD= 0.35404; t=- -7.436, p=0.005). In addition, there was a significant difference in the revenue collected during the implementation of iTax (M= 1.9126; SD= 0.35404) and after the implementation of iTax (M= 2.7182; SD= 0.29157; t=- --4.863, p=0.017). Furthermore, there was a significant difference in the revenue collected before the implementation of iTax (M= 1.1436; SD= 0. 17955) and after the implementation of iTax (M= 2.7182; SD= 0.29157; t= -15.093, p=0.001). There was also significant increase in abnormal revenues after iTax implementation (M= 0.8460 billion; SD= 0.33091; t=7.760; p=0.004) over the period prior to its implementation (M= 0.00001; SD=0.17142. In sum, iTax improves revenue collection. Revenue collection in Kenya has increased partly because of the introduction of iTax as envisaged by the findings of the current study. As such, it’s imperative for the Kenya Revenue Authority to develop strategies to increase the number of taxpayers who embrace the iTax system through training and marketing.