| dc.description.abstract | This study focused on the problem of bridging fiscal deficits by carrying out an analysis of the revenue producti vity of the Kenyan tax system. It used time. series data on . Kenya for the period between 1964 and 2002. A theoretical model was [developed based on Total Tax Revenue and on each tax source namely: Import duty, Other indirect taxes, Income tax, Excise duty, and Sales taxN alue added tax.
The Augmented Dickey Fuller test was used to test for stationarity of the variables in focus. The variables were found to be integrated of order one, Cointegration tests were carried out using the Engel Granger Two-step Procedure. The variables were found to be co integrated implying existence of long-run relationships. Error correction models were specified using Ordinary Least Squares. These models were subjected to various diagnostic tests.
The study applied the concepts of elasticity and buoyancy to determine whether the tax system was productive in meeting the revenue needs of.the country and bridging the chronic deficits in the country. Elasticities and buoyancies were computed for the total tax system and the various tax base sources. The Kenyan tax system was found to be productive with Total Revenue having a buoyancy that was greater than unit.
All the other tax sources, except Excise Duties, were found to be productive with a buoyancy that was greater than unity. The current revenue profile of thei nation was found to be sustainable to ensure optimal level of expenditure that facilitates formulation of fiscal policies that overcome the deficit. Lastly, Income tax was found to be the most productive component of the tax structure. | en_US |
