The Effects Of Tax Reforms On Tax Productivity Among Middle And Large Taxpayers In Kenya

Abstract

Tax being the main fiscal tool used by government to control economic activities in any country is normally at the heart of every revenue collection agency to better and improve revenues year after year. It is in light of this that the issue of tax reforms comes into consideration. Tax reforms have always since time immemorial played a key role in influencing how various governments improve revenue collections. This study’s objective is to assess the effect of tax reforms on tax productivity in the middle and large payers. This study covered a five-year study period of 2010 to 2015 being the period when drastic reforms measures were introduced key of them being automation in the tax systems among others. In this study, secondary data from KRA website, CBK and the ministry of finance has been used. The collected data was analyzed using multiple Regression model and descriptive statistics. The dependent variable was tax productivity while the independent variables were automation of tax systems, enforcement and compliance and GDP as a control variable. The study findings revealed that the introduction of tax reforms had a positive effect on tax productivity. The tax productivity as measured by tax revenues was better/higher in the period after introduction of tax reforms and thus the study acknowledges the effect of tax reforms in overall tax productivity and suggests introduction of more tax reforms to better tax revenues.