The Effects Of Tax Reforms On Customs Tax Productivity In Kenya
This study was based on customs taxation in Kenya and its response to customs tax reforms. Also, the response of customs tax revenue to economic growth was assessed. The study empirical analysis in order to assess the effects of tax reforms and effects of economic growth on customs tax productivity in Kenya. The first objective was to examine the effect of tax reforms on customs tax revenue in Kenya. The second objective was to evaluate the response of customs tax revenue to economic growth in Kenya. Time series data ranging from 1991 to 2015 was be used in the study. A double log linear model, with customs tax revenue as the dependent variable and GDP, one-year lag in GDP and dummy variable for RARMP tax reforms as independent variables, were used in the analysis. Before estimation of the model, unit root testing and consequently, tests for cointegration were carried out. An error correction model was thereafter adopted in estimation because the variables were found to be cointegrated. The analysis results indicated that the RARMP was insignificant in influencing the custom tax revenues in the country. In addition, logarithm of GDP and its one-year lag were insignificant in influencing the custom tax revenues. The study results reveal that GDP was significant in influencing the total tax revenue but the RARMP was insignificant in influencing the total tax revenue. The policies recommended were; the improvement in custom tax administration in the country, review of RARMP reforms and review of custom tax base.
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