Effects Of Debt Collection And Inflation On Revenue Collection

Abstract

Taxation has proved to be the main source of funds through which the government of Kenya normally gets revenue to finance both current and developments expenditures. There has been a gradual growth in the domestic revenues mobilized by the Country Taxman over the past few years following improvement in the debt management practices and general improvement in the performance of the economy. However, there has been a growth in the deviation between actual revenue collections against revenue targets in each and every financial year attributed by noncompliance, nil and non-fillers problem. It is due to these reasons that the KRA needs to embrace business optimization and increase revenue enhancement strategies in order to revamp the tax gap. The taxpayers normally exhibit the tendency of being inefficient in following up on tax debts and this has been the reason as to why the debtors have become demotivated to clear their tax dues which has consequently led to widening of the tax gap. The prime purpose of this study was to assess the impact of debt management tools on revenue mobilization at Kenya Revenue Authority. In order to accomplish the purpose successfully, relevant data had to be collected from relevant secondary sources such as the corporate plan manuals and got analyzed using Statistical Packages for Social Sciences(SPSS) version 20 in order to establish the relationship between debt collection, inflation and Tax collection. Results of the study found that inflation and debt collection were statistically significant to revenue collection. Both tests were carried out at 5% level of significance.