The Effect Of Itax System On Revenue Collection In Kenya

Abstract

The success of the country largely hinges on the amount of revenue collected. Considering that much of the revenue of the Kenyan government is generated from taxes, the efficiency of the tax system results in enhanced revenue collection and hence availability of resources by the government to its citizens such as providing employment opportunities, and enhanced infrastructure. Kenya revenue authority being the organization delegated to collect revenue, ensures procedures and reforms that increase it revenue collection. The -Tax system has therefore been adopted to improve revenue collection through increasing tax compliance, and closing of tax leakages through tax evasion. i-Tax system was launched in October 2011 in a bid to increase efficiency and ensure better compliance with tax law. I-Tax system is a web enabled application that gives taxpayers the convenience of filing returns and registering tax payments from the comfort of their homes or offices. The broad objective of the study was to establish the effect of i-Tax system on revenue collection in Kenya. A descriptive research design was undertaken in order to establish the differences in the revenue collected between the two periods that is before and after i-Tax system. An inferential statistic was carried out involving a correlation analysis in order to ascertain the reliability of the data collected to describe the relationship between the variables of interest in the study and a consequent test of the research hypothesis. This study collected secondary data obtained from published material and information from annual reports and published data. The data obtained was quantitative. Descriptive and inferential statistics were employed in data analysis with the help of Ms Excel software. Descriptive statistics included measures of central tendency (mean and standard deviation). Paired t-test was used as an inferential statistic. The collected data was analysed through descriptive statistics. The study established that the mean and standard deviation of revenue collected before i-Tax system was lower than that of revenue collected after i-Tax system had been implemented that is 421.36 and 821.52, there was a double increase. It also concluded from the bar graph that there was a gradual fluctuation in the amount of revenue collected after i-Tax system than before i-Tax system. I-Tax actually has an effect to revenue collection as according to the t-test there is significance in correlation between tax collected before i-Tax system and after i-Tax system implementation with a very strong correlation of 0.978678726 and a regression on economic growth (GDP) and revenue collected. Based on the research findings and the analysis it was recommended that more access should be increased that is stabilizing the internet to all areas and increase the number of centres. The government should also increase connectivity in all operations to enhance compliance.