EFFECTS OF POLITICAL RISK FACTORS ON TAX REVENUE IN KENYA

Autor/innen

  • Manyanza Rhodah Mueni Department of Applied Economics, School of Economics, Kenyatta University, P.O Box 43844 -00100, Nairobi, Kenya
  • Nelson H. Wawire Department of Applied Economics, School of Economics, Kenyatta University, P.O Box 43844 -00100, Nairobi, Kenya
  • Perez A. Onono Department of Applied Economics, School of Economics, Kenyatta University, P.O Box 43844 -00100, Nairobi, Kenya

DOI:

https://doi.org/10.46827/ejefr.v5i1.1068

Schlagwörter:

tax revenue, democratic accountability, bureaucracy quality, internal conflict

Abstract

A broad range of tax reforms have been implemented in Kenya in the post-independence period with the objective of increasing tax revenue for promoting economic growth with reduced reliance on external funding. Most of the reforms have targeted broadening of the tax base. However, tax collections remain inadequate, and deficits have persisted. Past studies on tax revenue growth have looked at effects of foreign sector, stage of development, demographic factors and sectoral mix on tax revenue. The models used in those studies did not factor in political risk factors including democratic accountability, bureaucracy quality and internal conflict. Such factors can have significant direct or indirect influence on tax revenue. This study estimated tax revenue models with these factors captured using data for the period 1984 to 2016. The findings show that increase in bureaucracy quality and democratic accountability lead to increase in tax revenue. Efficiency of institutions is shown to enhance tax collections during periods of social strife suggesting the presence of displacement and inspection effect. Internal conflicts are shown to cause declines in tax revenues. The government of Kenya and its revenue authority should therefore strengthen the quality and efficiency of institutions and effective control measures on acts of civil war, terrorism and civil disorder alongside the tax reforms to increase tax revenues. JEL: H20; H21; H25

Article visualizations:

Hit counter

Autor/innen-Biografien

  • Manyanza Rhodah Mueni, Department of Applied Economics, School of Economics, Kenyatta University, P.O Box 43844 -00100, Nairobi, Kenya
    Rhodah Mueni Manyanza is a lecturer of Economics specializing in Public Sector Economics, International Economics, Planning and Evaluation in the School of Economics of Kenyatta University. She has eight years’ experience in teaching and research at the university level. She holds a PhD in Economics and M.A (Economics) from Kenyatta University. She has carried out research on topics of taxation policy and investment.
  • Nelson H. Wawire, Department of Applied Economics, School of Economics, Kenyatta University, P.O Box 43844 -00100, Nairobi, Kenya
    Professor Nelson H. W. Wawire is a Full Professor of Economics specializing in Macroeconomics, Monetary Policy, Public Sector Economics, Project Appraisal, Planning and Evaluation and Women Economic Empowerment. He has over 28 years’ experience in teaching, researching, consulting and offering community services at the University level. He is a reviewer for various International Journals, a resource person for the African Economic Research Consortium and a consultant for the World Bank, Centre for Global Development, and Government ministries and Departments. He has carried out research and published 41 articles, 8 books, 10 book chapters, five Policy briefs and two Country Notes on a wide range of topics and themes including but not limited to monetary policy, fiscal policy, Small Medium Enterprises, health economics and project evaluation.
  • Perez A. Onono, Department of Applied Economics, School of Economics, Kenyatta University, P.O Box 43844 -00100, Nairobi, Kenya
    Dr. Perez Ayieko Onono is a Senior Lecturer with 12 years of university teaching experience in the department of Applied Economics at the School of Economics of Kenyatta University. She is also the Dean of the School of Economics. She holds a PhD in Economics, and M.A (Economics) from Kenyatta University, Post Graduate Diploma in Education (PGDE) from Maseno University and BSc. in Agricultural Economics from Egerton University. Dr. Onono is an active consultant and researcher with a wide range of training and research experience in areas related to Human Development and Poverty analysis, Agricultural policy analysis, Agricultural productivity analysis, Taxation policy and fiscal decentralization¬¬.

Literaturhinweise

Abdalaziz, M. (2012). Measuring taxable capacity in Libya. Doctoral dissertation. University of Gloucestershire.

Acemoglu, D., & Robinson, J. A. (2006). Economic backwardness in political perspective. American political science review, 100(1), 115-131.

Ade, M., Rossouw, J., & Gwatidzo, T. (2018). Determinants of tax revenue performance in the Southern African Development Community (SADC). Economic Research Southern Africa, ERSA working paper 762.

African Development Bank, (2010). Domestic Resource Mobilization for Poverty Reduction in East Africa: Uganda Case Study. Regional Department East Africa (OREA). November.

African Development Bank [AfDB], Organization for Economic Cooperation and Development [OECD] & United Nations Development Programme [UNDP], 2016). African Economic Outlook 2016. Sustainable Cities and Structural Transformation. Paris: OECD Publishing., No. 6(1), 21-37.

Aloo, L. O. (2017). Free Movement of Goods in the EAC. In East African Community Law (pp. 303-325). Brill Nijhoff.

Bahl, R. W. (1971). A regression approach to tax effort and tax ratio analysis. Staff Papers, No. 18(3), 570-612.

Bird, R. M., Martinez-Vazquez, J., & Torgler, B. (2008). Tax Effort in Developing Countries and High-Income Countries: The Impact of Corruption, Voice and Accountability. Economic Analysis and Policy, No. 38(1), 55-71.

Botlhole, T. D. (2010). Tax Effort and the Determinants of Tax Ratio in Sub-Sahara Africa. An International Conference on Applied Economics–ICOAE. No. 110-113.

Chelliah, R. J. (1971). Trends in Taxation in Developing Countries, IMF Staff Papers, No. 2 (18), 254-325.

Clark, C. (1945). Public finance and changes in the value of money. The Economic Journal, No. 55(220), 371-389.

Ehrhart, H. (2011). Assessing the relationship between democracy and domestic taxes in developing countries. https://halshs.archives-ouvertes.fr/halshs-00553607; Accessed 21-08-2019.

European Union, (2010). An assessment of the response to the 2008- 2009 drought in Kenya. A report to the European Union Delegation to the Republic of Kenya

Gandhi, V. (1987). Tax reform: some considerations and limits (Lessons from experiences of developing countries). Seminar paper, University of the West Indies, St Augustine, Trinidad, November 1987.

Ghura, D. (1998). Tax Revenue in Sub-Saharan Africa: Effects of Economic Policies and Corruption. IMF Working Paper 98/135. Washington: International Monetary Fund.

Gupta, A. S. (2007). Determinants of Tax Revenue Efforts in Developing Countries, IMF Working Paper, No: WP/07/184 (July).

Howard, M. (2001). Public Sector Economics for Developing Countries. Canada. University of West Indies Press.

Javid, A. Y., Arif, U., & Arif, A. (2011). Economic, political and institutional determinants of budget deficits volatility in selected Asian countries. The Pakistan Development Review. 50(4) 649-662.

Karingi S., Wanjala, B., Nyamunga, J., Okello, A., Pambah, E. and Nyakang’o, E. (2005). Tax reform experience in Kenya. Kippra Working paper, No.13. Nairobi. Kenya Institute for public policy research and analysis.

Kenya Institute for Public Policy Research and Analysis (KIPPRA) (2006). Lessons from Kenya's tax reforms experience. Policy Brief No. 10. Nairobi: Kenya Institute of Public Policy Research and Analysis.

Muriithi, M. K. & Moyi, E. D. (2003). Tax Reforms and Revenue Mobilization in Kenya, AERC Research Paper 131, Nairobi: AERC

Muthoga, S. K. (2003). Determinants of Foreign Direct Investment (FDI) in Kenya. Unpublished Master’s Project. Kenyatta University.

Onono, P. (2016). Economic Effects of Inter-Community Conflicts in Kenya: Evidence of the Importance of Peace in the Realization of Sustainable Development. International Journal of Cooperation & Development. 3(2): 118-129

Organization for Economic Cooperation and Development [OECD] (2015). Examples of Successful DRM Reforms and the Role of International Co-operation. Discussion Paper, July.

Peacock, A. T., & Wiseman, J. (1961). Front matter, the growth of public expenditure in the United Kingdom. In The growth of public expenditure in the United Kingdom (pp. 32-0). Princeton. Princeton University Press.

Shin, Y., & Schmidt, P. (1992). The KPSS stationarity test as a unit root test. Economics Letters, 38(4), 387-392.

Shoup, C. S. (1957). Ricardo and Taxation. Finanz Archiv/Public Finance Analysis, (H. 1), 1324.

Sriyana, J. (2011). The effect of budget deficit shock on government spending: an empirical case in Indonesia. International Journal of Business and Development Studies. 3(1) 41-58.

Stotsky, J. G. & Wolde Mariam, A. (1997). Tax Effort in Sub-Saharan Africa. Washington, DC. IMF Working Paper.

Tanzi, V. (2001). Creating effective tax administration; the experience of Russia and Georgia. Pp. 53–74 in Kornai, Haggard, and Kaufman (2001)

Teera, J. M. (2003). Could Do Better: An Appraisal of Uganda’s Tax performance relative to Sub-Saharan Africa’. Online: University of Bath: www.bath.ac.uk/cpe/workingpapers/Uganda-tax performance.pdf.

Wawire, N. H. W. (1991). An Empirical Assessment of Tax Performance in Kenya: 1958 - 1989, M.A Research Paper, Kenyatta University.

Wawire, N. H. W. (2006). Determinants of Tax Revenues in Kenya, Unpublished PhD Thesis, Kenyatta University.

Wawire, N. H. (2016). Analysis of Income Tax System Productivity in Kenya. Amity Journal of Economics. 1(2), (1-8)

Wawire, N. (2017). Determinants of value added tax revenue in Kenya. Journal of Economics Library, 4(3), 322-344.

Downloads

Veröffentlicht

2021-05-20

Ausgabe

Bd. 5 Nr. 1 (2021)

Rubrik

Articles