Tax reforms and revenue mobilization in Kenya
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Date
2003-05-02
Authors
Moses Kinyanjui Muriithi
Eliud Dismas Moyi
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
One of the key objectives of tax reforms in Kenya was to ensure that the tax system could
be harnessed to mitigate the perpetual fiscal imbalances. This would be achieved through
tax policies intended to make the yield of individual taxes responsive to changes in national
income. In addition, it was expected that the predominant taxes in the revenue would be
those with highly elastic yields with respect to national income (or proxy bases). This
study applies the concepts of elasticity and buoyancy to determine whether tax reforms
in Kenya achieved these objectives. Elasticities and buoyancies are computed for the
pre-reform period as well as the post-reform period. Evidence suggests that reforms had
a positive impact on the overall tax structure and on the individual tax handles. In fact,
the elasticity of indirect taxes was low and that of direct taxes was high, especially after
the reforms. Despite this positive impact, the reforms failed to make VAT responsive to
changes in income, although VAT was predominant in the tax structure.
Description
HC 800 . A1 A342 2003
Keywords
Tax - Kenya , Revenue - Kenya