In Kenya, tax revenues make up to 80% of the government’s budgetary resources with a negligible proportion coming from grants and loans owing to the stringent conditionalities adopted as part of Structural Adjustment programmes (SAPs) imposed on the Kenyan government in the 1990s by International monetary Fund (IMF) and the World Bank (Muriithi and Moyi, 2006). Government use taxation to raise revenues to cover their expenditures on the provision of social goods and services, to regulate the level of spending in the economy, redistribute income among the populace and control imports into the country (Wilkinson, 2007).
Different taxation methods are used to create a tax base which forms a pool that the tax authority can tap thereby placing a tax burden on the populace. Kenyan tax system is, however, often characterized by increasing number of non compliance among the small taxpayers and as a result of this the government has started to focus reforms specifically tailored to the SMEs so as to improve the level of compliance in Kenya. The most critical challenge to reforms is the presence of large untaxed informal sector causing high levels of revenue leakage. It is estimated that in the financial years 2000/01and 2001/02, only 65 percent to 69 percent of income tax revenue was collected by KRA (KIPPRA, 2004).
The puzzle of the economic theory as to why people evade taxes has extensively been discussed since Allingham and Sandmo (1972) strongly based their theory on economic crime theory; that the extent of deterrence, as a product of being detected and the size of fines imposed determines the level of compliance. The probability of being detected is shaped by the shared knowledge among categories of taxpayers and any deterrent measu...
... middle of paper ...
...ow compliance level among the small businesses in Kenya.TOT is a final tax levied at 3% of turnover and is payable quarterly on or before the 20th of the month immediately following the quarter. In its 4th corporate plan, KRA noted that whereas introduction of TOT was anticipated to “reduce the administrative burden of the small taxpayers and broaden the tax base in the informal sector”, it failed to achieve its 2008/2009 baseline value of 5,000 newly registered TOT taxpayers and Kshs.131 million in collections (KRA 4th
Corporate Plan). Tax reforms initiatives that have so far been undertaken in Kenya have chiefly focused deterrence and curing shortcomings created by the complexities in the tax code, the high tax burden and the high cost of filing returns and paying tax without addressing the problems that are created by lack of equity and fairness in the tax system.
Kenya is in a malnourished area, so the farmers should sell their produce more locally for better improvements
Our current system of taxation is a varied rate percentage based on different income brackets. Many say that it violates our constitutional rights through unequal taxation. Multiple deductions, loopholes, special rates, and a complex system of regulations all characterize our Federal Income Tax System, prompting many to question why it is still being used (Peters, 2013). The current system although bringing in over $3 trillion, taxes income multiple times, and includes the taxing of estate, labor, savings, and investments (National Priorities Project, 2013). The system itself is complex with over 20,000 pages of regulations, requiring a massive filing system, which is set up and maintained by an even larger IRS, requiring over $225 billion in compliance costs (Hall, 2001). One can be hard pressed to find an advantage in the current system, other than the fact that it provides the government with an enormous amount of funds, and it has...
To understand this compromise, there needs to be a basic understanding of the United States current tax code, more specifically in this situation the federal income tax code. The income tax makes up 46 percent of the federal governments three trillion dollar internal revenue, that is 1.38 trillion dollars (.N.p.).
I. You might have heard politicians in the news, talk about overhauling our tax system with a new fix-all idea, the flat-tax. This would simplify our overly complicated tax system and might seem appealing at first glance, however there are serious problems with it.
While the United States has a long-standing foothold on the oil in Africa, China has been dominating the other natural resources available for the past 20 years (Bhorat 2013). Additionally, the current perception of President Obama in Kenya seems to have changed dramatically over the recent years. While much of the letdowns were due to high expectations on the Kenya’s population, the general consensus was that President Obama has not done much to help improve the current state of the Kenyan economy. The current programs in Africa are programs that were enacted or established by President's Clinton and George W. Bush (Mwangi 2013). This has allowed the Chinese government to move in and expand operations in the region.
the example of taxation which is the first of its kind on this particular product. The author is
...organizations, NGOs, and businesses to eliminate the corruption in order for policies to be more effective and operational.
“Taxation and Tax Reform.” Issues and Controversies. Facts On File News Services, 28 Jan. 2013. Web. 2 Dec. 2013
Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue.
Gurría, Angel. "Improve tax fairness and help the developing world." OCED. Organisation for Economic Co-operation and Development, 24/04/2009. Web. 9 Oct 2011. .
A number of policy interventions have been originated since independence to address the growing employment problem in Kenya, and with that, make an attempt at bettering the lot of the Kenyan youth. The earliest among these were the Kenyanization policies adopted at independence in which it was envisaged that young Kenyans would quickly take over duties and responsibilities from departing colonial staffers. Other policy measures included promotion of growth and development of the informal and jua kali sector in the 1990’s.
The country faces various health challenges including a high burden of communicable diseases (such as HIV/AIDS that is responsible for 29.3% of all deaths, malaria and Tuberculosis) and non-communicable diseases (Government of Kenya, 2011). Health services are provided by government, missionaries, ...
The main source of income for Kenya comes from agriculture. Coffee and tea are the most valuable crops. Together they account for approximately 50 per cent of all forigien exchange earnings. Because of the rapidly growing population, Kenya now imports large quantities of food, praticularly wheat. Unemployment is high. Expecally in the urban areas.
Many new business owners struggle with the decision of whether or not to outsource tax compliance services plus “on average 55% of SME’s consider cost of service is an obstacle for them to seek external advice” (Banham, 2014). There are many tax authorities to which a business can owe taxes such as payroll taxes, self-employment taxes, property taxes and sales taxes to name a few. To make matters more confusing, the tax forms, filing and payment deadlines for each type of tax are also individual. Tax errors can occur in a number of ways and are not simply limited to under-reporting income. Other types of errors that can bring about penalties include applying deduction limitations incorrectly and worker misclassification. The IRS grants leniency to first time offenders that fail to file, pay or make timely deposits under the First Time Penalty Abatement policy. The penalties assessed for underpayment of taxes due to negligence are not covered under this policy. The majority of young businesses are not equipped with the financial backing to withstand the blow of such penalties resulting from an error on a tax
Many unsolved problems in many African countries, but the issue of the rise of corruption are disturbing, and the amends it has done to the polity are vast. The fear of fraud leads to restrict movement of documents in offices, slow traffic on the highways, port congestion, ghost workers syndrome, queues at passport offices, police extortion tollgates and gas stations, vote irregularities among others. Even the nutty people on the road remember the devastation caused by bribery - the funds allocated for their success disappear into some people pockets. Thus, some people believe corruption is the bane of many African countries. Corruption is the main obstacle to slow down, and knock African economy growing. The problem keeps happening in Africa, and the issue will hardly be solved.