CW-Department of Applied Economics
Permanent URI for this collection
Browse
Recent Submissions
Item Determinants of Informal Sector Performance in the Rural Areas of Kenya: Evidence from Makueni County(2014) Dianah, M. Ngui; Joseph, M. Muniu; Wawire, N. H. W.The general objective of this paper was to investigate the factors that determine the performance of woodwork and metalwork enterprises in the rural parts of Makueni County in Kenya. The results showed that working capital. licensing. competition and the level of education were statistically significant in determination of profits. Based on the findings. it is recommended that the government and other stakeholders should provide both financial and non-financial services at affordable rates to the small business operators and entrepreneurs. Loans in form of money or kind should be made available through relevant lending institutions to supplement the working capital. eminars and conferences should be held to create awareness to the entrepreneurs of the various incentives and credit facilities provided by the government and other stakeholders. To achieve diversification and reduce the level of competition, the government should advice entrepreneurs on alternative business ventures. The government should also allocate land to the entrepreneurs and establish business parksItem Determinants of value added tax revenue in Kenya(2011-03) Wawire, N. H. W.Past studies that have been undertaken on the responsiveness of tax revenues to changes in GDP in Kenya have found a positive relationship between tax revenues and GDP. However, the studies omit some key determinants of tax revenues, such as the nature of the tax system and institutional, demographic and structural features of the economy. Due to this omission, the estimated income elasticities of Value Added (VAT) revenues are unreliable for planning purposes, a situation that might be responsible for the recurring budget deficits. The specific objectives of this study were to establish the determinants of VAT revenue and assess the response of VAT structure to changes in the in its tax bases. The study is important because its results can be used to design pro-growth tax policies and implement tax changes that are equity enhancing. The paper uses Paul Samuelson's (1955) fundamental general equilibrium analysis of the public sector to derive its main results. In the framework, the demand function for the public good was derived from a constrained model of utility-maximization. In the same vein, tax revenues were taken as functions of household incomes, which paved the way for the estimation of Engel curves for public goods. The study finds that growth elasticities for VAT are all greater than one. The estimation results show that total GDP elasticity of VAT revenues is less than the elasticities with respect to monetary GDP, suggesting the existence of an underground economy in Kenya over the period of analysis. It is found that VAT revenues respond with substantial lags to changes in its determinants and that VAT revenues are sensitive to unusual circumstances. The study concludes that Kenya’s VAT revenue is very responsive to changes in their determinants especially international trade. There is therefore the challenge of creating a stable VAT system so that tax revenues can increase rapidly as the economy grows.