Effects of Technological Innovations and Taxpayer Education by Kenya Revenue Authority on Revenue Collection in Kenya

Abstract

The Kenya Vision 2030 is the blueprint for Kenya to achieve the Millennium Development Goals. However, the main challenge is the level of debt which is 5.276 trillion Kenya shillings which is equivalent to 52.7% of the gross domestic product. The government therefore should adopt automated systems in order to collect revenue more efficiently. Technology advancement leads to improvement of tax revenue collected in a country. Revenue collection is a major issue in Kenya since majority of the government’s revenue comes from taxes. Kenya Revenue Authority is the main collector of government revenue and despite putting up systems to collect revenue more efficiently, introduction of automated systems was envisioned to enhance the revenue collection but the authority is still unable to meet the revenue targets set every year. The objectives of this project was to study the effects of technological innovation and strategies together with taxpayers’ education employed by Kenya Revenue Authority on revenue collection in Kenya. The study used secondary data from economic surveys published by Kenya National Bureau of Statistics (KNBS), data collected and published by Kenya Revenue Authority (KRA), the national treasury, and Central Bank of Kenya. (CBK).The revenue figures were used from the year 1999 to 2020 while GDP figures were from the year 1964 to 2020. Regression analysis was used to study the effects of technological innovations and taxpayers’ education campaigns employed by Kenya Revenue Authority. The unemployment rate variable was employed as control variable in the model. For objective one, regression analysis was used to study the effects of technological innovations on revenue collection. The findings indicated that while the economy is changing to a faster and more reliable means of doing business, the taxing authority has to change its systems to maximize the collections to curb the deficit that has led to massive borrowings. The second objective was to determine how taxpayer education affects revenue collection. A dummy variable was used to obtain the estimates. The study found that education is key in enhancing compliance in payment of taxes as this bridges the gap in terms of what is expected from individuals, businesses and government agencies.