Tax Collection Strategies and Compliance of Residential Rental Income Earners in Kasarani Sub-County, Kenya.
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Date
2023
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International Journal of Current Aspects in Finance, Banking and Accounting
Abstract
Financial freedom is one of the goals economies dream to achieve in both developed and
developing nations through taxation. However, non-compliance according to previous literature
hindered tax authorities from achieving the set tax collection targets. Drop in National Residential
rental income tax collection was reported in the year 2020 by Organization for Economic
Cooperation and Development in Kenya. Similarly, the Country’s tax authority data revealed
reduction in tax collection for Kasarani Sub County in the year 2020/2021. The key objective of
this research was to investigate influence that tax collection strategies have on the compliance of
residential rental income earners in Kasarani sub-county in Kenya. The specific objectives aimed
at determining the influence of taxpayers trust building, Knowledge & tax awareness, modern
technology adoption and effective tax law enforcement strategies on the compliance of residential
property owners. The research was anchored on the social exchange, reasoned action, technology
acceptance and economic deterrence theories. Descriptive research design was applied to
evaluate the influence of independent variables on the dependent ones. A population of 871
property owners was considered with 274 respondents obtained from population target in aid of
stratified sample model whereas questionnaires were applied in collecting primary data. Analysis
of data was run on multiple regression model supported with descriptive techniques. Validity test
together with reliability analysis was done using Analysis of Variance and Cronbach Alpha
models. Multicollinearity, normality, heteroscedasticity, and linearity tests were undertaken for
diagnostic purpose. Study findings indicated that tax payer’s trust building (t=3.399, p<0.05),
knowledge & awareness campaign (t=5.732, p<0.05), modern technology (t=2.897, p<0.05) and
effective tax law enforcement strategy (t=4.795, p<0.05) had positive and significant effect on the
compliance of Residential Rental Income earners in Kasarani Sub County. The study concluded
that mutual trust building aided mobilization of public support for tax collection agenda prompting
the initially skeptic residential rental income taxpayers to embrace tax compliance, that tax
knowledge & awareness strategy positively affected tax compliance, tax collection and reporting
through the modern technology based systems proved to significantly support tax compliance and
that the tax law enforcement measure is very strategic in influencing tax income collection. Study
recommended use of competitive communication skills as a trust building window in formal and
informal interactions between the taxpayer and agency on matters tax compliance. The study
recommended the training of taxpayers on use of technology and expansion of its tax labs centers
networks close at the Sub County level for easy access.
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Citation
A Opiili, D., & Kosgei, M., (2023). Tax Collection Strategies and Compliance of Residential Rental Income Earners in Kasarani Sub-County, Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 5(2), 1-20. https://doi.org/10.35942/d5kmjw37