Record Details

Determinants of value added tax revenue in Kenya

Journal of Economics Library

View Archive Info
 
 
Field Value
 
Title Determinants of value added tax revenue in Kenya
 
Creator WAWIRE, Nelson;

Department of Applied Economics

School of Economics

Kenyatta University

P.O. Box 43844 -00100

Nairobi, Kenya

wawire2012@gmail.com or were.nelson@ku.ac.ke
 
Subject Tax revenue; Elasticity; Tax system; Underground economy; Unusual circumstances.
H25; H24; H27.
 
Description Abstract. Past studies that have been undertaken on the responsiveness of Value Added Tax revenues to changes in GDP in Kenya have found a positive relationship. However, the studies omit key determinants of tax revenues, such as the nature of the tax system, institutional, demographic and structural features of the economy. Due to this omission, the estimated income elasticities are unreliable for planning purposes, a situation that might be responsible for the recurring budget deficits. The specific objectives of thepaperare to establish the determinants of Value Added Tax revenue and assess yields responseto changes in bases and reforms. The paper uses Paul Samuelson's (1955) the paper are fundamental general equilibrium analysis of the public sector to derive its main results. The estimation results show that GDP elasticity is less than the elasticities with respect to monetary GDP, suggesting the existence of an underground economy. It is also found that tax yields respond with substantial lags to changes in its determinants and revenues are sensitive to reforms and unusual circumstances. The study concludes that Kenya’s Value Added Tax revenue is very responsive to changes in its determinants especially international trade. There is the challenge of creating a stable Value Added Tax system.Keywords. Tax revenue, Elasticity, Tax system, Underground economy, Unusual circumstances.JEL. H25, H24, H27.
 
Publisher Journal of Economics Library
 
Contributor —
 
Date 2017-09-18
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.kspjournals.org/index.php/JEL/article/view/1391
10.1453/jel.v4i3.1391
 
Source Journal of Economics Library; Vol 4, No 3 (2017): September; 322-344
2149-2379
 
Language eng
 
Relation http://www.kspjournals.org/index.php/JEL/article/view/1391/1369
 
Rights Copyright (c) 2017 Journal of Economics Library
http://creativecommons.org/licenses/by-nc/4.0