Civic pride and tax compliance in Kenya

Civic pride and tax compliance in Kenya

Authors: Clement Otindo (Clement.otindo@kra.go.ke), Racheal Mbaire (Racheal.mbaire@kra.go.ke), Jane Kanina (Jane.kanina@kra.go.ke)

ISSN: 2709-8575
Affiliations: Research Economist
Source: African Multidisciplinary Tax Journal, 2021 Issue 1, p. 149-168
https://doi.org/10.47348/AMTJ/2021/i1a9

Abstract

Every government aspires to foster voluntary tax compliance; thus, the need to understand what citizens think about paying taxes other than taxes being a legal requirement. This paper analysed data collected through a nationwide survey on tax compliance. An ordered probit regression model was employed to examine the relationship between civic pride and tax compliance in Kenya. The findings indicated that tax compliance pertains to the relationship between individuals and the state. Individuals who are proud to be Kenyan and have faith in both the Kenya Revenue Authority (KRA) and the government depicted higher levels of compliance than those who were not proud and did not have faith in the institutions. Other factors that were found to significantly influence voluntary tax compliance in Kenya included age, gender, satisfaction with democracy, corruption in government and a fair tax system. Therefore, to improve voluntary tax compliance, the government and tax administration should adopt strategies aimed at increasing taxpayers’ confidence in the system. This include improved service delivery to the citizenry especially health and education, fair and equitable distribution of resources, fair treatment to all, eradication of corruption and having a fair tax system.

The determinants of the vat potential in Benin: an econometric analysis

The determinants of the vat potential in Benin: an econometric analysis

Author: Tidjani Ousmaïla Awe Obinti (ismaelobinti@gmail.com)

ISSN: 2709-8575
Affiliations: Economètre-Chercheur à la Direction Générale des Impôts du Bénin
Source: African Multidisciplinary Tax Journal, 2021 Issue 1, p. 169-188
https://doi.org/10.47348/AMTJ/2021/i1a10

Abstract

This paper aimed to analyse the determinants of VAT potential in Benin over the period 1991 to 2017. The results of the estimation, conducted using Engle Granger’s cointegration model, showed that the latter is, on the whole, lower than the actual level of VAT collection over the period of analysis. This means that the VAT potential is relatively well developed, insofar as the tax capacity of the Beninese economy remains insufficient to mobilise more VAT revenue. However, this observation must be put into perspective as the capacity to mobilise VAT lost momentum from 2013 after a remarkable performance for over 23 years. This result calls for an improvement in tax reforms implemented in order to optimise the capacity of the tax administration in VAT mobilisation. Furthermore, the estimate showed that structural factors such as the degree of openness of the economy and the real gross domestic product per capita have had a positive and significant impact on VAT revenue mobilisation.

Taxable capacity and effort of value-added tax in Kenya

Taxable capacity and effort of value-added tax in Kenya

Authors: Jane Muguchu (janemuguchu@gmail.com), Nelson H.Wawire, Anthony Wambugu

ISSN: 2709-8575
Affiliations: Ph.D. Student, School of Economics, University of Nairobi, Kenya; Associate Professor of Economics, School of Economics, Kenyatta University, Nairobi, Kenya; Professor of Economics, School of Economics, University of Nairobi, Kenya
Source: African Multidisciplinary Tax Journal, 2021 Issue 1, p. 189-210
https://doi.org/10.47348/AMTJ/2021/i1a11

Abstract

Domestic tax revenue mobilisation has received great focus among developing countries in order to achieve the development objectives with less reliance on foreign aid. The effort to mobilise revenue in developing countries has been undermined by some challenges such as high levels of non-compliance, low taxable capacity and effort averaging 10 to 20 per cent compared to Organisation for Economic Cooperation and Development (OECD) countries, which collect 30 to 40 per cent of their gross domestic product (GDP). To achieve Kenya’s Vision 2030 development objectives, the tax administration is expected to collect over 20.7 per cent of GDP and ensure revenue growth of 10 per cent per annum (Republic of Kenya, 2007). This called for establishing how far the country is from reaching its maximum tax potential and the effect of various factors that determine the taxable capacity of the country. Emphasis was placed on value-added tax (VAT) due to its high revenueraising potential. Using the Ordinary Least Squares (OLS) estimation technique and maximum likelihood for stochastic frontier approach, the study estimated the taxable capacity and effort of value-added tax (VAT). The results indicated that capital investment, manufacturing and private credit as a per cent of GDP impacted positively on taxable capacity while inflation, exports and agriculture negatively affected taxable capacity. The tax effort estimation results indicated that the average tax effort between 2011 and 2015 was 0.5, thus classifying the country under low collection, high effort category. Therefore, broadening the tax base through increased investments, manufacturing and improving on the efficiency of tax administration is fundamental in enhancing revenue mobilisation.

Carbon tax to lower emissions: the likely impact of carbon emissions tax on households in South Africa

Carbon tax to lower emissions: the likely impact of carbon emissions tax on households in South Africa

Author: Nkhensani Siweya (nsiweya@sars.gov.za)

ISSN: 2709-8575
Affiliations: Functional Analyst: Economist, South African Revenue Service (SARS)
Source: African Multidisciplinary Tax Journal, 2021 Issue 1, p. 211-227
https://doi.org/10.47348/AMTJ/2021/i1a12

Abstract

The South African government, along with other countries, has signed the Paris Agreement to commit to lowering carbon dioxide emissions. This has led to the introduction of carbon tax in different countries to combat global warming. The Mexican government was the first to introduce carbon tax amongst the emerging economies back in 2014, while the Argentine government implemented carbon tax in January 2018. The South African government followed suite and introduced carbon tax effective 5 June 2019. Households are expected, however, to be weighed down by the levy as the carbon fuel levy will be implemented at 9 and 10 cents per litre on petrol and diesel respectively. The impact on strained households’ income is expected to emanate from the already high fuel prices, which have been on a rising trajectory since the beginning of 2019.

VAT withholding tax and its impact on vat compliance: evidence from the Zimbabwe revenue authority

VAT withholding tax and its impact on vat compliance: evidence from the Zimbabwe revenue authority

Author: Blessings Majoni (bmayjay@gmail.com)

ISSN: 2709-8575
Affiliations: Revenue Specialist, Zimbabwe Revenue Authority
Source: African Multidisciplinary Tax Journal, 2021 Issue 1, p. 228-243
https://doi.org/10.47348/AMTJ/2021/i1a13

Abstract

Value-added tax (VAT) withholding tax is a key instrument used in various tax administrations to curb revenue leakages that emanate from clients that charge VAT on their services and supplies and then fail to remit it to revenue authorities. The Zimbabwe Revenue Authority (ZIMRA) implemented VAT withholding in 2017 with the expectation that it would positively affect VAT compliance. The motivation of this study therefore arises from the knowledge that a number of developing countries are considering implementing a withholding tax mechanism on VAT. In addition, a number of developing countries such as the Philippines, Ethiopia and Ghana, have implemented VAT withholding tax with varying outcomes. Public finance literature on the empirical analysis of VAT withholding tax is, however, limited as it requires administrative data that most tax researchers are not privy to. This paper sought to undertake a more comprehensive empirical investigation of the direct effect of the introduction of VAT withholding tax on VAT compliance. To estimate the empirical effect of VAT withholding tax on VAT compliance, this paper exploited data of VAT registered clients in ZIMRA over a 24-month period. The study used an ordinary least squares (OLS) multiple regression analysis to investigate the effects of VAT withholding tax on VAT revenue. The study further used a difference-in-differences estimator by classifying VAT taxpayers into two groups. Empirical evidence indicates that there is a positive significant relationship between implementing VAT withholding tax and VAT revenue in the ZIMRA scenario.

Problem of expanding the management of VAT to the synthetic tax centers of DR Congo

Problem of expanding the management of VAT to the synthetic tax centers of DR Congo

Author: Luc Mwenelwata Butindi (lucmwenelwata@gmail.com)

ISSN: 2709-8575
Affiliations: Inspecteur des Impôts. Direction Générale des Impôts, RD CONGO. Master en Gestion, Comptabilité OHADA et Audit
Source: African Multidisciplinary Tax Journal, 2021 Issue 1, p. 244-260
https://doi.org/10.47348/AMTJ/2021/i1a14

Abstract

The tax reform to replace turnover tax with value-added tax (VAT) in Congolese tax legislation, in order to broaden the tax base, was justified by the government’s desire to increase levels of state revenue. This tax was introduced in 2010 and implemented in 2012.

Although its contribution has improved the level of tax revenue, certain managerial aspects linked to it have not been exploited to significantly improve resource mobilisation objectives. In particular, the fixed threshold has excluded certain structures, the synthetic tax centres in particular, who are in direct contact with the vast majority of consumers, from the management of this tax.