INTEREST RATES AND TAX REVENUE PERFORMANCE BY THE KENYA REVENUE AUTHORITY
INTEREST RATES AND TAX REVENUE PERFORMANCE BY THE KENYA REVENUE AUTHORITY
Jacinta Mbithe - Postgraduate Student, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
Dr. Charity Njoka (PhD) - Lecturer, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
James Muturi (PhD) - Lecturer, Department of Accounting and Finance, School of Business Economics and Tourism, Kenyatta University, Kenya
ABSTRACT
Tax revenue contributes greatly to government’s service delivery, the development of infrastructure, and growth of the economy. The tax revenue consolidation in Kenya is a constitutional responsibility of the Kenya Revenue Authority. However, while tax revenue in Kenya has consistently grown, it has always fallen short of the targeted collection despite the employment of various economic strategies, the use of different fiscal policies, attracting foreign direct investment, and tax reforms. For instance, in the financial year 2022/23, KRA’s total collection of Kes 2.166 trillion fell short of the Kes 2.273 trillion target, signifying a deficit of Kes 107 billion. The research intended to find out the effect interest rate and tax revenue performance in Kenya. Anchored on the Khaldun’s theory of taxation, the study adopted the positivist philosophy and an explanatory research design. Its focus was on the Kenya Revenue Authority as its target population, having been established through an Act of Parliament in the year 1995. Quantitative archival time-series data for interest rate were used from the period between 1996 and 2023, considering the availability of the associated relevant research data. The quantitative data were collected, cleaned, coded, and analysed using SPSS version 24 of the Stata software. Both descriptive and inferential statistical methods were important for data analysis. Descriptive analysis focused on mean, percentages, standard deviation, and frequencies. To assess how interest rate related to tax revenue performance in Kenya, inferential tests included correlation and multivariate regression. The study found that interest rate had a moderate, but statistically insignificant (p>0.05) effect on tax performance.
