EFFECT OF SELECTED FACTORS AFFECTING REVENUE COLLECTION IN NAIROBI CITY COUNTY GOVERNMENT

Patrick N Ngicuru,Irene Riungu,Mrs Monicah Muiru

doi:10.47672/ajf.80

Abstract

Purpose: The purpose of this study was to establish the factors affecting revenue collection in Nairobi City County Government.Methodology: The study adopted a descriptive research design. The study population comprised of a total of 340 members of staff working as chief officers, technical staff and members of Nairobi City County assembly. The sample size was determined using the Fischer's formula. The sample size for the study was 180 which was distributed proportionately among the strata. The study used a survey questionnaire as a research instrument. Data collected was analyzed with the help of SPSS by both descriptive and inferential statistics. The results were presented in form of tables and graphs. The study adopted a multivariate regression.Results: The study found that revenue diversification affect revenue collected through number of sources of revenue and new policies to a great extent. Tax administration affects revenue in Nairobi City County through competent staff, availability of computers, and availability of postal communication system and tax education. Tax structure affects revenue collection through flexibility, equitability, neutrality and simplicity while different forms of revenue (property, business license) affect amount of revenue collected. Revenue diversification had a positive and significant relationship with amount of revenue collected whereas different forms of revenue collected had positive and significant effect on amount of revenue collected in Nairobi City County.Unique contribution to theory, practice and policy: The study recommends on the use of latest technology and competent staff in tax administration, also there should be more innovations to have diversified sources of revenues in Nairobi City County in order to collect more revenue. The financial managers and policy makers in Nairobi City County assembly should come up with new sources of revenues and taxes that obey the canon law of taxation that is economical, simple, flexible and easy to administer.

Highlights

Background of the StudyThe fundamental sources of own revenue for urban areas are normally property taxes, business licenses, market fees and different user charges
The study found that revenue diversification affect revenue collected through number of sources of revenue and new policies to a great extent
Revenue diversification had a positive and significant relationship with amount of revenue collected whereas different forms of revenue collected had positive and significant effect on amount of revenue collected in Nairobi City County

Summary

Introduction

The fundamental sources of own revenue for urban areas are normally property taxes, business licenses, market fees and different user charges. They can possibly give dependable revenue if all around managed, yet practically speaking all have genuine limitations. Business licenses make high consistence costs because of complex techniques; may not reflect capacity to pay; give chances to rent seeking; and are regularly ineffectively controlled, so they produce little revenue. Experience indicates open doors for change, including streamlining strategies for property valuation and upgrading aptitudes; making business permit frameworks easier, more transparent and successful, for instance by presenting single business license frameworks; and enhancing consistence in paying user fees for instance through shared private water taps in informal settlements (Fjeldstad & Heggstad, 2013)

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