Effect of Tax Payer Education on Tax Compliance among SMEs in Kenya, A case of motor vehicle spares traders Iin Nakuru Town Suburb Area

Abstract

The level of tax compliance among the small and medium tax payers is described as low by Kenya Revenue Authority. Kenya's SMEs have the potential to generate a great deal of tax revenue for the government, but that's not the case. The main objective of this study was to determine the effect of tax-payer education on motor vehicles traders' tax compliance in the Nakuru Town suburb of Kenya. The specific objectives included: to determine the effect of main stream media education, print media education, social media education and KRA stakeholders’ forums education on tax compliance among motor vehicles spare traders in Suburb area of Nakuru town, Kenya. The study was anchored on four theories: theory of planned behavior, economic deterrence theory, optimal taxation theory and presumptive taxation theory. Explanatory research design was adopted. The target population for the study was 300 traders dealing in motor vehicles spares in Suburb area of Nakuru town. A sample size of 150 traders was selected using simple random sampling technique. The study collected primary data by use of structured questionnaires. To explain the characteristics of the study variables, data collected was calculated and analyzed using descriptive statistics including frequencies, percentages, means and standard deviations. The relationship between the independent variable and the dependent variable was tested using inferential statistics such as Pearson correlation and regression. The findings indicated a combined R square of 0.615. This shows that main stream media education, social media education, KRA’s stakeholder’s education forums and print media tax payers education explain 61.5% of the tax compliance. The findings also indicated that print media tax payers education (β=0.315, p=0.000,