Perceived effect of Taxpayer Education on Income Tax Performance among Micro Enterprises in Nairobi County, Kenya

Abstract

Tax revenue is the backbone of all governments' revenues in the world. Studies point to the possibility that taxpayer education impacts the understanding of the tax laws, tax procedures, and tax filing, among others. However, there is a lack of taxpayer's education attribution to a particular tax base in the overall revenue performance. The study's objectives were to investigate the effect of taxpayer sensitization, the effect of print media education, and the effect of electronic media taxpayer education on income tax performance among micro-enterprises in Nairobi County, Kenya. The study is significant because KRA could use the findings to improve its taxpayer outreach interventions by understanding what works best among the micro-enterprises. The study was anchored on transformative learning, social learning, and the benefit theories of taxation. The target population of the study was 7,800 micro enterprises in the Kamkunji area. Bridget and Lewin's formula was used to arrive at a sample of 380 micro-enterprises, and a systematic sampling technic employed to reach the sampled population. Primary data was collected using a self-administered five-point Likert scale questionnaire. Findings indicated that Taxpayer sensitization was significant on income tax performance with (β=0.274, p=0.000; ρ < 0.05), print media education was significant on income tax performance with (β= 0.324; p=0.004; ρ < 0.05) and electronic media education was significant on income tax performance with (β=0.321; p=0.001; ρ < 0.05). Pearson correlation tested at a 95% confidence level showed a positive correlation of R 0.397, 0.283, and 0.421 between taxpayer sensitization, print media education, electronic media education, and tax performance. The findings revealed that taxpayer sensitization, print media education, and electronic media education correlate with income tax performance up to R=0.887 and account for R 2 =0.786. The findings further revealed that even if the results were adjusted, the study still accounted for Adjusted R 2 0.779 variation of income tax performance. The Regression equation showed that the independent and dependent variables were statistically significant. A unit change in taxpayer sensitization, print media education, and electronic media education increased income tax performance by 0.274, 0.324, and 0.321, respectively. The study concluded that taxpayer sensitization, print media education, and electronic media taxpayer education affected income tax performance. The study recommends that revenue authorities encourage taxpayers to attend taxpayers' week organized for business entities in which they present and represent other businesses' tax needs. This would lead to an increased level of awareness which is critical for improved income tax performance. Since the study found variations in the relationship between taxpayer education and income tax performance, future studies might be conducted in the areas that caused the variation, including economic, social, and religious factors.