Effect of taxpayer sensitization channels on voluntary compliance in residential income tax among registered landlords in Embu Town, Kenya

Abstract

The research broadly aimed at establishing the effect of taxpayer sensitization channels on voluntary compliance in residential income tax among registered landlords in Embu Town. The specific objectives were to establish the effect of taxpayer sensitization through tax seminars on voluntary income tax compliance in residential income tax, the effect of taxpayer sensitization through media services on voluntary compliance in residential income and lastly to determine the effect of taxpayer sensitization through mobile services on voluntary income tax compliance in residential income tax. The problem that the researcher set out to solve was that, compared to Embu, the towns in its neighborhood which have witnessed almost the same level of economic growth as Embu, have similar annual targets and are interestingly comparatively smaller in size appear to be doing better than Embu in terms of residential income tax performance from 2016 - 2020. The researcher adopted a causal research design to determine how taxpayer sensitization through tax seminars, media services and mobile services affect performance of residential income tax in Embu town. The researcher used primary data collected from 120 questionnaires randomly distributed to taxpayers belonging to the sampling frame of registered landlords within Embu town. The Economic Deterrence Theory, Equal Sacrifice Theory and Financial Literacy Theory guided the study. From the findings of the multiple regression analysis, the study established that holding other factors constant, a unit increase in Tax Seminars would lead to a 0.271 unit increase in Voluntary Tax Compliance in Residential Income tax among registered landlords in Embu town as shown by (β1=0.271, p=0.002<0.05). The study also established that holding other factors constant, a unit increase in Media Services would lead to a 0.335 unit increase in Voluntary Tax Compliance in Residential Income among registered landlords in Embu town as shown by (β2=0.335, p=0.000<0.05). The study further established that a unit increase in Mobile Services would lead to a 0.242 unit increase in Voluntary Tax Compliance in Residential Income among registered landlords in Embu town as shown by (β3=0.242, p=0.013<0.05). The study concluded that taxpayer sensitization has a significant and positive effect on voluntary tax compliance in residential income tax among registered landlords in Embu Town. The study recommended that to ensure even more enhanced voluntary tax compliance, KRA should heavily invest in taxpayer sensitization through media services where the audience reached at once is highest. The study also recommended that KRA should consider setting up more satellite stations geared towards bringing taxpayer services closer to the people. Given that all the three predictor variables explain 54.7% of all changes in voluntary compliance in Residential Income tax among registered landlords in Embu town, Kenya and that 45.3% of all changes were explained by other factors not included in the study, other studies should be conducted to determine, the effect of tax clinics on voluntary income tax compliance among registered landlords in Embu Town.