Assessing The Effectiveness of Revenue Collection and Control by The Local Authority Case Study, Mombasa City Council.

Table of Contents

Declaration ........................................................................................................................... i

List of figures ...................................................................................................................... ii

Acronyms ........................................................................................................................... iii

Approval ............................................................................................................................ iv

Dedication ........................................................................................................................... v

Acknowledgement ............................................................................................................. vi

Table of Contents .............................................................................................................. vii

CHAPTER ONE ................................................................................................................. 1

1. 1 Introduction and Background ....................................................................................... I

1.2 Statement of the Problem .............................................................................................. I

1.3 RESEARCH OBJECTIVES ......................................................................................... 2

1.4 RESEARCH QUESTIONS .......................................................................................... 2

1.5 SIGNIFICANCE OF THE STUDY. ............................................................................. 2

1.6 SCOPE OF THE STUDY ............................................................................................. 2

1.6.1 Geographical scope .................................................................................................... 2

1.7 Limitation of The Study ................................................................................................ 3

CHAPTER TWO ................................................................................................................ 4

LITERATURE REVIEW ................................................................................................... 4

2.0 INTRODUCTION ........................................................................................................ 4

2.1 Relevance of Theories and Principles of the Proposed Study ...................................... 4

2.1.1 Revenue Collection an Overview .............................................................................. 4

2.1.2 Tax Policy .................................................................................................................. 4

2.1.3 Tax Base ..................................................................................................................... 5

2.1.4 Sources of Revenues in Local Government Authorities ............................................ 5

2. I .4. I Property taxes .......................................................................................................... 5

2.1.4.2 City Service Levy ................................................................................................... 6

2.1.4.3· Miscellaneous Receipts .......................................................................................... 6

·2.1.4.4 Grants/Subvention .................................................................................................. 6

2.1.5 Principles Of Good Taxation System ........................................................................ 9

2.1.5.1. Equity ..................................................................................................................... 9

2.1.5.2. Simplicity ............................................................................................................... 9

2.1.5.3. Economy .............................................................................................................. 10

2.1.5.4. Certainty ............................................................................................................... I 0

2.1.5.5. Convenience ......................................................................................................... 11

2.1.6 Tax Burden ............................................................................................................... 11

2.1.7 Tax Incidence ........................................................................................................... 12

2.1.8 Tax Incentives/Tax Expenditures ............................................................................ 12

2.1.9 Tax Reform .............................................................................................................. 12

2.1.10 TAX AVOIDANCE AND EVASION .................................................................. 13

2.1.10.1 Tax evasion; ........................................................................................................ 13

2.1.10.2 Tax avoidance; .................................................................................................... 13

2.1.11 Causes Of Tax Evasion And Avoidance: ............................................................... 13

2.1.12 How To Minimize Tax Evasion And Avoidance .................................................. 14

Vll

2.1.13 Taxation as a Tool for Social and Economic Policy .............................................. 15

2.1.14 Tax Administration ................................................................................................ 16

2.1.15 Control of Revenues .............................................................................................. 16

2.1.16 Revenue Accounting Systems ................................................................................ 16

2.1.17 Internal Control Systems ........................................................................................ 16

2.1.18 Characteristics of a Good Internal Control ............................................................ 17

2.1.19 Categories oflnternal Control ............................................................................... 17

2.1.20 Control of Public Fund .......................................................................................... 18

2.2 EMPERICAL LITERATURE REVIEW .................................................................... 19

2.2.1 A Synthesis of Literature Review ............................................................................ 20

CHAPTER THREE .......................................................................................................... 21

3.0 RESEARCH METHODOLOGY .............................. -................................................. 21

3.1 RESEARCH DESIGN ................................................................................................ 21

3.2 Research Techniques .................................................................................................. 21

3.2.1 Qualitative Technique .............................................................................................. 21

3.2.2 Quantitative Technique ............................................................................................ 21

3.3 Population of Enquiry ................................................................................................. 21

3.4 Sampling framework ................................................................................................... 21

3.4.1 Quota sampling ........................................................................................................ 22

3.5 Sample Size ................................................................................................................. 22

3.6 Sample Selection ......................................................................................................... 22

3.7 DATA COLLECTION METHODS ........................................................................... 23

3.7.1 Interviews ................................................................................................................. 23

3.7.2 Questionnaires .......................................................................................................... 23

3.7.3 Observation .............................................................................................................. 24

3.7.4 Documentation ......................................................................................................... 24

3.8 TYPES OF DATA COLLECTED .............................................................................. 24

3.8.1 Primary data ............................................................................................................. 24

3.8.2 Secondary data ......................................................................................................... 25

3.9 DATA ANALYSIS AND REPORTING .................................................................... 25

CHAPTER FOUR ............................................................................................................. 26

4.0 FINDINGS AND ANALYSIS ................................................................................... 26

4.1 Taxpayers' response towards revenue collection ....................................................... 26

4.2 A narrow revenue base ................................................................................................ 26

4.3 Ineffective taxpayer's education campaign ................................................................ 27

4.4 Poor working environment and work load .................................................................. 27

4.5 Loop holes in revenue collection procedures .............................................................. 28

4.6 Trend of revenue collection ........................................................................................ 28

4.7 Presentation of findings and analysis .......................................................................... 28

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CHAPTER FIVE .............................................................................................................. 37

4.0 CONCLUSION AND RECOMMENDATION .......................................................... 37

4.1 CONCLUSSION ......................................................................................................... 37

5.2 RECOMMENDATION .............................................................................................. 38

BIBLIOGRAPHY ............................................................................................................. 41

APPENDIX 1 .................................................................................................................... 43

QUESTIONNAIRE .......................................................................................................... 43

APPENDIX 2 .................................................................................................................... 45

RESEARCH BUDGET .................................................................................................... 45

APPENDIX 3 .................................................................................................................... 46

SCHEDULE OF ACTIVITIES ......................................................................................... 46