Abstract:
Over the years, raising of revenue in Kenya has been heavily dependent on payment of taxes by the middle class. This has strained their pockets at the same time contributing to budget deficits year after year because they cannot raise enough money to fund a trillion-shilling budget. The motivation behind this study was the effects that taxation has on the small percentage of Kenyans who pay taxes. Majorly, a lot of Kenya’s resources are not enough to cater for the population and to make up for the deficit; the state always results to taxation. Whether it is increasing Value Added Tax (VAT) on commodities, or imposing higher custom duty on imports or toughening policy on filing of tax returns, the solution usually revolves around a mark-up of taxes. This seemingly positive gesture to increase revenue to improve the lives of Kenyans is harmful in its practical aspect. This is because despite paying all these taxes, healthcare is still unaffordable for majority of the population; people are still living and learning in deplorable conditions. This study, done through resources such as books and desktop research, is designed to optimize the taxation system in Kenya. The overall purpose of this study is therefore to review the taxation legal framework and to propose changes that encompasses the inclusion of manual and blue-collar labourers in the taxpayers’ bracket. Over the years leading up to now, there has been an increase in the digitization of commercial money transfers and mobile phone communication. These emerging trends in the country will be beneficial in this study because they will greatly influence the proposed solution and subsequently the success of the outcome.
