Kenya tax model: Value added tax simulation analysis
Taxation can be used as a policy tool to influence economic behaviour, promote equity and achieve developmental goals. However, taxation can result in undesired outcomes if not well designed and implemented. Distortionary tax may adversely affect consumption, private sector investment (Adam and Beva...
| Autores principales: | , , , , , , , , |
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| Formato: | Brief |
| Lenguaje: | Inglés |
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Kenya Institute for Public Policy Research and Analysis
2024
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| Acceso en línea: | https://hdl.handle.net/10568/172822 |
| _version_ | 1855525630247960576 |
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| author | Shibia, Adan Omune, Lensa Mbuthia, Juneweenex Diao, Xinshen Oguso, Alex Omwenga, Walter Kiptoo, Elvis Ali, Jecinta Laichena, Joshua |
| author_browse | Ali, Jecinta Diao, Xinshen Kiptoo, Elvis Laichena, Joshua Mbuthia, Juneweenex Oguso, Alex Omune, Lensa Omwenga, Walter Shibia, Adan |
| author_facet | Shibia, Adan Omune, Lensa Mbuthia, Juneweenex Diao, Xinshen Oguso, Alex Omwenga, Walter Kiptoo, Elvis Ali, Jecinta Laichena, Joshua |
| author_sort | Shibia, Adan |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | Taxation can be used as a policy tool to influence economic behaviour, promote equity and achieve developmental goals. However, taxation can result in undesired outcomes if not well designed and implemented. Distortionary tax may adversely affect consumption, private sector investment (Adam and Bevan, 2014) and household welfare (de la Feria and Swistak, 2024). Kenya faces a similar trade-off between generating sufficient tax revenue to finance government programmes such as the Bottom-Up Economic Transformation Agenda (BETA) and mitigating potential adverse effects on domestic production and household welfare. The Value Added Tax (VAT) contributes about 30 per cent of Kenya’s total tax revenue (National Treasury, 2024). The average share of VAT to GDP for Kenya was 4.6 per cent between 2013/14 and 2023/24, comparable to that of East African Community (EAC) countries and Sub-Saharan African at 4.5 per cent (World Bank, 2024; East Africa Revenue Authorities Technical Committee, 2024), but lower than the 6.7 per cent for South Africa and the 5.2 per cent for lower-middle-income economies. VAT is a broad-based consumption tax, with tax incidence largely falling on the final consumers, and therefore any VAT policy changes have potential economy-wide implications. This is compounded by the fact that VAT is a regressive tax, meaning that low-income households spend a higher proportion of their income on vatable products compared to high income earners. The VAT in Kenya is currently imposed at a standard rate of 16 per cent, with certain essential goods, particularly primary agricultural produces, and services as VAT exempt or zero-rated. |
| format | Brief |
| id | CGSpace172822 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2024 |
| publishDateRange | 2024 |
| publishDateSort | 2024 |
| publisher | Kenya Institute for Public Policy Research and Analysis |
| publisherStr | Kenya Institute for Public Policy Research and Analysis |
| record_format | dspace |
| spelling | CGSpace1728222025-02-06T22:28:04Z Kenya tax model: Value added tax simulation analysis Shibia, Adan Omune, Lensa Mbuthia, Juneweenex Diao, Xinshen Oguso, Alex Omwenga, Walter Kiptoo, Elvis Ali, Jecinta Laichena, Joshua taxes Value Added Tax economic behaviour welfare income Taxation can be used as a policy tool to influence economic behaviour, promote equity and achieve developmental goals. However, taxation can result in undesired outcomes if not well designed and implemented. Distortionary tax may adversely affect consumption, private sector investment (Adam and Bevan, 2014) and household welfare (de la Feria and Swistak, 2024). Kenya faces a similar trade-off between generating sufficient tax revenue to finance government programmes such as the Bottom-Up Economic Transformation Agenda (BETA) and mitigating potential adverse effects on domestic production and household welfare. The Value Added Tax (VAT) contributes about 30 per cent of Kenya’s total tax revenue (National Treasury, 2024). The average share of VAT to GDP for Kenya was 4.6 per cent between 2013/14 and 2023/24, comparable to that of East African Community (EAC) countries and Sub-Saharan African at 4.5 per cent (World Bank, 2024; East Africa Revenue Authorities Technical Committee, 2024), but lower than the 6.7 per cent for South Africa and the 5.2 per cent for lower-middle-income economies. VAT is a broad-based consumption tax, with tax incidence largely falling on the final consumers, and therefore any VAT policy changes have potential economy-wide implications. This is compounded by the fact that VAT is a regressive tax, meaning that low-income households spend a higher proportion of their income on vatable products compared to high income earners. The VAT in Kenya is currently imposed at a standard rate of 16 per cent, with certain essential goods, particularly primary agricultural produces, and services as VAT exempt or zero-rated. 2024 2025-02-05T21:13:43Z 2025-02-05T21:13:43Z Brief https://hdl.handle.net/10568/172822 en Open Access Kenya Institute for Public Policy Research and Analysis Shibia, Adan; Omune, Lensa; Mbuthia, Juneweenex; Diao, Xinshen; Oguso, Alex; Omwenga, Walter; Kiptoo, Elvis; Ali, Jecinta; and Laichena, Joshua. 2024. Kenya tax model: Value added tax simulation analysis. KIPPRA Policy Brief 252. Nairobi, Kenya: Kenya Institute for Public Policy Research and Analysis. https://repository.kippra.or.ke/handle/123456789/5257 |
| spellingShingle | taxes Value Added Tax economic behaviour welfare income Shibia, Adan Omune, Lensa Mbuthia, Juneweenex Diao, Xinshen Oguso, Alex Omwenga, Walter Kiptoo, Elvis Ali, Jecinta Laichena, Joshua Kenya tax model: Value added tax simulation analysis |
| title | Kenya tax model: Value added tax simulation analysis |
| title_full | Kenya tax model: Value added tax simulation analysis |
| title_fullStr | Kenya tax model: Value added tax simulation analysis |
| title_full_unstemmed | Kenya tax model: Value added tax simulation analysis |
| title_short | Kenya tax model: Value added tax simulation analysis |
| title_sort | kenya tax model value added tax simulation analysis |
| topic | taxes Value Added Tax economic behaviour welfare income |
| url | https://hdl.handle.net/10568/172822 |
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