Effect of selected factors affecting revenue collection in Nairobi City County Government

Abstract

The introduction of county governments with the adoption of the new constitution has brought with it challenges in administration of these new institutions. This is particularly the case with revenue collection in the county governments whereby the revenue collected has in many times been below the projected figures. This has resulted in financial challenges in the delivery of services to the public. The purpose of this study was to establish the factors affecting revenue collection in Nairobi City County Government. The specific objectives of the study were to: establish effect of revenue diversification on revenue collection, establish the effects of administration on revenue collection, assess the effects of tax structure on revenue collection and find out how different forms of revenues affects revenue collection. The study adopted a descriptive research design. The study population comprised of a total of 340 members of staff working as chief officers, technical staff and members of Nairobi City County assembly. The sample size was determined using the Fischer‟s formula. The sample size for the study was 180 which were distributed proportionately among the strata. The study used a survey questionnaire as a research instrument. Data collected was analyzed with the help of SPSS by both descriptive and inferential statistics. The results were presented in form of tables and graphs. The study adopted a multivariate regression. The study found that revenue diversification affect revenue collected through number of sources of revenue and new policies to a great extent. Tax administration affects revenue in Nairobi City County through competent staff, availability of computers, availability of postal communication system and tax education. Tax structure affects revenue collection through flexibility, equitability, neutrality and simplicity while different forms of revenue (property, business license) affect amount of revenue collected. Revenue diversification had a positive and significant relationship with amount of revenue collected whereas different forms of revenue collected had positive and significant effect on amount of revenue collected in Nairobi City County. The study concluded that revenue diversification strategies increases the amount of revenue collected, with a good tax administration practices like competent staff and adoption of latest technology, the amount of revenue collected increases. A good tax structure that is flexible, simple and economical, the amount of revenue collected will be high. The study recommends on the use of latest technology and competent staff in tax administration, also there should be more innovations to have diversified sources of revenues in Nairobi City County in order to collect more revenue. The financial managers and policy makers in Nairobi City County assembly should come up with new sources of revenues and taxes that obey the canon law of taxation that is economical, simple, flexible and easy to administer.