NAME; KEVIN KAMAU MUKONO
REG NO; HD231-6231/2012
COURSE; BACHELOR OF COMMERCE
UNIT CODE; HBC 2211
TASK; Explain the fiscal policies reforms the government has undertaken over the years in respect to tax reforms In Kenya.
Kenya’s tax system has undergone more or less continual reform over the last twenty years. On the policy side, rate schedules have been rationalized and simplified, a new value-added tax introduced, and external tariffs brought in line with those of neighboring countries in East Africa. At the same time, administrative and institutional reforms have taken place. Most notable among these was the creation of the semi-autonomous Kenya Revenue Authority (KRA) in 1995, which centralized the administration of tax collection.
Kenya relied on unified tax policies and an administrative system jointly administered by the initial three members of the EAC. This was a legacy of British colonial administration that all the three countries inherited at independence. At that point, the government’s three main sources of tax revenue were: income tax; customs and excise duties; and inland revenue. Changes in both policies and administration were collaboratively determined and minimal until early 1970s. Following a decision to assign responsibility for income tax to each EAC member state, Kenya adopted the community legislation and enacted the Income Tax Act of 1973.
The pragmatic post-independence political economy choices of the Government of Kenya worked quite impressively for much of the
one and half decades after independence. However, a series of adverse political and economic events in the second half of the 1970s, and first half of the 1980s, served to disrupt both political and economic trends. Government promulgated wide-ranging reforms by way of “Sessional Paper No. 1 of 1986 on Economic Management for…...