FACTORS INFLUENCING OPTIMAL REVENUE COLLECTION IN...

European Journal of Accounting, Finance and Investment

Vol. 5, No. 2; 2019;

ISSN (3466 – 7037);

p –ISSN 4242 – 405X

Impact factor: 4.17


An official Publication of Center for International Research Development

Double Blind Peer and Editorial Review International Referred Journal; Globally index

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pg. 72

FACTORS INFLUENCING OPTIMAL REVENUE COLLECTION IN

KITUI COUNTY GOVERNMENT

1Kelvin Mugwe Ngure, 1Kananu Addy.Maureen, 1Munywoki E. Whitney Munini, 1Zablon Evusa, Antony 1Wahome Ndirangu, 2Sisimonda Kinya Mwanja,

1South Eastern Kenya University 6 Machakos University

Corresponding author: Antony Wahome Ndirangu; [email protected]

Abstract: Enhancement of revenue collection in counties is a crucial activity in the financial obligation that leads to the recognition of

their directive by the constitution to offer well timed services to the citizens and demand that may surpass the available resources

within the counties. Currently, the largest proportion of the County financial resources comes from the National Exchequer. Therefore,

the purpose of this study was to investigate the factors affecting optimal revenue collection by KituiCounty Government. To achieve

the overall goal of the study, four specific objectives were formulated and each respective variable was then presented in the

conceptual framework. The specific objectives included: To establish the influence of Technology on optimal revenue collection by

KituiCounty Government; To determine the influence of public participation on optimal revenue collection by KituiCounty

Government; To find out the influence of internal control system on achievement of optimal revenue collection by KituiCounty

Government; To establish the influence of human resource on optimum revenue collection by KituiCounty Government. Longitudinal

research design and descriptive research designed were used. The target population was the finance and accounting officers of Kitui

County Government. The Sample population was selected using purposive and simple random sampling. Questionnaires were used for

collection of primary data. The questionnaires pilot tested to determine the reliability and validity before they were administered in the

final study. Both descriptive and inferential analysis was done for the collected data. The study population comprised a total number

of 56 members and sample population of 15 members. Data was analyzed using SPSS (V.25) and the results in a multiple linear

regression used to reveal the coefficients of the specific independent variables of the study. On overall, the study established internal

control system and technology has the greatest effect on optimal revenue collection, followed by public participation while human

resource had the least effect on optimal revenue collection. Technology and internal control system a strong positive correlation of

0.533 and 0.564 respectively and public participation and human resource had a positive correlation of 0.213 and 0.189 respectively

on optimal revenue collection. The study significance level was below the 0.05 with technology at 0.024, public participation 0.044,

internal control system 0.011 and human resource 0.024. The study recommends that County government should set up public forums

more often. Also, it provides that government institute should be started to give County revenue collectors trainings on use of new

technologies implemented.

mailto:[email protected]


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pg. 73

1.0 INTRODUCTION

1.1 Background of the Study

Revenue is a government income from taxation, exercise duty,

customs, fines, donations and grants, fees and other sources

appropriated to payment of public expense such as the

communal items or the total amount of income of an individual,

a state, or the return from any kind of belongings, patent or

services rendered (Akeyo, 2012). Revenue collection should

comply with best practices of equity, ability to pay, economic

efficiency, convenience and certainty (Adenya, 2017). Gidisu

(2012) argued that government should increase its fiscal depth

without incurring costly repeating overheads in order to match

its performance with needs and expectations of its clients.

Efficient means of taxation could help improve the

governments’ revenue position, reduce public sector borrowing

requirement, reduce dependency on aid, reduce over-reliance on

commodity exports and increase countries’ ownership of their

development agenda (African economic outlook, 2013).

Moreover, better tax management and revenue mobilization

could improve tax revenue performance and reinforce the

relationship amongst state-citizenry, including the private sector

and civil society. Also, there is increased confidence in the

government’s ability to use tax revenue sparingly to provide

basic services, providing a strong basis for trust in the

government, leading to more tax compliance. This is often

referred to as the fiscal exchange proposition or the quid pro quo

i.e. in return for paying taxes, a citizen expects quality service

delivery (Fjeldstad&Heggstad, 2012).

Palil& Mustapha (2011) examine the determinants of tax

compliance in Malaysia, aimed at improving tax revenue

collection. The results suggested that tax knowledge has a

significant impact on tax compliance and ultimately, on revenue

collection, even though the level of tax knowledge varies

significantly among respondents. The results also indicated that

tax compliance is influenced specifically by probability of being

audited, perceptions of government spending, penalties, personal

financial constraints, and the influence of referent groups. The

findings generally align with (Fjeldstad&Heggstad, 2012) who

examined the key determinants of taxpayer compliance in

Africa, leading to improved tax revenue.

Fjeldstand&Heggstand (2012), in the study of opportunities and

constraints facing local revenue mobilization in Anglophone

Africa, addressed on political and administrative limitations that

various revenue instruments face and tax compliance by citizens.

The study deduced that, as illustrated by a number of countries

from Anglophone Africa, mobilization of revenue by the local

authorities is hitherto inadequate to develop and supply essential

services to the citizens. In spite of modern reforms by the

Central Government tax systems in many countries in Africa, the

systems are featured by excessive number of different taxes with

rate structures that are complex to the tax payer

(Bikas&Andruskaites, 2013).

Gupta (2007) investigates the principal determinants of tax

revenue performance across developing countries, including

Sub-Saharan Africa, by using a broad dataset of 120 countries.

The results confirm that factors such as per capita GDP, trade

openness and foreign aid, significantly affect revenue

performance of an economy. Other factors include corruption,

political stability and share of direct and indirect taxes.

Pieters (2015) evaluated revenue collection and challenges faced

by local municipalities of South Africa. His study targeted the

Ndlambe local municipality in the Eastern CapeProvince. He

found that there was total breakdown of internal control system.

The reports were far from being accurate, there was poor record

keeping by the municipality and Ndlambe is grant dependent

thus incurring huge amounts of debts.

Tax revenues in Africa have positively been trending since 2001

to 2013, complementing total external flows as an additional

source of finance. There is still need to improve on revenue,

however, most sub-Saharan African countries collect tax

revenue at levels below 20% of GDP. They are recommended to

raise tax- to- GDP ratio to roughly four percent if they intend to

meet the UN’s development goals and other developmental

imperatives (UN,2012). That can be achieved by increasing and



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enhancing domestic savings, improving financial sector

performance and enhancing public sector revenue collection and

expenditure including tax reforms.

Kenya government has 47 County governments whose structure,

mandate and authority are same as enshrined in the constitution

(Ndunda, 2015). According to C. O. K 2010, the clause for

revenue collection states that, there shall be established revenue

fund for every County government, where there will be payment

of all money raised or paid on behalf of the County government

except money excluded by the Act of Parliament (G.O.K 2014).

Bird 2010 argues that, considerable devolution of the National

Government revenue and expenditure functions to sub-national

jurisdiction,is likely to affect the Central Government’s ability to

undertake stabilization and macroeconomic adjustments and

balancing through the budget. Ndunda(2015) argues that, when

regional governments confront budget constraints, the tendency

of their destabilization increases.

Ngugi, (2016) researched on effective revenue mobilization and

found that some of the reasons for poor revenue mobilization are

inadequate data on revenue sources, low enforcement on revenue

mobilization by laws, less revenue collectors and poor training.

Low local revenue performance implies that some planned

activities could not be implemented due to insufficient funding.

Ndungu (2013) in his research on challenges facing collection of

revenue and the effect of the same on service delivery in

Naivasha Municipal Council, the findings were that corruption is

the main challenge affecting revenue collection. Also, human

resource was alleged to lack required skills and training in the

collection of revenue.

1.2 Review of Revenue Collection in KituiCounty

On adoption of the new constitution, Kenya changed its

administrative structure to entail national and County

governments. This system allowed devolution of political and

administrative functions where there was fiscal decentralization

in which County governments can raise their own revenue and

also budget for the devolved functions (Constitution of Kenya,

2010). Maintaining these devolution programs demand strong

revenue base locally hence County governments require to

implement strategies that ensure optimal revenue collection.

Successful revenue collection in the County governments is vital

because it promotes efficient service delivery and economic

development. Counties must now find new and innovative ways

to ensure that their revenue streams are adequate enough to pay

their debts and at the same time provide development to the

society that is critically needed on all fronts (The World Bank,

2014).

According to controller of budget report on the FY 2016/17,

only two counties were able to surpass their target, that is

Marsarbit (107.3 per cent) and Turkana (103.5 per cent)

counties. Only sh32.5 billion of the expected 57.7 billion was

collected by KituiCounty. This performance represented a

decline of 7.1 per cent from Kshs. 35.02 billion generated in

financial year 2015/16. Kitui, Machakos, Kisii, Kirinyaga, Kilifi,

Kakamega, Kajiando, Isiolo, Garissa and Busia counties, did not

actually meet half of their revenue targets.

KituiCounty’s FY 2017/18 approved a supplementary budget of

Kshs. 11.36 billion, which comprised of 60.11 billion (53.8

percent) and Kshs. 5.25 billion (46.2 percent) allocation for

recurrent and development expenditure respectively. The County

expects to receive Kshs. 8.65 billion (76.2 per cent) as equitable

share of revenue raised nationally, Kshs. 686.34 million (6 per

cent) as total conditional grants, generate Kshs 702.04 million

(6.2 per cent) as own revenue source, and Kshs.1.32 billion (11.6

per cent) cash balance brought forward from FY 2016/17 to

finance its budget.

During the first nine months of FY 2017/18, KituiCounty had

received Kshs. 4.52 billion as equitable share of revenue raised

nationally, Kshs. 348.61 million as total conditional grants, had a

reported reserve of Kshs. 1.32 billion and has managed to raise

Kshs. 216.32 million from own revenue source. The total funds

amounts to Kshs. 6.43 billion. The County’s own generated

revenue in the first nine months of FY 2017/18 amounted to

Kshs. 216.32 million. This represents an 8.2 percent compared to

Kshs. 235.54 million generated in similar period of FY 2016/17.

It also represents a 30.8 per cent of this financial year target of

own source revenue not meeting at least half of the target in the

third quarter of the financial year.

According Annual Budget Implementation Reportby the Kitui

government the County Government targeted to collect Kshs

528,413,076 from local sources during FY 2017/2018. The



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actual achievement was Kshs 335,122,477 which translates to

63.4% of the targeted collection.

1.3 Statement of Problem

In an attempt to copy the National Government in provision of

public services, counties need to generate their own revenue.

Recent analysis shows that counties receive 69% of their funds

from National Government through Exchequer and thus has to

generate the remaining 31% to meet its budgetary obligation

(CRA, 2013). Government’s taxes and licenses to single

business are the main sources of revenue. According to Ngugi

(2016), parking fees, land rates and market fees are some of

other sources of revenue that fall under County’s mandate

collection. Successful revenue collection means the objectives of

the County governments are met.

According to controller of budget reports, since devolution back

in 2013, most County governments in Kenya have not been able

to meet their annual collection targets. Kenyan constitution

provides two broad sources of revenue i.e. revenue transferred

from the national government and one generated by the County

on its own. KituiCounty has not been exceptional in failing to

meet the targets. The County managed to collect Kshs.32.5

billion of the expected 57.7 in FY 2016/2017. The County

Government targeted to collect Kshs 528,413,076 from local

sources during FY 2017/2018. The actual achievement was Kshs

335,122,477 which translates to 63.4% of the targeted collection

not meeting the revenue collection targets (Annual budget

implementation report FY 2017/2018).

A proper and sound legal frame work was to be implemented in

order for the County to meet optimal revenue collection. This

study sought to identify the factors that maximized revenue

collection. The aim was to meet the optimal revenue which is

attained from interaction of different factors.

1.4 Objectives of the Study

1.4.1 General Objective

The general objective of the study was to identify factors that

influence optimal revenue collection by KituiCounty

Government

1.4.2 Specific Objectives

The specific objectives of this study included:

1. To find out the influence of technology on optimal

revenue collection by KituiCounty Government.

2. To establish the influence of public participation on

optimal revenue collection by KituiCounty Government.

3. To establish the influence internal control on optimum

revenue collection by KituiCounty Government.

4. To determine the influence of human resource on

optimal revenue collection by KituiCounty Government.

1.5 Scope of the Study

The study’s scope wasKituiCounty which is located in the South

Eastern region of Kenya. The study searched for data from the

heads of the finance and accounting departments in the

KituiCounty government and other officers in these departments.

Questionnaire and interview schedules were used to collect data.

2.0 LITERATURE REVIEW

2.1 Theoretical Framework

There are several theories which explain how tax affects revenue

collection both positively and negatively. However, the

researchfocused on the agency theory, the benefit theory and the

expediency theory.

2.2.1 The Agency Theory

The inception of the agency theory first happened concurrently

but independently between Barry Mitnick and Stephen Ross.

The two had similar ideas that led to the formation of the agency

theory although they had slightly different persuasions. Stephen

Ross leaned towards the economic agency theory, while Barry

Mitnick led to the development of the institutional theory of

agency. The agency relationship is one that arises between two

parties or more when one party, who is designated as the agent,

acts for, on behalf of, or as a representative for the other

designated principal, in a particular domain of problems (Keya

&Muturi, 2017). According to Torome,(2013), the agent-

principal relationship is where one party, agent, acts for another

party, principal. The acting for is presumed to in a broad sense

be for the benefit of the principal.

Venables(2010), studies show that, economic agency theory

faces a great challenge in the selection of a compensation system

that would get rid of the agency problem where agent acts for his

benefit and not for the principal’s and merge the two’s

preferences, that is the agent and the principal. However, he



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focused his view on the problems of agency relationship that can

be solved through the contributions of incentives or contractual

constraints or risk decisions are further looked at keenly.

Jensen &Meckling (2006), argues that agency relationship is

based upon the agency theory and defines it as a contract under

which one or more persons (the principal) engages another

person (the agent) to perform some service on their behalf which

involves delegation of some decision making authority and

powers to the agent. The argument is that incase the objective is

to maximize utility,the agent will not always act in the best

interest of the principal. Therefore, the principal has to

implement some measures to act as incentives to ensure the

agent is compensated for forgoing on their self-interests through

incurring monitoring costs to ensure compliance (Torome,

2013). The principal cannot in any situation fail to incur costs

and still at the same time expect to have the agent make optimal

decisions from the principal’s point of view. The principal is

constantly at loss because even if he does not incur costs to keep

the agent in check, he still faces the residual loss of agency due

to reduction in welfare caused by the diversion of the agent’s

priorities.

Fontrodona (2006), displays that the motivations and aspirations

of the principal and the agent in the agency relationship are not

in sync. Therefore, the principal wants to incur as little loss as

possible in terms of remuneration to the agent while at the same

time expecting stellar performance that leads to more profits.The

agent on the other hand wants to do as little work as possible at

high pay. The scholar believed that a moral minimum is required

to be upheld above the interests of any party, hence,

contradictory assumptions on human nature will leadto valid

assumptions of trust, honesty and loyalty getting infused with

the agency relationship. Therefore, where the agents lack these

compelling characteristics, the principal will have to incur

agency cost as a result of the divergence of interests.

Wright & Oakes, (2002) argues that, level of expectation

expected by the principal differ depending on the experience and

professional level of the agents. Therefore, a professional broker

or agent is expected to have skills that result to effective and

efficient work output than part time revenue collecting agents.

Also, the County finance officers, revenue collection clerks and

County enforcement officers are not motivated to pursue

maximum revenue collection or follow up on any late payments

or defaulters of land rates and fees charged for services offered

(Jensen &Meckling, (2006).The County Government on the

other hand expects optimum collection of revenues so as to

finance County projects set up to improve the standard living of

the County residents. Government tends to spend as little as

possible towards the supervision of the revenue collection

officers to ensure selfless execution of delegated work as the

costs would be counterproductive and are prohibitive in any

case. However, the employees are usually not motivated to

pursue optimum collection as there is little or completely

nonexistent oversight and supervision, hence rampant corruption

and reluctance to do work.

Gordon & Li (2005), shows that, there exist a loophole that helps

the tax workers to defraud the government of tax especially

through corruption and erosion of taxes in the case of cash

payments. This ultimately impacts final revenue received by the

County government. According toShankman’s contributions to

agency theory, the Countygovernment ensures optimum revenue

collection needs only to instill the aspects of trust; honesty and

loyalty into the employees to ensure the more positive moral

human persuasions win rather than corruption and self-benefit.

The government should also offer incentives to its tax collection

workforce so as to increase productivity

Besley&Ghatak(2005), argued that, the principal should

motivate the agents through offering some incentives. Therefore,

the government should ensure provisionof commission in

addition to their salaries to develop the motivational concerns

from the administration. The agency theory is extensively

adopted as a tool to solving conflict between agents and owners

so as to smoothen the working of the government and its

employees. According to Torome,(2013), the interest shown by

the interested parties in the organization resolves conflicts with

better understanding of obligation of each group.

2.3.2 The Benefit Theory

This theory was first developed by Erick Robert Lindahl (1919).

The theory states that the state should levy taxes on its citizens

according to the benefits they receive from the state (Gituma,

2017). Therefore, citizens will actively expect to receive some



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form of benefit or improvement in the way of life once they pay

their taxes, land rates and levies. The benefits theory of taxation

treats the relationship between the taxpayer and the state in

contractual terms. Taxation is the price paid by the taxpayer for

benefits or services provided by the government. Hence, taxes

should be low or zero for those who receive no benefits from the

state, and high for those deriving the most (Vosslamber,2010).

Braithwaite (2008), argued that there will be higher chances of

voluntary compliance to being taxed if the tax payers are able to

cultivate trust with the tax collectors as they will be sure their

contributions will be reinvested through government

expenditure. The tax collectors also have to appear to be fair as

if it is perceived hence, there will be a higher rate of compliance.

Lumumba et al (2010), found out that the taxpayer's perception

on the tax system and how it benefits them helps improve the

rate at which there is tax compliance. This shows that if the

taxpayer perceives a fair tax system that will result to a higher

proportion of benefits, there will be a higher level of tax

collection hence optimal revenue collection.

The theory has however attracted some very viable critics. The

theory goes against the basic principle of taxation that taxes are

compulsory so as to meet the government’s expenditure and that

any benefits that accrue to the citizens cannot be measured so as

to justify the benefits that they will receive (OECD Revenue

Statistics, 2017). A tax is an obligatory and as such the

government has the mandate to collect the revenue so as to meet

its expenditures and supply general benefits to the public

(Booker, 2004).

Chauke(2017) criticizes the theory in that, if the collection of

taxes is connected directly to the benefits that accrue to the

citizens, then the poor who receive the most benefits from the

County or state providing public services at subsidized prices or

sometimes at no charge should then be taxed more, the only fault

with the thought is that it goes against the principle of justice

and equity. The nature of the benefit theory then seems to

purport that anyone can effectively reduce their tax liability by

reducing their consumption of the public goods and services or

by under reporting any benefits received from the government.

The theory also fails to account for the fact that many people fail

to comply with taxes and either avoid tax or entirely evade tax.

Most of the reasons for failure to comply with taxes are that the

citizens are mistrustful of the tax system due to corruption and

there is very little effect of fines on tax compliance as it is

negligible (Ndirangu, 2014).

The theory can be used positively to motivate people on revenue

payment. This can be attained by government expenditure on the

needs of the taxpayer. Bray (2008) implicates that the County

governments should formulate projects and programs that will

help do away with poverty therefore reduce the hardship in the

life of its citizens by use of its Internally Generated Funds (IGF).

The funds the County has generated from within its jurisdiction

are market levies, property taxes and land rates and any fines

imposed on the resident citizens. The County government

therefore is required to institute revenue collection measures

regardless of the benefits that will get to the citizens because

failure means the government will have difficulties in financing

its operations. According to Brewer (2009), the County

governments should identify crucial local needs to satisfy them

better than the national government. This influence people in

revenue payment as the benefit of their contribution are visible.

The County is then able to collect the IGF to fund its projects.

2.3.3 The Expediency Theory

Olushola (2016) defines the theory as a tax systems or proposals

that should be practical. It emphasizes that the economic and

social objectives of the state and the effects of the tax system

should be ignored and taken as irrelevant (Bhartia, 2009). This is

because a tax system is of no use if it cannot be imposed on

citizens and collected effectively. Birungi (2015) argued that

every group tries to promote and protect their own interests and

authorities and they usually reshape tax structures to

accommodate these forces. This is done with the aim to reduce

the tax burdens faced or to avoid those tax burdens all the same.

The practicability of the system is achieved when there is

harmonization of the social, political and economic group’s

interests so that everyone’s interest will be addressed and taken

into consideration. However, in line with practicability of a tax

system, if a tax cannot be collected then it should be out of

question. Also, if a tax is to be levied on a certain group of

people and they see it as impracticable, then it should be

outfaced. The expediency theory is relevant to the current study



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as it seeks to explain how achieving the tax plans could

influence collection of optimal revenue in the County

governments.

Olushola(2015) argued that the expediency theory proceeds on

the assumption that there is basically an exchange relationship

between taxpayers and the state. This enables the state to provide

certain goods and services to the society and they contribute to

the cost of these supplies in proportion to the benefits received.

He also noted that taxes should be allocated on the basis of

benefits received from the government expenditure. This is quite

significant in this study because if the taxes paid by the citizens

are proportional to their income and they don’t see it as a

burden, there will be less tax avoidance and evasion, hence

collection of optimal revenue.

Bhartia, (2009) argued that,the expediency theory of taxation

depicts the policy of “pluck the goose that squawks least”. This

principle states that income, wealth and transactions should be

all taxed at a fixed rate, and that is, people who buy more and

earn more should pay more taxes but not pay a higher rate of

taxes compared to others (Ayuba, 2014). Any citizen is to pay

taxes just because they can and their relative share in the total

tax burden is to be determined by the relative paying capacity

(Bhartia, 2009). Therefore, using this theory the state should be

able to administer and collect taxes more efficiently and this

argument is applicable in this study since the County can attain

optimal revenue collection.

Avulala (2014) an efficient tax system is one that guarantees

minimum extortion of taxpayers and distortion in economic

decisions of people and firms. However, according to this

theory, much importance has been given to obtain maximum

revenue and little interest given for proper distribution of the

taxation burden. Efficiency is the main issue in this argument

when collecting taxes and on its achievement, citizens will be

satisfied with the services and will be willing to contribute their

part in taxes for the welfare of their economy. This ensures

revenue is collected optimally, efficiently and with cooperation

from its citizens. According to the Expert of group United

Nations (2010), tax revenue substantially contributes to public

development and therefore the need to streamline national tax

system so as to ensure the realization of optimal revenue

collection through equitable and fair distribution of the burden of

taxes.

However, to build the whole tax system only on the

considerations of expediency has its pitfalls as argued by

Ndunda et al (2015). Taxation influences certain policy tools to

the authorities and which should be effectively used for

correcting the economic and social challenges facing the society

which include; unemployment, income inequalities, cyclical

fluctuations and regional disparities (Chigbu et al., 2011).

Taxation can be used to reduce the unemployment rate by

employing more efficient people who follow up on revenue and

ensure a larger percentage has been collected since it’s the major

source of revenue tax can play a huge role in solving some of the

challenges.

2.4 Empirical review

2.4.1 Technology

Technology innovation has been an important matter in revenue

and tax collection. Revenue and tax collection are affected by

automation which is technological enhancement, this is in terms

of hardware and software to curb inherent risks relating to

revenue reduction (Gitaru,2017). Technology implementation is

key in improving the efficiency and effectiveness of revenue

mobilization in the country. This will enable revenue collection

agency to meet their set targets since there will be less revenue

avoidance and evasions. This is usually attained successfully by

synchronizations of various systems towards a common

repository mapping which is a fundamental tool in automation

(Dramod, 2004). Automation of the revenue system involves

investing in modern technologies i.e. ICT, in order to upgrade

the revenue system and achieve integration and information

sharing which will enhance efficiency and effectiveness of the

system.

Panday (2006) carried out an empirical study whose main goal

was to establish the influence of adopting technology in revenue

mobilization in India. He used regression analysis among a

random sample of 20 local governments in the country. The

results of the study revealed that for a government to compare

execution of technology with the development and desires of its

constituents, it should significantly build its financial profundity

without causing expensive repeating overheads. He noted that



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technology adoption through systems automation is fit for

acquainting bigger efficiencies with accumulation of street

parking fees that can enhance the income.

The development and utilization of modern technology in

revenue mobilization has become a critical feature of every

country particularly developing countries. This is as a result of

the numerous usefulness modern technology offers in the

development of counties. A study by Kinyanjui and Kahonge

(2013) in Kenya revealed that the use of e-payment by mobile

phone-based technology increased parking fees collection. It

recommended for development of an application to control

traffic flow, allocation and availability of parking space within

the streets of Nairobi.

The Kenya Revenue Authority introduced the electronic tax

administration system referred to as iTax, so as to enhance tax

collection and improve its efficiency which was a part of the tax

reform agenda of the government (KRA, 2016).Application of

technology has helped in reducing inconsistencies and errors in

tax filling (Kipkemoi, 2015). The straight forwardness of the

iTax system has greatly reduced the number of middlemen like

cyber cafes with own interests and given more power to

taxpayers though connection of only one email address to one

account hence increasing the outlook of trustworthiness. This

has ensured that taxpayers are now more loyal and have ease to

file their taxes since they have complete control (KRA, 2017).

Malonza (2016) argued that itax enabled a larger intake of

groups that were otherwise not recognized before the electronic

platform. Every taxpayer already captured by the system can

never again evade tax.

Nyongesa (2014) found that the use of automation of revenue

collection system would widely increase the revenue collection

but it was not clear how the revenue collection would be

influence by e-payment. In fact, the study recommends that the

County Government of Mombasa needs to automate its revenue

collection without specifying the system to use.

All sectors of the County should put in place an effective and

efficient revenue collection system in monitoring framework that

ensures adequate supervision of the budgeted programs and

project activities to enhance accountability and absorption of

resources (Lidaywa,2018).

2.4.2 Public Participation

Public participation in the budget process has greatly increased

the number of people willing to pay taxes and reduced tax

avoidance and evasion. Participation by citizens is mainly geared

to helping the County set priorities, provide feedback on projects

funded by the government and ensure fiscal transparency.

According to Cloete (2009), public participation promotes

democratic principles such as political equality, majority rule,

popular sovereign and accountability.

The Public Finance Act, 2012 section 137, provides that the

County budget and economic forum be set as a means for public

participation in preparation of County plans, County fiscal

strategy paper and budget review and outlook paper for the

County. Public hearings held from September 1 to February 15

each financial year, also help the national treasury, ministries

and agencies get consultation with the public and stakeholders

pertaining proposals on budget. Public views are used in

formulation of the budget policy statement. All the public

participation encouraged by the COK is geared towards giving

the citizens power to control how public monies are spent. This

aspect has greatly empowered citizens hence giving them more

faith in the tax and revenue collection system as the outcome is

clearly seen. This has ultimately reduced tax avoidance and

evasion (ICPAK).

Vanda (2016) argues that public participation is a learning space

for the citizens. This can be emanated through the exercise of

opportunities arising from access to information and education.

This promotes more responsible shared decisions making on

issues affecting the common majority citizens. The modern and

civilized community considers other factors such as

cosmopolitan experience and common view perspective on basis

of community governance rather than physical distance (Omolo,

2016). Therefore, it is viewed as liberation from the market

despite challenge of how unresolved problems affect the

decision making.

IPAT (2016)argued that public participation and engagement of

citizens in the decision-making process generate an added

advantage which is better sense of citizens’ priorities. The elite

of the societies who happen to decide the priorities to the less

elite in the society are incorrect, hence the need to practice



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participation of the society so as to ensure citizens provide what

is their top priority. Reaching to a consensus concerning a

specific problem is difficult due to differences in the perspective

of the people in power and those facing them. Therefore,

through participation, specific problems will be analyzed and

solution generated. Those directly affected by problematic

situation tend to have ideas to solve problem than only relying

on ideas from elite social class. The elite groups tend to develop

policy to their benefit so as to finally deprive the society their

resources. Public participation encourages public education and

impact in them a sense of citizenship.

IPAT (2016) the relevance of public participation comes to play

during public policy debate, which involve addressing the

problem, analyzing and designing the actual policy and in the

implementation of the public policy. This is because a broad

policy produces subdivision of choices due to determination of

the specific environment to be launched. IPAT (2016) argues

that, local government may lack resources for implementation of

the policy drafting of choices. Therefore, awareness is made on

constraints involved in implementing the debated policy.

Lewis et al (2008) noted that the willingness to file tax forms is

an important ingredient in achieving efficient administered tax

system. Therefore, a high magnitude of fairness in the tax

system enhances particular democracy thereby encouraging

firms and individuals to comply voluntarily. Checking each

filling form, increases the cost of administration on income tax

due to large number of population in the state or County. As a

result, less fair system increases the rate of tax evasion making it

more difficult in administration of the system. According to

Ngugi (2015), impartial administration in large tax payers,

results to inadequate record keeping hence making collection of

income tax more problematic in undeveloped countries.

Brautigan (2008) argues that public participation is linked to

empowerment which represents advancement in democratic

governance that allow permit and can be conceived as both self-

initiated and initiated by others. According to Kayagi (2010),

public empowerment is also act of building, developing and

increasing power through co-operation, sharing and working

together.

2.4.3 Internal Control Systems

Brian (2013) asserts internal controls as a set of organizational

policies and approved internal processes, crafted by management

of the organization to ostensibly achieve management’s primary

objective of ensuring that the business operates

flawlessly.Hongming&Yanan (2012) add that internal control

systems resemble the human nervous system which is spread

though out the business carrying orders and reactions to and

from the management. Karagiorgos et al (2011), noted that

internal control system has five components which include:

Control environment, which involves the attitudes and norms of

both management and their employees; Risk assessment, which

is the regular review of the business to assess risks inherent and

develop controls to mitigate them; Control activities, which use

accounting systems and information technology to introduce

procedures to every transaction and offsite backups to reduce

risk of losing data example in fire; Information and

communication, where management need to receive adequate

and timely information on controls on any problems are

addressed as they surface; Monitoring, where management

regularly checks to confirm that the internal control system still

works effectively and points out and corrects any shortfalls so as

to improve the control environment.

Mawanda (2008) noted that internal processes are those that

management relies on to make sure things don’t get goofed up.

There is need to have working internal control systems so as to

ensure that the organization is protected against risks. These

risks can lead to the compromise of the organization’s

objectives.

Brian (2013) describes internal controls as those mechanisms

that are put in place to either prevent errors from entering the

process and or detecting errors once they have entered the

system. The County governments have moved from cash-based

transactions in collection of revenue. It has adapted methods like

use of bank account for payment of land rates and pay bill

numbers for market levies to avoid most of these errors from

occurring. This is a control tool to ensure employees are not

exposed to cash. Avenues for fraud and stealing from public are

mitigated. The internal control system is meant to be monitored

and checked from time to time so as to gauge its effectiveness

(Amuda&Inenga, 2009). Internal controls set on revenue



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collection in counties have reduced the chances for collusion and

fraud thus ensuring optimum collection of revenue.

Amudo (2009) noted that there are weaknesses in internal

controls and they are associated with increased levels of earnings

management. Employees are therefore being blinded by their

greed for money and this is creating huge problems especially in

controlling the internal processes of an organization. There is

therefore the need to frequently and in an impromptu manner, set

up audits that will check and test the strength of the internal

control systems in revenue collection offices. Revision of

policies is eminent after collection so as to reduce or entirely

eliminate fraud.

Olumbe (2012) noted that ineffective control systems result in

ineffective programs which eventually lead to losses. James

Anyanzwa, while writing the report on Capital Markets

Regulators Reign in on Rogue Firms for the Standard

Media(May, 2013), stated that the trend of corporate failures and

accounting frauds at the time were mostly preceded by failure in

the internal control systems of the companies affected. This

research deals with optimal revenue collection and ineffective

internal control systems is a challenge. Therefore, revenue

collecting systems and organizations should ensure monitoring

of internal processes regularly and in case of errors they should

be corrected immediately.

Internal control processes are affected by an organization’s

board of directors, management and other employees (Brian,

2013). They are created so as to provide reasonable assurance

that objectives like; effectiveness and efficiency of operations,

compliance with applicable laws and regulations and reliability

of financial reporting will be achieved by the entity (COSO).

Internal controls usually represent the firm’s plans, methods and

procedures that are used to meet its goals and objectives. Internal

control systems that are effectively updated, monitored and

audited are very useful in collection of revenue in Kenya’s

counties and they ensure revenue is collected optimally and

maximum value realized.

2.4.4 Human Resource

Ngugi (2016) noted that human resource plans that address

training and development of staffs, inadequate staff and ensuring

empowerment of staff on the ethical behaviors free from fraud

and corruption will enhance optimal revenue collection. The

skills and competence of these revenue clerks should be

irrefutable. This is to mean the clerks should be able to carry out

their duties and responsibilities with due professional care and

integrity hence ensure there is no corruption and all loopholes

for tax evading are closed. Kamande (2014) argued that the use

of high performance work practices like; proper and

comprehensive employee selection and recruitment procedures;

performance monitoring and management systems; feasible and

incentive compensation; extensive employee involvement; in

decision making and training with the aim to improve skills and

knowledge of the employees and also the ability of the firm’s

current and potential workforce so as to increase motivation and

reduce employee turnover while enhancing retention of quality

workforce. This cause has been promoted further by the

development of KRA Training Institute (KRATI) where the best

human resource practices are taught and integrity is improved

on.

Adenya&Muturi (2017) noted that optimal revenue collection

will be the result when the employees have the right work ethic

and as such lead to reduced corruption and fraud. This argument

is true since employees hold the power to misuse the revenue

collected or to choose to be honest at work, so as to move

towards optimal revenue collection. Kamande (2014) stated that

human resource is the biggest determinant of how much revenue

is collected and gets to the public offers. This is because even

with use of technology, it still has a human aspect of operation

that if not handled with care will lead to less than optimal

revenue collection

The Turkish revenue administration (2014) noted that among the

most important factors influencing optimal revenue collection is

the level of quality of the services offered to the citizens by the

revenue collecting agencies. Hence, there is the need to have

total quality management training in order to come up with a

comprehensive, effective, innovative and high-quality tax payer

service system. Factors that were highlighted in this argument

include: Creating a standardized measure and an evaluating

system for employee and customer satisfaction; training of the

personnel in the organization, especially the employees involved

in service delivery on teamwork; problem solving techniques;



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motivation and leadership i.e. encouraging employee growth by

motivating them to go for further studies; Promoting gender

equality in the organization and have equal opportunities for

growth for both genders and also the minority groups such as

persons living with disabilities.

Cheeseman& Griffiths (2005), pointed that the KRA Corporate

Plan 2003/2004 – 2005/2006 used the Balanced Score Card

(BSC) as a performance measurement strategy along four key

dimensions and they include: Financial which entails surpassing

revenue targets; Internal processes to ensure increase in the

efficiency of processes and reduction of cost; The people where

there is the development of a highly motivated and professional

workers; To stakeholders to ensure quality service to taxpayers,

government and other parties.

2.4.5 Optimal Revenue Collection

Governments work towards maximizing their revenue collection

by using methods that ensure they raise enough revenues to run

and manage their affairs on the grass roots (Lelei, 2018).

According to the National Association of Counties (2014), in the

United States, there are 3,069 counties which greatly vary in size

and population from Loving County, Texas with just 71

residents to Los Angeles, California which is home to 9.2

million people. 48 out of 50 states in that country have

operational County governments. Increase in revenue collection

is achieved through employing County revenue instruments to

be used in tax collection as well as exploiting and harnessing all

available sources of revenue in their localities and devising a

cost effective means of collecting revenue (Lelei, 2018).

Revenue collection generally relates to a government agency’s

actions to collect outstanding financial obligations from the

public (GOK, 2010). The County governments in Kenya get

their revenue from taxation, permit fees, cess, license fees and

other sources. The Government of Kenya raises most of its

revenue through enhancing elasticity of the existing tax system

that is, rationalizing and regulating expenditure through strict

fiscal controls(Awitta, 2010). The tax system involves the

collection of direct and indirect taxes. Direct taxes are those

charged on the factors of production and they include;

withholding tax, personal income tax, corporate tax and rental

income tax. Indirect taxes are charged on consumption of taxed

goods, for example, value added tax. Efficient and effective tax

system influences optimal revenue collection and the

achievement of governments’ objectives.

The agency mandated with the responsibility to collect revenue

from Kenya is the Kenya Revenue Authority (GOK, 2010). In

order to perform its mandate, KRA has its agents all over the

country who aid in the collection of the taxes and charge

penalties to defaulters. The Countygovernments also have their

levies collection officers for levies such as license fees and

market fees. Optimal revenue collection has been aided by the

use of technology such as iTax system which is a system that

automatically updates tax charges due to be paid, and on default,

flags the information to the tax collector. Technological

advancement has greatly aided the tax collection process since it

has reduced the complications and made it easier for the citizens

to access the platform since they need only use the iTax portal.

Information Technology however evolves at a fast pace that the

existing fiscal systems faces obsolescence very fast. Adams

(2002) comments that the incorporation of previously existing

structures becomes more challenging as there is need to develop

new applications to assist in financial processes. Passage of time

also increases the magnitude of data to be processed so as to

keep fiscal processes working therefore the need for accessible

infrastructure, (Maxwell, 2005).

Lelei (2018), the outcome of his research revealed that the

training of the County revenue collection staff is imperative

toward the attainment of optimal revenue collection. This shows

that the revenue collection staff influence by a big margin the

amount of revenue collected by the County government and by

extension the national government. Those already employed

should be trained by the Human Resource department and

related agencies such as Ethics and Anti-Corruption

Commission. The newly employed should have the constitution

of Kenya invoked to ensure unethical practices are addressed

early (COK, 2010). Having well trained and ethical staff ensures

that the employees are less likely to engage in corrupt practices

that reduce the level of revenue that gets to the public coffers

therefore, optimal collection.

Optimal revenue collection has been enhanced by the increase in

tax compliance due to tax payer education by KRA. According



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to Muriithi&Moyi(2006), the tax authorities are required to be

more vigilant and concerned with taxpayer education,

compliance and tax audits. Tax audits are important as they

ensure the taxpayers remain faithful in their tax remittances,

especially in cases of self-assessment. Taxpayer education has

ensured that there is a higher level of tax compliance because the

citizens understand the importance of their compliance (Awitta,

2010). Citizens understand the influence of failure to comply

towards the government and its ability to provide public goods

and services.

3.0 RESEARCH METHODOLOGY

3.1 Introduction

This chapter outlines the research design and the methodology

that was followed in conducting this study. The researcher sub-

divided the chapter in groups so as to enable relevant study.

Specifically, the chapter spells out research design, target

population, sample size and sampling procedures, research

instruments, piloting, instruments reliability, data collection

procedures, and data analysis.

3.2 Research Design

Research design can be defined as a set of logical procedures

that undertaken, enables one to obtain evidence to calculate the

degree or extent to which theoretical questions are or are correct

(Mohajan, 2017).

The study employed Longitudinal Research and descriptive

research designs so as to ensure capturing the current and

trending case study being undertaken for the trending financial

year 2016/17 and 2017/18. It enhanced and helped in the

achievement of the required objective of the study as it tracks the

changes of variables over time that explains the cause of the

changes. The longitudinal design also ensures the description of

the pattern of changes which help in determining the direction

and magnitude of the causal relationship. Compared to Cross-

sectional design where it does not consider time dimension, the

longitudinal design takes the measurement of each variable over

time two or more time periods which allow measurement of

changes of variables over time.

3.3 Target Population

Karimi (2017) states that population is a set of people, elements,

services, and events, group of people or households that are to be

investigated. This ensures that the collection of sample data on

the population of interest reflects the actual population

performance. The target population of the study was 56

accounting and finance officers of KituiCounty Government.

3.4 Sample Population.

The sample respondents in the study comprised of 30% of the

population as deemed appropriate for Longitudinal study

(Ngugi, 2016). A simple random and purposive sampling was

employed for the selection of the sample from the population of

the study. Purposive and simple random sampling was

conducted according to departments or the level of responsibility

in the departments.

According to Mutavi 2016, simple random sampling increases

statistical effectiveness and efficiency on the sample, provision

of required data for analysis of various subpopulations and

ensures different research methods and procedures can be used.

Therefore, the sample population of the study will be 15 officers

of the County Government of Kitui.

The formula to find the sample size is: -

n= __N____

1 + (N * e2)

Where;

N= population size

e= Tolerance at the desired level of confidence, take 0.05 at 95%

confidence level

n = sample size.

Therefore,n= 56 = 14.74 =15

1 + (56 * 0.05)

3.5 Data Collection Instrument

Data collection is the gathering of data, information of facts and

evidence from the targeted population to allow making

conclusions, drafting of decisions important to the study and

passing information to others members of interest (Ajayi, 2017).

The study employed both primary and secondary data that were

collected from various sources of the case study. The primary

data collection instruments were questionnaires, that had both

structured and unstructured questions. The structured

questionnaires provided gathering of personal information from

the respondents and data on revenue collection. The open ended



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questionnaire adopted use of interview guide to collect left out

questions from the respondents.

Questionnaires allow researchers to collect a large amount of

data in a shorter duration, and they are less expensive.

According to Machuki (2010), questionnaires offer an objective

means of collecting information about people’s knowledge,

beliefs, attitude, and behavior.

Collection of secondary data was achieved from County

Government Website, published articles, case studies, interview

guides and public records form the agency

3.6 Reliability of research instruments

Simiyu (2013) defines reliability as the extent to which result

gathered from the field is consistent over time and accurately

represents the features of the population under

investigation.Cronbach coefficient Alpha was employed for the

determination of the reliability of the area of the study by

determination of internal consistency research and the average

correlation of items within the text (Simiyu, 2013). The

Cronbach’s alpha is demonstrated in fig 3.4

Cronbach's alpha Level of Internal

consistency

α ≥ 0.9 Excellent

0.8 ≤ α < 0.9 Good

0.7 ≤ α < 0.8 Acceptable

0.6 ≤ α < 0.7

Questionable

0.5 ≤ α < 0.6 Poor

Fig 3.1Cronbach’s alpha level of consistency.

3.7 Piloting

A pilot test is where a small-scale representation is undertaken to

represent the main research (Ataro, 2016). Randomly selected

sample were subjected to the questionnaires for pretesting the

questionnaires during the pilot surveillance.

3.8 Data Collection Procedure.

Data collection is the process of measuring and gathering data

on defined variables of interest following an established

systematic manner that helps the researcher test stated

hypothesis questions, answer stated questions and evaluation of

outcome, (Mohajan, 2017). Data is raw material facts without

any processing, organizing or analysis which has little meaning

and benefit to the user of the information such as managers or

decision makers. Mohajan (2016) argues that data does not

contain details or information to use them in a particular context.

3.8 Data Collection Procedure.

Data collection is the process of measuring and gathering data

on defined variables of interest following an established

systematic manner that helps the researcher test stated

hypothesis questions, answer stated questions and evaluation of

outcome, (Mohajan, 2017). Data is raw material facts without

any processing, organizing or analysis which has little meaning

and benefit to the user of the information such as managers or

decision makers. Mohajan (2016) argues that data does not

contain details or information to use them in a particular context.

According to Mohajan (2017), researchers ought to use

important information following specified data lifecycle concept

that include: Studying key elements, definitions and concepts of

the data to be collected; Ensure data collection by using

questionnaires and coding instruments; Processing of the

information containing data with specification of the context;

Archiving of data through indication of procedures for the

guarantee of preservation of data and confidentiality;

Distribution of data indicating the terms use and of the citation;

Analysis of data providing replication codes and publication;

Repurposing of data indicating the procedures for post hoc

harmonization and transformation.

3.9 Data Analysis

Data analysis is a procedure of bringing order, structure and

analyzing the wide range of the collected data (Smith and

Albaum, 2012). Regression analysis model was used for data

analysis to establish the correlation of the independent variables

to the dependent variable. The Statistical package for social

sciences (SPSS) tool aided in data processing and analyzing.

3.9.1 Multiple Regression Analysis

The model is a more advanced model because it appreciates that

more than one independent variable affects the dependent

variable. The model was used in the analysis of the individual

independent variable to the dependent variable. The following

multiple regression analysis was used to answer the questions of

the study;

Y =β0 + β1X1+β2 X2 + … + βp Xp + ei



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The study’s independent variables include; Technology, Public

Participation Internal Control System and Human Resource

Regression equation will therefore be;

Y = β0 + β1X1+β2 X2 + β3X3 + β4X4 + ei

Where, Y- Optimal Revenue

X1- Technology

X2- Public Participation

X3- Internal Control System

X4- Human Resource

ei– Error function

β0 – Beta function

4.0 DATA ANALYSIS AND INTERPRETATION

4.1 Introduction

The overall goal of the study was to find out the influence of

Optimal Revenue Collection by the County Government of

Kitui. The chapter presents the findings of the study based on the

objective. Specifically, the presentation attempted to address the

objectives of the study, namely: To find out the influence of

technology on achievement of optimal revenue collection by

KituiCounty Government; To establish the influence of public

participation on optimal revenue collection by KituiCounty

Government; To establish the influence of internal control on

optimum revenue collection by KituiCounty GovernmentTo

determine the influence of human resource on optimal revenue

collection by KituiCounty Government.

4.2Analysis of General Information

The study targeted a sample population of 15 revenue officers in

collection of data with regard to the study. Questionnaires were

distributed to the respective respondents. However, only 14 were

calculated representing 93.33% response rate which is sufficient

and satisfactory for analysis. According to Nulty (2008), the

response rate was acceptable as it has surpassed the 70%

response rate threshold.

4.2.1 Reliability of the Pretested Research Instruments

Cronbachalpha, is a measure of internal consistency, which was

used in the examination of the internal reliability of the

questionnaires. Therefore, the higher the mark, the more

dependable the acquired data is. The final questionnaire was

modified and developed based on feedback generated from the

pilot testing the initial questionnaire. According to the Cronbach

Alpha table, a value between 0.7-0.9 was acceptable as show in

table 4.1.

Table 4.1. The CronbachAlpha Coefficients for the Variables

Variables Cronbach Alpha N

Technology 0.937 5

Public participation 0.925 5

Internal control system 0.930 4

Human resource 0.893 5

Optimal Revenue Collection 0.909 5

4.2.2 Gender of the respondents

Although men and women may contribute differently towards

the performance of organizations at different stages, gender of

the respondents was considered to be a crucial component of the

study as it is linked to individual performance. The study first

aimed to investigate the respondents gender whereby 46.7%

were male and 46.7% were female. The findings show that

gender parity was considered in the study. The gender

representation represents a fair compliance to the Kenya

constitutional requirements that public institutions exercise

adherence to not more than two thirds of one gender in

employment and distribution of staff.

Table 4.2 Gender of the Respondents

Frequency Percent Valid Percent

Cumulative

Percent

Valid 0 1 6.7 6.7 6.7

Male 7 46.7 46.7 53.3

Female 7 46.7 46.7 100.0

Total 15 100.0 100.0

4.2.3 Period Served in the Current Position

Work experience was another personal attribute that was

investigated. There is a general held view that experience

impacts on performance positively. A person with a wide

experience is more skilled and likely to perform effectively than

one who is newly employed. On investigating the period 57.1%

who were the majority had worked between 0-5 years, 21.4%

had worked between 6-10 years, and 21.4% had worked for over



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15 years. The findings show that over 42.9% of revenue

collectors had experience of over 5years which means they were

staff adopted from defunct municipal and County councils of

Kitui former local authority. 57.1% of revenue collectors with

experience of less than 5years, are relatively young people that

were employed in the recent past and in the wake of inception of

County governments in Kenya in early 2013.

Table 4.3 Period served in current position

Frequency Percent

Valid

Percent

Cumulative

Percent

Valid 0-5 years 8 57.1 57.1 57.1

6-10 years 3 21.4 21.4 78.6

over 15

years

3 21.4 21.4 100.0

Total 15 100.0 100.0

4.2.4 Age of the Respondents

Age is an important factor as a determinant of performance.

Normally, the middle level generation is regarded

knowledgeable, innovative, energetic and vibrant compared to

the much elder people. The findings of the study confirmed the

general perception since most of respondents belonged to the age

group of 25-35 years representing 57.1% followed by age group

36-45 years constituting 21.4% (table 4.1). These age brackets of

respondents below 25 years represented the lowest number of

7.1% and above 45 years representing 14.3%. The young

officers are energetic in the field of collection of revenue while

the old are knowledgeable and experienced in collection of

revenue.

Table 4.4 Age bracket of Respondents

Frequency Percent

Valid

Percent

Cumulative

Percent

Valid below 25 1 7.1 7.1 7.1

25-35 years 8 57.1 57.1 64.3

36-45 years 3 21.4 21.4 85.7

above 45 years 2 14.3 14.3 100.0

Total 15 100.0 100.0

4.2.5 Education Level of Respondents

The study aimed at determining the education level of the

County employees. The levels was classified into the Secondary

school level, certificate/ diploma, undergraduate level and post

graduate level followed by secondary school level 28.6%. The

study revealed that a fair number of employees in the County

government of Kitui possessed middle level education. Most of

employees had tertiary level education representing 50% of

population. But contrary to our expectation only a small number

14.3% for undergraduate and 7.1% for post graduate education

that represented the supervisors.

Table 4.5 Education Qualification

Frequenc

y Percent

Valid

Percent

Cumulative

Percent

Valid secondary school 4 28.6 28.6 28.6

certificate or

diploma level

7 50.0 50.0 78.6

undergraduate

degree

2 14.3 14.3 92.9

post graduate level 1 7.1 7.1 100.0

Total 15 100.0 100.0

4.3 Descriptive Statistics

The section presents the descriptive findings and analysis

relative to the research objectives. The findings are summarized

in measure of central tendencies (mean) and measure of

dispersion (standard deviations).

4.3.1Technology

The study aimed to find out the influence of technology on

revenue collection in the County government. Majority of the

respondents 92.9% agreed that integration of technology in the

County government has improved revenue collection.

Table4.6 Respondent Perception on Influence of Technology



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SA% A% N% D% SA% Mean Std.

deviation

The County government have automated

revenue collection system

64.3 21.4 7.1 7.1 0 4.43 .938

There is continuous upgrade of the

technological system in collection of revenue

42.9 42.9 14.3 0 0 4.29 .726

Technology synchronization has improved

revenue collection

50.0 42.9 0 7.1 0 4.36 .842

Technology has eliminated fraud in

collection of revenue

42.9 35.7 7.1 7.1 7.1 4.00 1.240

Technology has simplified and reduced

workload in revenue collection

71.4 28.6 0 0 0 4.71 .469

According to table 4.6, 85.7% of the respondents indicated that

the County government has automated revenue collection system

that increased the effectiveness and efficiency in collection of

revenue. This has been as a result of continues upgrade of the

technological systems on revenue collection as agreed 85.8% by

most of the respondents. Further, majority of the respondents

92.9% agree that there has been improvement in collection of

revenue as a result of synchronization of technology where most

of the respondents 78.6% agreed there has elimination of fraud.

All the respondents 100% strongly agreed that technology has

simplified and reduced the workloads in collection of revenue.

4.3.2 Public Participation

The respondents were requested to rate their degree of

agreement or disagreement. A scale was used where strong agree

had a weight of 5, agree- 4, neutral-3 , disagree-2 and strongly

disagree had a weight of 1. According to table 4.7

Table 4.7 Respondent Perception on Influence of Public Participation

SA% A% N% D% SD% Mean Std.

Deviation

Revenue mobilization meetings are held often. 21.4 42.9 28.6 0 7.1 3.71 1.069

Public are involved in decision making of revenue

collection.

42.9 50.0 7.1 0 0 4.36 .633

Citizens participation in identification, initiation,

implementation of projects involved in revenue

collection

50.0 14.3 28.6 7.1 0 4.07 1.072

Attendance of public forums in relation to issue

related to revenue is satisfactory

14.3 71.4 7.1 7.1 0 3.93 .730

The County government has organized series of civil

education program on matter related to revenue

collection

28.6 42.9 14.3 7.1 7.1 3.79 1.188

Majority of the respondents either agreed strongly or just agreed

that the public are involved in the decision making of revenue

collection and most them agreed 64.3% that citizens participated

in identification, initiation and implementation of revenue



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collection programs. On attendance of public meetings, most

respondents 64.3%agreed that the public forums are held often

and are satisfactory and majority seemed to agree85.7% that

attendance to these public forums was satisfactory. This has

been perpetuated by the County government organizing series of

civil education programs on revenue collection matters as the

majority of the respondents 71.5% agreed

4.3.3 Internal Control

Internal controls are policies and procedures put in place to

ensure the continued reliability of accounting systems. Accuracy

and reliability are paramount in the accounting world. Without

accurate accounting records, managers cannot make fully

informed financial decisions, and financial reports can contain

errors. Internal control procedures in accounting can be broken

into seven categories, each designed to prevent fraud and

identify errors before they become problems. The researcher

sought to establish the extent to which internal control affects

optimal Revenue Collection by the County government of Kitui

as indicated in table:

Table 4.8 Respondent Perception on Influence on Internal Control System

SA% A% N% D% SD% Mean Std.

Deviation

The County government has a computerized

internalized control system

71.4 28.6 0 0 0 4.71 .469

All the employees have fully been trained and

use the computerized internal control system

14.3 50.0 14.3 14.3 7.1 3.50 1.160

County government internal control are

regularly reviewed and control sets

28.6 35.7 35.7 0 0 3.93 .829

Timely reports are generated from internal

control system sets

28.6 64.3 7.1 0 0 4.21 .579

The research established the strength of internal control systems

available in KituiCounty. The study sought to find out whether

the KituiCounty government has computerized internal control

systems with regard to revenue collection. Respondents strongly

agreed with a mean of 4.71 and a standard deviation of 0.469,

71.4% strongly agreed with 28.6% of the respondents agreeing.

Employees have been trained on use of computerized internal

control systems with 64.3% of the respondents agreeing

(mean=3.50, std=1.160), review and control setting of those

internal control systems is done regularly with 64.3% agreeing

(mean=3.93, std=.829) and 35.7% remaining neutral. Lastly the

research showed that timely reports are generated from the

internal control system set with an agreement of 92.9%

(mean=4.21, std=.579).

4.3.4 Human Resource

The study sought to find out the extent the respondents agreed to

the statement that to what extent human resource influences

optimal revenue collection. The percentages, means and standard

deviation were computed to provide the analysis in each respect

as shown in table 4.9

Table 4.9 Respondent Perception on Influence of Human Resource

S.A% A% N% D% SD% Mean Std.

deviation

Revenue officers meet their daily revenue

targets.

42.9 35.7 21.4 0 0 4.21 .802

Revenue collectors are recruited completely 28.6 57.1 14.3 0 0 4.14 .663



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through a due procedure

County government has an adequate

monitoring& performance appraisal system

for all its activities

57.1 21.4 14.3 7.1 0 4.29 .994

County government has an adequate

compensation program for its employees

14.3 35.7 0 35.7 14.3 3.00 1.414

All employees participate equally and

actively in County decision making

21.4 7.1 35.7 21.4 14.3 3.00 1.359

From the findings above, 78,6% of the respondents agreed (M=

4.21, SD=.802) that revenue officers meet their daily revenue

targets which has been propelled by a due procedure used in

recruitment of revenue collector where 85.7% of the respondents

agreed (M=4.14, SD= 0.663). Further, 78.5% of the respondents

agreed that the County government has an adequate monitoring

and performance appraisal system for all its activities while the

50% disagreed that employees (M=3, SD=1.414) are adequately

compensated. However, the other 50% agreed that County

government is adequately compensated. On the hand, 71.6% of

the respondent disagreed (M=3, SD=1.359) that all employees

participate equally and actively in the County decision making

hence relying on the elite group to formulate the revenue

policies.

4.4Inferential Statistics

The section provides the perspective of the association between

the independent variables ad dependent variables. Gituma

(2017), suggested that the Pearson product moments correlation

coefficient measure the linear correlation dependence between

variable X and Y, measuring a value between +1 and -1

inclusive, where +1 is positively correlating variables, 0 is no

correlation, and -1 is negatively correlating variables.

Gituma (2017) reveals that p values less than 0.05 level of

significance can reflect a statistically significant relationship.

The section will therefore provide the findings and results of

both correlation co-efficient and multiple regression analysis.

4.4.1 Influence of Technology on Optimal Revenue

Collection

The relationship between the technology and optimal revenue

collection is show in table 4.10. The result was found that,

technology and optimal revenue collection is positively

correlated (r= 0.688). Also, it was noted that the relationship was

statistically significant with the p value of 0.001 which lower

than the 0.05 threshold.

Table 4.10 Correlation between technology and optimal

revenue collection

Model

Unstandardized

Coefficients

Standardized

Coefficients

T

Signific

ance B

Std.

Error Beta

Technology .688 .151 .784 4.550 .001

1. Dependent Variable: Optimal Revenue Collection

(UNDP, 2015) indicated that technological programs and

electronic governance initiatives has got worldwide support from

the aids fraternity as a catalyst of reforms in achievement of

international developments goals such as education, health,

poverty reduction and environment. According to Mitullah,

(2016), policy blue prints formulated each year including

technology being a vital to promote transparency in the

ministries, reduction in cost in service delivery and improvement

public participation of citizens. Therefore, introduction of

electronic garget and E- services has increased benefits for the

government in global development policy programs (Gituma,

2017).

4.4.2 Influence of Public Participation on Optimal Revenue

Collection

The relationship between public participation and optimal

revenue collection is show in table 4.11

Table 4.11 Correlation Between Public Participation And

Optimal Revenue Collection



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Model

Unstandardized

Coefficients

Standardize

d

Coefficient

s

t

Significan

ce B

Std.

Error Beta

Public Participation .860 .141 .860 6.089 .000

The results were found to be positively correlated (r=0.860). It

was also noted that the correlation between the variables were

statistically significant with a p value of 0.000 which is a value

less than 0.005 indicating that the data used was 95% significant.

Therefore, public participation has a positive correlation

indicating that a unit increase in frequency of public

participation results to increased revenue collection due to public

awareness.

4.4.3 Influence of internal control system on Optimal

Revenue Collection

The relationship between internal control system and optimal

revenue collection is show in table 4.12.

Table 4.12 Correlation between internal control system and optimal

revenue collection

Model

Unstandardized

Coefficients

Standardized

Coefficients

T Significance B Std. Error Beta

Internal

Control

System

.864 .131 .877 6.577 .000

a. Dependent Variable: Optimal Revenue Collection

The findings demonstrated the presence of a strong positive

significant (r=.864, p=.000) between internal control system and

optimal revenue collection. Therefore, it observed that there is a

direct linear relationship between the two variables implying that

if one variable increased it consequently results to an increase in

the other variable. Therefore, in order to optimize revenue

collection in KituiCounty, improvement of internal control

system is of key significance.

4.4.4 Influence of Human Resource on Optimal Revenue

Collection

The relationship between human resource and optimal revenue

collection is show in table 4.13

Table 4.13 Correlation between human resource and optimal

revenue collection

Model

Unstandardized

Coefficients

Standardize

d

Coefficients

T

Significanc

e B

Std.

Error Beta

Human Resource .845 .148 .845 5.695 .000

a. Dependent Variable: Optimal Revenue Collection

The correlation analysis results indicated that there exists a very

strong, positive and statistically

significant correlation between County human resource and

optimal revenue collection

by NakuruCounty Government (r = 0.845; p < 0.00). The

findings indicated that the more

competent the County workforce is, the more likely revenue

collection will be optimized in Kitui

County, and the reverse is true. The findings further underline

the essence of the County

Government training or hiring competent personnel. This finding

agrees with that of Harrison, (2007) who indicated that learning,

development and training opportunities ought to advance

individual, team and administrative performance. It is growth

that comes from a clear vision about people’s capabilities and

operates within a business framework (Bowsher, 2008).

4.5Regression Analysis Model

In this study, a multiple regression analysis was adopted in

testing the among the predictors variables and Optimal Revenue

Collection by the County Government of Kitui. The research

used the statistical package for social sciences (SPSS V 25.0) to

code, enter and computation of measures of the multiple

regressions.

The model describes the coefficient of determination that

explains the extent to which the changes of the dependent

variable can be affected by the change in the independent

variables or it is the percentage of variation in the dependent

variable (Optimal Revenue Collection) which is explained by all

the four independent variables: Technology, Public

Participation, Internal Control Systems and Human Resource.

Table 4.14 Regression Analysis Model



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Mod

el R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .940a .883 .836 .0440

a. Predictors: (constant), Technology, Public Participation,

Internal Control Systems and Human Resource

R- Squared is applied in the statistic in evaluation of the model

fitness. Therefore, the R2 also known as the coefficient of

determination, describe the percentage of the variance in the

dependent variable explained jointly by the independent

variables. 88.3% of the changes in the Optimal Revenue

Collections in County Government of Kitui could be contributed

by the combined effect of the predictors variables. The study

therefore shows that 11.7% are the other factors not accounted in

the research. Also, the results presented are 83.6% reliable as

indicated by the adjusted R squared coefficient showing that had

the study used total population rather than sample population or

an alteration of the sample to replace some respondents not in

target population, then the results would have a variance of

16.4% from the current results. Therefore, further research

should be done in the determination of revenue collection by the

KituiCounty Government.

4.5.1 Analysis of Variance

The analysis is conducted in order to establish the relation

between (independent variable) technology, public participation,

internal control system, human resource and (dependent

variable) optimal revenue collection in the County government

of Kitui hence testing four the research questions for the study

using ANOVA.

Table 4.15 ANOVAAnalysis

Model

Sum of

Squares Df

Mean

Square F Significance

1 Regression 22.013 4 5.503 18.848 .000b

Residual 2.920 10 .292

Total 24.933 14


2. Predictors: (constant) Technology, Public Participation,

Internal Control System, Human Resource

From the ANOVA analysis table, the significance level in

testing the reliability of the model between technology, public

participation, internal control system, human resource and

Optimal Revenue Collection was (0.000) which is less than 0.05

the critical level of significance level. This indicates that the

model is significant in predicting the relationship between the

independent variables (technology, public participation, internal

control system, human resource) and the dependent variable

(optimal revenue collection).

The F critical at 5% level of significance was 0.000 and the F

calculated is (18.848). Since the F calculated is greater than the

F critical, it shows that the model was statistically significant

and reliable in explaining the influence the independent variable

to optimal revenue collection by the KituiCounty Government.

4.5.2 Regression Coefficients

The regression coefficients involved with the factors that

influence optimal revenue collection are shown in Table 4.15

Table 4.16 Regression Model Coefficients

Model

Unstandardized Coefficients

Standardized

Coefficients

t Significance B Std. Error Beta

1 (Constant) 5.141 1.577 3.261 .010

Technology .533 .200 .562 2.663 .024

Public Participation .213 .268 .135 .795 .044

Internal Control System .564 .177 .656 3.177 .011

Human Resource .189 .150 .257 1.255 .024




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From the findings, the substitution of the equation

Y = β0 + β1X1+β2 X2 + β3X3 + β4X4 + ei………………Equation

4.1

Substituting the coefficients in the model,

Y = 5.141 + 0.533X1+0.213 X2 + 0.564X3 + 0.189X4

…….Equation 4.2

Where, Y- Optimal Revenue

X1- Technology

X2- Public Participation

X3- Internal Control System

X4- Human Resource

ei– Error function

β0 – Beta function

From the regression analysis, taking all the factors technology,

public participation, internal control system and human resource

at a constant at zero(0), impact of the optimal revenue collection

will be at 5.141%. The finding note that there is a strong positive

correlation between technology and optimal revenue collection

(β= 0.533) with a significance level of greater than (0.05) at

0.024 that implied that 53.3% of changes in revenue collection

collected by the County government is explained by technology

holding other factors in the study constant. Zhou &Madhikeni

(2013) findings on importance of revenue collection are

consistent with the results where technology guarantees the

validity of origin and the receipt exchange that cannot be

tampered by both the payer and receiver hence improving the

efficiency in revenue collection.

There was also a positive correlation or relationship between

public participation and optimal revenue collection by the

KituiCounty Government, provided by positive beta (β= 0.213)

with significance level of less than (0.05) at 0.044. This

indicated that 21.3% of changes in revenue collection are

explained by the public participation holding other factors of the

study constant.

Further, the findings revealed that a strong positive relationship

between the internal control system and optimal revenue

collection in KituiCounty government, where the positive

coefficient (ß=0.564) with a significance level of below (0.05) at

0.011. The relationship therefore affirmed that internal control

system in the County contributed to 56.4% of the changes in

revenue collection by the County holding other variables

constant. This is in consisted with those finding of Kosaye,

(2018) which had a positive correlation (ß=0.753; p= 0.000)

hence asserting that internal control systems are employed in

revenue collection.

The study also found a positive correlation between Human

resource and optimal revenue collection, given positive

coefficient (0.189) with a significance level of less than (0.05) at

0.024. The findings show that from the positive relationship,

18.9% of changes in the revenue collection can be explained by

human resource holding other factors constant. (Chambers,

2009) studies on emphasis on staff competence to an

organisation were in consistent with the findings where he

suggested that human resource is essential to the success and

survival of an organisation as they provide reasonable assurance.

5.0 SUMMARY, CONCLUSION AND

RECOMMENDATIONS

5.1 Introduction

This chapter presents the summary of findings, explores the

implications of the findings, draws conclusions and prescribes

recommendations. The research findings are as received from

the respondents. They are presented in the order of the objectives

which zeroed on the influence of public participation, human

resource, technology and internal control systems, on

effectiveness of optimal revenue collection by KituiCounty

government.

5.2 Summary

This study has contributed to the conceptual and empirical

understanding of the factors influencing optimal revenue

collection by KituiCounty government. This research

specifically sought to analyze the factors influencing optimal

collection of revenue in the context of the revenue collecting

officers in the County government of Kitui. Descriptive research

design was applied to analyze the primary data which was

obtained by use of questionnaires. Questions asked were closed

ended and were mainly of a five-point likert-type scale.

Longitudinal research design was also used in the study to

analyze the secondary data obtained from the KituiCounty

government’s website.



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The research was guided by the following questions; what was

the influence of public participation on optimal revenue

collection by KituiCounty government; what was the influence

of human resource on optimal revenue collection by

KituiCounty government; what was the influence of technology

on optimal revenue collection by KituiCounty government and

what was the influence of internal control systems on optimal

revenue collection by KituiCounty governments.

The study found out that County revenue officers had a good

level of basic education and had the knowledge and skills to

collect and account for revenue they collected. It was also

evident that effective and efficient internal controls aided in

revenue collection. Integration of technology was ongoing in

Kitui town and Mwingi town first, and the results showed that

there was improvement in collection of revenue. However public

participation was not done very often but only once in a year as

the law dictates.

5.2.1 Technology

The study noted that the use of technology was in the process of

being integrated by the use of Point of Sale gadgets, Mpesa push

messages, use of a pay bill (account number 415215) to pay the

revenues, and a new mode of paying revenues using a QR code.

In the few months they have been used, those modes of

technology have been highly embraced thus ensuring efficiency

and effectiveness in obtaining optimal revenue collection.

5.2.2 Public participation

The study showed that public participation was evident as per

the constitution of Kenya where there was a compulsory public

forum held once every year and others held when need arises.

However, these public forums are not as effective as they should

be since they are carried out as instructed by law hence are done

just for formality and not because the people have asked for

them Hence the study found out that public participation affected

optimal revenue collection to a small extent.

5.2.3 Internal control systems

The study through primary data found out that the County has

put in place good internal control systems to aid in collection of

revenue and control fraud. The County has automated systems

where a revenue collector is monitored from the main office on

what they are doing and how much revenue they have collected

each day, and the amounts are deposited to the bank the same

day, and incase of transport and weather challenges, revenue

collected must be deposited to the bank the next day. These have

proved to be very effective as the cases of fraud have highly

reduced. The County government also has systems that review

periodically to correct errors and malpractices. However,

reporting of incidences of lack of integrity by taxpayers is still a

challenge.

5.2.4 Human resource

The study found out that County revenue officers were well

educated which was paramount in ensuring that they were

accurate when collecting revenue and penalties payable when

there is defaulting. They were well trained and monitored when

they are employed to ensure there were minimal mistakes when

collecting revenue and this reduced the cases of corruption in

KituiCounty as all employees were accountable for the revenues

they collected. However, employees rarely got an increment in

salary or any other form of rewards to motivate them at work.

5.2.5 Optimal Revenue Collection

The research established that all factors (public participation,

human resource, technology and internal control systems)

influenced optimal revenue collection. Public participation

affected optimal revenue collection by a small rate while

technology even though being in its early stages has shown great

potential in ensuring revenue is collected optimally. Human

resource to some extent also influences optimal revenue

collections since revenue officers in KituiCounty are educated

and accountable even though they are not rewarded to ensure

they are highly motivated. Internal control systems integrated in

the County have helped to avoid corruption and fraud by

employees because they are closely monitored not to tamper

with revenues collected and errors detected are corrected

immediately.

5.3 Conclusion

Devolution has mandated that counties in Kenya are to collect

their own revenue to support their budgets and boost the monies

received from the national exchequer. The County government

of Kitui has taken steps to increase its revenue collection so as to

increase the income available to implement their budget and the

development projects set. The level of technology which is a



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work in progress is proving to have a positive impact on optimal

revenue collection in the County and in KituiCounty’s case, the

implementation of the various forms of technology as a unit

work together to increase the amount of revenue that reaches the

County coffers.

Human resources in the County pertaining to revenue collection

are educated and can handle the task of revenue collection with

the use of the new implemented technologies well. This has led

to an increase in level of revenue collected according to data

from Kitui town and Mwingi town. The County government of

Kitui has prudently implemented internal control systems that

ensure that the human resource and technology implemented

work as a unit and reduce any dysfunctions. This has been

achieved by instituting timelines for banking revenue collected

where cash is collected and use of Mpesapay bill and Mpesa

push messages to eliminate the physical cash aspect so as to

reduce employee fraud. The research indicates that although

public participation affects the optimal revenue collection, it is

by a small margin as the County is not obligated to hold many

and frequent public forums than is required by law. Public

forums are held once before the budget is forwarded the County

assembly for approval therefore the Countyresident only get that

opportunity to give their input on the revenue collection

measures and how the monies collected are spent. the public

forums although are an avenue to educate citizens on the

importance of revenue collection and why they should not

evade, citizens often give propositions for tax rates and County

fees to be reduces which is counterproductive.

From the findings, implementation of effective internal controls

to has ensured the technology is used and appropriately at that.

This has shown promise in the reduction of employee fraud and

collusion to defraud the County and reduce revenue due to the

County. The level of internal controls is measured by its

effectiveness and the increase in revenue collected.

Also, the County government should improve their staff

competence though periodic training to ensure they are well

versed in the implemented technology. Increase the level of

employee motivation strategies so as to boost morale and

increase competitiveness in regional revenue collection. This

ensures employees are inclined to be truthful thereby reduce

collusion cases.

5.4 Recommendations

Public participation is an important factor that could be used as a

niche to increase revenue collections. This is because revenue is

collected from the public who are residents of the County. The

County government should therefore set up public forums more

often. These public forums will be an opportunity for the County

to involve its citizens in the making of vital economic and

financial decisions that will affect them. The public will also get

more power to give their opinion on what development projects

would best serve them and improve their lives rather than wait

for implementation of projects that are unsuitable. The public

can also be educated on the importance of remitting any tax or

fees they owe the County. This will give the public a sense of

responsibility and pride towards promoting their County thereby

reducing incidences of evasion and avoidance.

Government training institutes like the Kenya School of

Government should be used to give the County revenue

collectors trainings on use of new technologies implemented.

This will ensure the employees are well versed and will not have

problems using the technology. The County should also have

reward systems put in place that are competitive and group like

in nature according to regions in the County. This will ensure the

County revenue collectors are not indifferent to the cause of

optimal revenue collection. The supervisors will also keep the

revenue collectors on toes to ensure no laxity so as to ensure all

employees work diligently so as to win the prize for well

performed or achieving targets. The County government should

also include the employees in some of the policy making

processes that affect their work. The employees are in the field

everyday hence best able to provide productive suggestions on

how system can be implemented to work.

Automation of the revenue collection process is a good thing but

requires monitoring to ensure it achieves its objective of optimal

revenue collection and increase of transparency. Before

implementation of revenue collection technologies, the

employees should be involved and first trained. This reduces the

time it takes the employees to get used to and understand the

workings of the technology. Technology used directly by County



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residents should be clearly explained. The public should be

sensitized on how to use the self-help technologies such as the

Mpesapay bill and Mpesa push messages, and circumstances it is

appropriate to use such. This will increase optimal revenue

collected as County residents do not feel it an inconvenience to

go pay their tax, cess or fees due to the bank.

The constant review of the internal control systems is expensive

but necessary. The County government should not ignore the

reviews. The reviews will ensure the weaknesses in the internal

control system are dealt with and new controls set to ensure both

employees and technology work efficiently.

5.5 Limitations of the study

The study encompassed employees in the finance department

who were very busy therefore the issuing of questioners

interrupted the normal workflow. In light of the foregoing, the

respondents might have been distracted in the answering of the

questionnaires. Permission was required to administer the

questionnaires to the employees. This mandated several visits to

various offices of County officials to obtain such permission

hence prolonging the study. Some of the respondents were in

meetings therefore it required several visits or leaving the

questionnaires so as to ensure answering. Some employees were

fearful therefore the questionnaires did not include personal

information like the name of respondents. The permission letters

given by the County officials were also useful in dissipating

these fears.

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