The Influence of the Agriculture Sector to Gross Domestic Product Contributions on Tax Revenue Performance in Kenya
DOI:
https://doi.org/10.70619/vol5iss11pp1-11-686Keywords:
Agriculture sector to GDP Ratio, Tax Revenue Performance, GDPAbstract
This study investigated the influence of the contribution of the agriculture sector to tax revenue performance, with a focus on its roles in enhancing tax mobilization and supporting economic growth. The study was grounded in two key theoretical frameworks: the Cost-of-Service Theory and the Benefits Theory, which guide the exploration of the relationship between sectoral economic contributions and tax revenue outcomes. A time series research design was employed, using secondary data from the Kenya Revenue Authority and the Kenya National Bureau of Statistics for the financial years 2014 to 2024. The agriculture sector's current contribution to GDP had a significant positive effect on tax revenue performance (β = 289.391, p = 0.000), while its first lag showed significant negative effects (β = -396.566, p = 0.000) and the second lag demonstrated partial recovery (β = 213.961, p = 0.000). This study concludes that Kenya’s agriculture, services, and manufacturing sectors all significantly influence tax revenue performance, but with distinct temporal patterns. Regarding the effects of agriculture sector's on tax revenue performance, cyclical effects on tax revenue performance, to mitigate the negative adjustment effects, the Kenya Revenue Authority (KRA) should develop and deploy a digital platform for farmers, particularly those in large-scale cash-crop farming, to declare and pay taxes based on projected annual income.
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