The Tax Modernisation Programme was introduced in 1986 with the hope that this would, among other things, enhance revenue collection, improve tax administration and reduce compliance and collection costs. Despite the tax modernization, there are concerns that the challenges that confront the Ministry of Finance and Kenya Revenue Authority today are not much different from the challenges that faced these revenue authorities before the reforms. There are also concerns that tax competitiveness in Kenya is low and the country remains among the most tax unfriendly countries in the world. This study reviews tax revenue performance as well as tax design and administration changes during the period 1996 – 2005 in order to identify priorities for further tax reform. It discusses some of the important issues related to tax administration, tax policy and tax modernization as implemented in Kenya. This is approached from both macroeconomic and microeconomic viewpoints using data from 1996 to 2005. The macroeconomic perspective focuses mainly on issues of tax yields and structure of taxation while the microeconomic
perspective looks at specific issues of tax design and tax administration.
