Bulletins

Governments undertake tax reforms for a number of reasons, some of which include simplification of the tax system; addressing the equity question in the distribution of tax burden; strengthening tax administration and ensuring revenue adequacy. Indeed, the drivers and emphasis on tax reforms will vary from one country to another. Studies1 show that Kenya’s tax reforms are geared towards introduction of new taxes or new rates of existing bases, the need to widen tax bases and reduce exemptions as well as introduce more stringent administrative changes to seal loopholes and appropriate sanction measures.

Informal sector is generally viewed as comprising of activities of petty traders operating in the streets of main urban centers. Most are involved in the sale of second-hand items like clothes, some in the business of shoe shining, street vendors, carpentry, vegetable selling, repair and construction work. It can also be described as any activity generating income and profits, though on a small scale, using simple skills, dynamic and not tied to regulation of the activities.