Effect of Tax Literacy on Consumption Taxes Compliance among Retailers in Starehe Sub County Nairobi, Kenya

Purpose: The ultimate purpose of Kenyan government is to raise sufficient revenue to finance its expenditure. There have been continuous reforms in the administration of consumption taxes. Government is unable to adequately raise revenue through tax collection and hence the need for this study. The purpose of the study was to determine the effect of tax literacy on consumption taxes compliance among retailers in Starehe sub -county Nairobi, Kenya. The study was guided by Theory of Planned Behaviour. Methodology: Explanatory research design was adopted and the target population of this study was 4639 retailers in Starehe sub -county Nairobi, with a sample size of 368 respondents. Primary data was collected by use of questionnaires. In this study, 276 out of 368 distributed questionnaires were accurately completed and returned, reflecting a 75% response rate. The statistics generated was descriptive and inferential statistics that was analyzed using correlation and linear regression. Results: The study showed that tax literacy (β = 0. 189, p < 0.05) significantly improve consumption tax compliance. Conclusion: The study recommended that the KRA should launch comprehensive tax literacy programs aimed at educating retailers about consumption tax regulations and their benefits.