Shifting of the Kenyan sales tax, 1973-1974

This paper attempts to estimate the extent of shifting of the Kenyan Sales Tax in its first year of operation. The method involves looking at profits with and without the Sales Tax. The shifting model is across-sectional analysis, using indirect least squares as the estimating technique. The outcome is that the Sales Tax is shown to be more than fully shifted. The implication of this as a possible cause of Kenya's recent inflation is then summarised. The reason for over-full shifting is attributed to the way the Sales Tax was administered.