– The Impact Of Taxation On Small And Medium Scale Business In Nigeria –
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ABSTRACT
The study was carried out to find out the impact of taxes on small and medium scale business enterprises in Nigeria. The study aimed at assessing the performance of business enterprises in Nigeria, finding out if taxpayers are aware of all their tax obligations, policies and problems affecting them as well as their businesses.
The study applied both qualitative and quantitative research designs where interviews and questionnaires were used. Data were collected from both primary and secondary sources.
Data were processed and analysed using formal tables, pie charts, narrative text, and correlation to find out the relationship between the impact of taxes and performance of small scale businesses.
A total of 50 respondents were considered out of the entire population of small scale and medium enterprises. The findings indicated that the performance of small scale business is affected by stock levels, capital employed, daily expenses, daily sales and the average amount of taxes paid annually.
Most business owners are aware of taxes paid, uncertain of the mode of assessment and little assistance is given as regards tax awareness. The findings revealed the problems faced by the small and medium businessmen as regards mode of assessment, collection and tax collectors, inefficiency by tax collectors, loss of equipment, loss of sales and loss of stock as a result of taxes.
Recommendations on the impact of taxes included; an improvement on the method of collecting taxes, educating the business community about its different tax rates and introducing a scheme that allows taxpayers to pay the tax obligation.
TABLE OF CONTENTS
Certification………………………….…………………………………I
Dedication…………………………..…………………………………..ii
Acknowledgement……………………………………………………….ii
Outline page……………………..……………………………………….iv
Abstract……………………………………………………………………1
Chapter one INTRODUCTION
Background of the study……………………………………………….….2
Statement of the problem…………………………………………………..3
Purpose of the study/Objective of the Study……………………………….4
Research questions………………………………………………………….4
Scope of the study……………………………………………………….…4
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- Subject scope………………………………………………………………5
- Geographical scope…………………………………………….…………..5
1.5.3 Time scope………………………………………………………..…….….5
1.6 Significance of the study…….…………………………………………….5
Chapter two LITERATURE REVIEW
2.1 Introduction …………………………………………………………..………7
2.2 Theoretical Review …………………………………………….………..……9
2.3 Theory of Planned Behaviour……………………………………………..…..12
2.4 Theory of Taxation…………………………….……………………………….12
2.5 Ability-to-Pay Principle………………………………………………………….13
2.6 Concept of Small Scale Enterprises…………………………………………….14
2.7 The concept of tax compliance……………………..……………………………16
2.8 problem of tax compliance ……………………………………………………..19
2.9 Contribution of Tax Policy on the Growth of SMEs……………………………21
2.10 Factors that Favour the Growth in SMEs………………………………………22
2.11 Policy Measures that will Encourage SMEs Growth…..………………………24
Chapter Three METHODOLOGY
3.1 Research Design……………………………………………………………………28
3.2 Population of the study……………………………………………………………28
3.3 Sample design……………………………………………………………………..28
3.4 Method Of Data Collections………………………………………………………29
3.5 Methods of Data Analysis…………………………………………………………29
Chapter Four DATA ANALYSIS AND RESULTS
4.1 Introduction……………………………………………………………….………….30
4.2 Results of correlation and multiple linear regressions……..…………………………30
Chapter Five SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary………………………………………….…………………………………….35
5.2 Conclusion……..……………………………………………………….………………..35
5.3 Recommendation………………………………………………………………………….37
Bibliograhphy………………………………………………………………………….…..38
Appendix A…………………………………………………………………………………………………………..39
Appendix B………………………………………………………………………………..40
INTRODUCTION
Background of the study
Taxation increases incentives for public participation in the political process and creates pressure for more accountability, better governance, and improved efficiency of government spending.
Taxation also creates incentives for governments to upgrade their institutions for tax collection and administration and to provide more public services (Moore, 2007).
Taxes have existed virtually as long as there have been organized governments. The first tax law legislation was introduced in 1919 and ever since then taxes have evolved through a number of reforms.
The government in an attempt to widen the tax base and collect more revenue has had to levy several taxes especially on business enterprises in Nigeria which constitute a large part of the formal sector.
The taxes charged on business enterprises in Nigeria include; corporation tax, value added tax, presumption tax and exercise duty. In 1997 the Income Tax Act was made. This was to give guidance in assessment and computation of taxes (Campsy, 1997).
The Nigerian government has made some recommendable efforts to promote development through taxation since the inception of the current taxation laws for purposes of promoting development.
The main objective of taxation in Nigeria has always been to mobilise resources needed to meet the aspiration of government.
This is because for any government to be effective, strong, competent and capable of spearheading development, resources have to be readily available in its treasury so as to be in position to provide goods and services to the people adequately. The Nigerian government has always had to ensure proper resource mobilization (Musa, 1992).
According to Manasseh (2000), a tax is generally referred to as a compulsory levy imposed by government upon various categories of assets and taxation is a compulsory and non refundable contribution imposed by government for public purposes.
In Nigeria a considerable fraction of the businesses are sole traders operating small scale business, locally owned and managed by individuals or families and often with very few employees working at a single location (Nigeria development bank report, 1988).
REFERENCES
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