The Impact Of Taxation On Small And Medium Scale Business In Nigeria

The Impact Of Taxation On Small And Medium Scale Business In Nigeria

Abstract

The study was carried out to find out the impact of levies on small and medium scale business enterprises inNigeria.The study aimed at assessing the performance of business enterprises in Nigeria, chancing out if duty payers are apprehensive of all their duty scores, programs and problems affecting them as well as their businesses. The study applied both qualitative and quantitative exploration designs where interviews and questionnaires were used. Data was collected from both primary and secondary sources. Data was reused and analysed using formal tables, pie maps, narrative textbook, and correlation to find out the relationship between the impact of levies and performance of small scale businesses. A aggregate of 50 repliers 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 situations, capital employed, diurnal charges, diurnal deals and the average quantum of levies paidannually.Most business possessors are apprehensive of levies paid, uncertain of the mode of assessment and little backing is given as respects duty mindfulness. The findings revealed the problems faced by the small and medium business men as respects mode of assessment, collection and duty collectors, inefficiency by duty collectors, loss of outfit, loss of deals and loss of stock as a result oftaxes.Recommendations on impact of levies included; enhancement on the system of collecting levies, educating the business community about its different duty rates and introducing a scheme that allows duty payers to pay the duty obligation.

Chapter One

Preface

Background of the study

Taxation increases impulses for public participation in the political process and creates pressure for further responsibility, better governance, and bettered effectiveness of government spending. Taxation also creates impulses for governments to upgrade their institutions for duty collection and administration and to give further public services( Moore, 2007).

levies have was nearly as long as there have been organized governments. The first duty law legislation was introduced in 1919 and ever since also levies have evolved through a number of reforms. The government in an attempt to widen the duty base and collect further profit has had to levy several levies especially on business enterprises in Nigeria which constitute a large part of the formal sector. The levies charged on business enterprises in Nigeria include; pot duty, value added duty, presumption duty and exercise duty. In 1997 the Income Tax Act was made. This was to give guidance in assessment and calculation of levies( Campsy, 1997). The Nigerian government has made some recommendable sweats to promote development through taxation since the commencement of the current taxation laws for purposes of promoting development. The main ideal of taxation in Nigeria has always been to mobilise coffers demanded to meet the aspiration of government. This is because for any government to be effective, strong, competent and able of leading development, coffers have to be readily available in its storeroom so as to be in position to give goods and services to the people adequately. The Nigerian government has always had to insure proper resource rallying( Musa, 1992).

According to Manasseh( 2000), a duty is generally appertained to as a mandatory tax assessed by government upon colorful orders of means and taxation is a mandatory and non refundable donation assessed by government for public purposes. In Nigeria a considerable bit of the businesses are sole dealers operating small scale business, locally possessed and managed by individualities or families and frequently with veritably many workers working at a single position( Nigeria development bank report, 1988). Taxation in Nigeria is grounded on system that was in Britain as it was a British colony. This also applied to other colonies away and for East Africa, one duty system operated under British administration. This process began in 1900 with the shack duty regulation which assessed a standard charge for every shack/ lodging.

During that period, taxation was aimed at raising profit for the executive structure assessed by the social government but also as a means of encouraging financial/ profitable conditioning. It was the Local Authority Ordinance of 1991 that governed the collection of levies. In September 1991, after a period of review the Rural Revenue Authority( URA) was established. All levies including income duty came under the marquee of the URA. From 1992, URA has been organizing and strengthening the executive procedures and in 1993 this process supported by a entitlement from the British government of roughlyUS$ 10million.

At least 50 small scale business enterprises were named in illorin, nearly all of them employ 2- 4 people. These small scale businesses are locally possessed and managed by private individualities who occasionally employ their family members. These small and medium scale businesses bear a wide duty burden which has led to poor performance. thus, it was against this background that the experimenter shouldered the study to probe further about the problem using Nigeria as a case study to estimate the impact of levies on small and medium scale business enterprises.

Statement of the problem

levies are raised by the government to induce profit used to give services to the public similar as; Health centers, telecommunication, roads, seminaries and electricity and this have helped to ameliorate the performance of small and medium scale business enterprises. Despite the services handed, small and medium scale business enterprises performance in Nigeria is still poor. This could be due to the adding duty burden brought about by duty rates which are revised annually. These rates feel to be taking an upward trend( Gordon and Dawson, 1987) which has led to winding up of some small scale business enterprises. This urged the experimenter to probe further about the impact of levies on small scale business enterprises.

Purpose of the study/ ideal of the Study

The purpose of the study was to estimate the impact of levies on small scale business enterprises in Nigeria. The specific objects are

1. To assess the impact of taxation on small and medium scale business enterprises in Nigeria.

2. To find out if duty payers are apprehensive of all their duty scores and programs.

3. To find out problems affecting duty payers and their business.

Exploration Questions

1. What’s the effect of levies on the performance of small scale business in Nigeria?

2. Are duty payers apprehensive of all their scores?

3. What are the problems faced by duty payers?

Compass Of The Study

Subject compass

The study covered small and medium scale businesses in Nigeria. Specifically, the study delved the performance of small scale businesses, the mindfulness of the duty payers regarding their scores, problems faced by the duty payers and the relationship between the levies paid and the performance of the small scale businesses.

Geographical compass

The study was carried out in Ilorin Kwara State, Nigeria. The area was deliberately named because the experimenter worked within the vicinity and thus this eased data collection.

Time compass

The study considered a period of four to six months. This period was named to enable the experimenter come up with coherent information from the repliers as it would enable them( Repliers) to give responses that are typical of their opinion from the compliances made over this period.

Significance of the study

The findings of the study are significant on the following ways;

1. To scholars and experimenters, the findings of the study are anticipated to contribute to the being literature about taxation and the effect it causes to the frugality as a whole.

2. To the duty authority and government, the study will guide them in conforming duty programs so that they suit conditions of small and medium scale businesses.

3. To unborn academicians especially of Nigeria University scholars, the study will help in gaining sapience about levies and performance of small scale business enterprises.

4. The accomplishment of the study will enable the experimenter to acquire hands on chops about processing of exploration work and data analysis. This proficiency will enable the experimenter to handle similar affiliated work with a lot of perfection and proficiency.