Impact of Taxation on the Operation of Small and Medium Scale Business (A Case Study of Smes in Abeokuta Metropolis.)

TABLE OF CONTENTS

Contents

CERTIFICATION.. ii

DECLARATION.. iii

DEDICATION.. iv

ACKNOWLEDGEMENTS. v

TABLE OF CONTENTS. vi

LIST OF TABLES. ix

ABSTRACT. xi

CHAPTER ONE. 1

INTRODUCTION.. 1

1.1Background of the Study. 1

1.2 Statement of Research Problem.. 3

1.3 Research Aim and Objectives. 3

1.4 Research Questions. 4

1.5 Research Hypotheses. 4

1.6 Significance of the Study. 5

1.7 Limitation of the Study. 5

1.8 Scope of the Study. 5

1.9 Outline of Chapters. 5

1.10 Operationalization. 7

1.11 Definition of Terms. 8

CHAPTER TWO.. 9

LITERATURE REVIEW... 9

2.1 Introduction. 9

2.2 Conceptual Review.. 9

2.2.1 Taxation. 9

2.2.1.1 Role of taxation in the economy. 12

2.2.1.2 Small scale business:13

2.2.1.3 Problems faced by small scale business. 14

2.2.2Economic advantage of SMEs in Nigeria. 15

2.2.3 Reducing Tax burden for SMES as well as inreasing revenue. 16

2.2.4 Performance. 18

2.3 Theoretical framework. 21

2.3.1 Benefit theory. 21

2.3.2 the cost of servieTheory. 22

2.3.3 Ability to pay theory. 25

2.3.3.1 Porportional Tax. 26

2.3.4 Tax Holiday. 27

2.4 Empirical framework. 28

2.5 Gap in literature. 30

CHAPTER THREE. 31

RESEARCH METHODOLOGY.. 31

3.1 Introduction. 31

3.2 Research Method. 31

3.3 Research Design. 32

3.4 Population of Study. 32

3.5 Sampling Technique/ Procedure. 33

3.6 Research Sample Frame. 33

3.7 Sources of Data and Procedure for Data Collection. 33

3.8 Research Instruments. 33

3.9 Validity of Research Instruments. 34

3.10 Reliability of the Research Instrument34

3.11 Ethical Issues for Consideration. 35

CHAPTER FOUR.. 36

4.1Introduction. 36

4.2Presentation of Data. 36

4.3Data Analysis and Interpretation. 36

4.3.1 Analysis of Demographic Data. 36

4.3.2 Test of Questionnaire. 40

4.5 Discussion of Results. 53

CHAPTER FIVE. 54

5.1 Introduction. 54

5.2 Summary. 54

5.3 Summary of Findings. 55

5.3.1 Theoretical Findings. 55

5.3.2 Empirical Findings. 55

5.4 Conclusion. 56

5.5 Recommendations. 56

5.6 De-limitation. 56

5.7 Suggestion for Further Study. 57

5.8 Contribution to Knowledge. 57

REFERENCES. 58

Appendix II

ABSTRACT

Small and Medium Enterprises play a very important role in development of the Nigerian Economy. Making up about 97% of the entire economy, they serve as a source of employment generation, innovation, competition, economic dynamism which ultimately lead to poverty alleviation and national growth. Tax policy is one of the factors that constitute the Small businesses’ economic environment. This research work tries to establish if any relationship exists between the growth of Small businesses and the tax policy environment in which they operate in Nigeria. Questionnaires were distributed to Small businesses in Abeokuta, Nigeria. It was found out that from most Small businesses surveyed; they were faced with the problem of high tax rates multiple taxation, complex tax regulations and lack of proper enlightenment or education about tax related issues like proportional tax and tax holiday. Although there was a general perception that tax is an important source of fund for development of the economy and provision of social services, the study revealed a significant negative relationship between taxes and the business’ ability to sustain itself and to expand. In order to obtain a vibrant and flourishing SME sector, the tax policy needs to be appropriate such that it will neither be an encumbrance to the Small businesses nor discourage voluntary compliance. A suggested solution is by increasing tax incentives through reducing tax rates and increasing tax authorities’ support services towards small and medium enterprises.