ABSTRACT
The
study was carried out to find out the impact of taxes on performance of small
scale business enterprises in Nigeria (SSBs), taking a case study of River
State. The study aimed at assessing the performance of business enterprises in
Rivers state, finding out if tax payers 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 was collected from both primary
and secondary sources. Data was 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 in Rivers state.
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 tax payers 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 impact of taxes included; improvement on the method of collecting taxes,
educating the business community about its different tax rates, introducing a
scheme that allows tax payers to pay the tax obligation in installment, and finding
a way of assessing the tax the small scale businesses should pay early in the
financial year in order to give enough time to the business to pay up their
duties rather than make an assessment and demand for payment spontaneously.
The
study was meant to establish the impact of taxes on performance of small scale
business enterprises in River state. This chapter consists of the background to
the study, statement of the problem, purpose of the study, objectives of the
study, research questions, scope and significance 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 assessees of various categories 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). Taxation in Nigeria is based on system that existed in
Britain as it was a British colony. This also applied to other colonies elsewhere
and for East Africa, one tax system operated under British administration. This
process began in 1900 with the hut tax regulation which imposed a standard
charge for every hut/dwelling.
During
that period, taxation was aimed at raising revenue for the administrative
structure imposed by the colonial government but also as a means of encouraging
monetary/economic activities. It was the Local Authority Ordinance of 1991 that
governed the collection of taxes. In September 1991, after a period of review
the URA was established. All taxes including income tax came under the umbrella
of the URA. From 1992, URA has been organizing and strengthening the
administrative procedures and in 1993 this process assisted by a grant from the
British government of approximately US$ 10million.
Rivers
state is located in Nigeria. At least 50 small scale business enterprises were
selected in Portharcourt, capital of Rivers state and almost all of them employ
2-4 people. These small scale businesses are locally owned and managed by
private individuals who sometimes employ their family members. These small
scale businesses bear a wide tax burden which has led to poor performance.
Therefore, it was against this background that the researcher undertook the
study to investigate more about the problem using Rivers state as a case study
to evaluate the impact of taxes on performance of small scale business
enterprises.
Taxes
are raised by the government to generate revenue used to provide services to
the public such as; Health centers, telecommunication, roads, schools and
electricity and this have helped to improve on the performance of small scale
business enterprises. Despite the services provided, small scale business
enterprise’s performance in Rivers State is still poor. This could be due to
the increasing tax burden brought about by tax rates which are revised
annually. These rates seem to be taking an upward trend (Gordon and Dawson,
1987) which has led to winding up of some small scale business enterprises.
This prompted the researcher to investigate more about the impact of taxes on
performance of small scale business enterprises.
The
purpose of the study was to evaluate the impact of taxes on performance of
small scale business enterprises in Rivers State.
1. To
assess the performance of small scale business enterprises in Rivers State.
2. To
find out if tax payers are aware of all their tax obligations and policies.
3. To
find out problems affecting tax payers and their business.
1. What
is the performance of small scale business in Rivers State?
2. Are
tax payers aware of all their obligations?
3. What
are the problems faced by tax payers?
The
study covered small scale businesses in Rivers State. Specifically, the study
investigated the performance of small scale businesses, the awareness of the
tax payers regarding their obligations, problems faced by the tax payers and
the relationship between the taxes paid and the performance of the small scale
businesses.
The
study was carried out in Rivers State, Nigeria. The area was purposely selected
because the researcher worked within the vicinity and therefore this eased data
collection.
The
study considered a period of 3 years 2009-2011. This period was selected to
enable the researcher come up with coherent information from the respondents as
it would enable them (Respondents) to give responses that are typical of their
opinion from the observations made over this period.
The
findings of the study are significant on the following ways;
1. To
scholars and researchers, the findings of the study are expected to contribute
to the existing literature about taxation and the effect it causes to the
economy as a whole.
2. To
the tax authority and government, the study will guide them in adjusting tax
policies so that they suit requirements of small scale businesses.
3. To
future academicians especially of Nigeria University students, the study will
help in gaining insight about taxes and performance of small scale business
enterprises.
4. The
accomplishment of the study will enable the researcher to acquire hands on
skills about processing of research work and data analysis. This proficiency
will enable the researcher to handle such related work with a lot of precision
and proficiency.
| Department | Education |
| Project ID Code | EDU0271 |
| Chapters | 5 Chapters |
| No of Pages | 78 pages |
| Reference | YES |
| Format | Microsoft Word |
| Price | ₦4000, $15 |
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| Contact Us On | +2347043069458 |