Effect of Taxation On The Performance Of Small And Medium-Scale Indigenous Enterprises In Abia State, Nigeria

Abstract

The study was on the effect of taxation on the performance of small and medium-scale indigenous enterprises in Abia State. The study specifically determined the socio-economic characteristics of respondents, the level of the performance of indigenous business operators, the level of taxes paid, the perception of indigenous business operators on tax policy, the effect of tax paid on the performance of the respondents, and the factors influencing the amount of tax paid by the indigenous business operators the study area. This study adopted the primary source of data with the use of face-to-face interviews and questionnaires. A simple random sampling technique selected one hundred and fifty-seven (157) respondents. Data were analyzed using statistical tools such as mean, percentage, frequency distribution, regression, and ANOVA. The study showed that most of the respondents who operated indigenous businesses were male, single, young, educated, and having good business experience enough to support the stability of their businesses. Most (73%) of the respondents selected for the study were involved in non-food businesses. In addition, most indigenous business operators had an average income of N 15,260.00 and paid a minimum of N 8 8420 per month as tax. The level of tax payment per month is on the high side and too much to shoulder by the indigenous business operators. Furthermore, indigenous businesses' perception of tax policy in the state did not conform with best practices evidence in the tax burden of operators. However, the operators of indigenous businesses have shown resilience in their operations. Age, firm age, income generated, value of assets, type of enterprise, and business registration were significant variables influencing the amount of tax the indigenous business operators paid. The study recommended that the government should engage operators of SMEs in the state to work out modalities to reduce their tax burden that will ultimately promote business activities in the state. Also, unwholesome tax practices in the state should be eliminated to make the state the next business destination.