Strategic Management Quarterly

Impact Analysis of Tax Policy and the Performance of Small and Medium Scale Enterprises in Nigerian Economy
Stephen I. Ocheni

Abstract
The mortality rate of Small and medium enterprises which make up 95% of the economy is very high and these Small and medium enterprises serve as source of employment generation; innovation, competition, and economic dynamism in the development of Nigerian Economy. Tax policy is one of the factors that constitute the Small businesses’ economic environment. Therefore, the objective of this study impact analysis of tax policy and the performance of small and medium scale enterprises in Nigerian economy is to investigate impact of tax policy on the performance of small and medium scale enterprises in Nigerian economy. Descriptive survey research design was adopted. The population for this study is comprised of sixty eight (68) SMEs currently operating in Kogi State and Abuja. They have 726 personnel comprised of fifty six (56) managers and 671 accountants. The sample for the study consisted of two hundred and fiftyeight (258) respondents, (20 managers and 238 accountants from the two states. Yaro Yamani formula for sampling technique was used to select the two hundred and fifty-eight (258) respondents, representing 36% of the population. Out the two hundred and fifty-eight (258) copies of the questionnaire were printed and distributed, sixty eight were not returned while One hundred and ninety (190) copies of the questionnaire were retrieved, representing a seventy four (74%) per cent return, out of which one hundred and forty six were wrongly filled giving the total of one hundred and forty four (144) copies of the valid questionnaire. Descriptive statistics was used to analyse the data collected and to obtain the mean assessment for each scale item. The research hypotheses for this study were tested using z-test statistics to establish p < 0.05 significant differences. The analysis revealed that there is no significant difference in the mean opinion scores of managers and accountants on the best tax policy that encourages tax compliance by SMEs in Nigeria. It was also revealed that there is no significant difference in the mean opinion scores of managers and accountants of the implications of tax policy on SMEs growth. The paper therefore recommended that the for Small and Medium Enterprises to get better equipped, have enough funds and survive in a competitive market, the rate of tax levied on the small business should be lower; The rate of tax incentives and exemptions which serve as catalysts and bait for attracting investors should be highly increased by the three tiers of government in Nigeria; Government should promulgate a policy that will help to avoid illegal taxes, such as community levy, boys or youth levy and as well as association or union levy; Any policy that will push for enough funds and other activities that will lead to Small and Medium Enterprises growth is good for promulgation and there should be consistency in tax policy that will cushion the effects of factors that militate against the expansion of SMEs in relation to their ability to pay taxes by government.

Full Text: PDF     DOI: 10.15640/smq.v3n1a3