EFFECT OF MULTIPLE TAXATION ON THE SURVIVAL OF SMALL SCALE ENTERPRISES

CHAPTER ONE

1.0        BACKGROUND OF STUDY

1.1         STATEMENT OF THE PROBLEM

There are lots of problems facing small scale enterprises world over. Although some of these problems are peculiar to many countries, the challenges faced by small scale enterprises in different countries and geopolitical divisions are basically the same. A study carried out by the Federal Office of Statistics shows that in Nigeria, small scale enterprises make up 80% of the economy (Ariyo, 2005). In spite of this importance, the mortality rate is very high as stated in Small and Medium Enterprise Development Agency of Nigeria (SMEDAN). SMEDAN has reported that about 80% of small scale enterprises in Nigeria die before their 5th anniversary. Among the factors responsible for these untimely shut-down are tax-related issues which are: (1) multiple taxations (2) high tax rates (3) low efficiency(4) high collection charges (5) low profitability etc.

Furthermore, owing to the compulsoriness of taxation as a charge against income and properties of individuals, partnerships, small scale enterprises and corporate bodies in the country, there has been an ample quest by the Nigerian government to increase the rate of some of the existing taxes as a means of generating additional revenue. This mostly affects small scale enterprises that are struggling to stay afloat in the business environment who still have to pay tax out of the little profit they make.

1.2         OBJECTIVES OF THE STUDY

The broad objective of the study is to examine the implication of multiple taxations on the performance of small scale enterprises in Asaba, Delta State.

The specific objectives include;

to ascertain whether there is a significant relationship between multiple taxations on the profit of small scale enterprises to determine if there is a relationship between multiple taxations on the reinvestment rate of small scale enterprises. to ascertain whether there is a relationship between multiple taxation on the growth of small scale enterprises. to determine if there is a relationship between multiple taxations on the productivity of small scale enterprises.

1.4     STATEMENT OF HYPOTHESES

In order to carry out this study; the following research hypotheses were formulated. These hypotheses were structured in both null and alternative forms as follows:

Ho1: There is no significant relationship between multiple taxations and the profit of small scale enterprises.

HA1: There is a significant relationship between multiple taxations and the profit of small scale enterprises.

H02:  There is no significant relationship between multiple taxations and the reinvestment rate of small scale enterprises.

HA2: There is a significant relationship between multiple taxations and the reinvestment rate of small scale enterprises

H03:  There is no significant relationship between multiple taxations and the growth of small scale enterprises.

HA3: There is a significant relationship between multiple taxations and the growth of small scale enterprises.

Ho4: There is no significant relationship between multiple taxations and the productivity of small scale enterprises.

HA4: There is a significant relationship between multiple taxations and the productivity of small scale enterprises.

1.5   SIGNIFICANCE OF THE STUDY

         The finding from this study will be of good benefit to the general Nigerian populace and the business community as it will help the tax payers to have a deep understanding of their obligations and the need to meet such duties on tax liabilities. Government and its agencies on their own part will equally see the need for effective planning, administration and collection of taxes and also providing incentive for tax payers so as to limit the problem of tax avoidance and evasion hence, achieving the overall macro-economic goals of the country.

              Finally, it could serve as a possible benchmark for other further advanced studies in this regard.

1.6     SCOPE OF THE STUDY

For the purpose of achieving acceptable and realistic results, this study is primarily focused on small scale enterprises in Asaba, Delta State