An Appraisal of Taxation and Its Effect on Small Business Survival in Taraba State
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Background of the Study
Taxation plays a critical role in generating revenue for governments, which is then used to fund public goods and services. However, for small businesses, the tax burden can be a significant challenge, potentially affecting their survival and growth (Adeyemi & Bello, 2023). In Taraba State, small businesses constitute a large portion of the economy, with many engaged in agriculture, retail, and service sectors. These businesses often face difficulties in complying with tax regulations due to limited financial capacity and lack of awareness of tax obligations.
The state government, through the Taraba State Internal Revenue Service, has implemented various tax policies aimed at improving revenue generation. However, the impact of these taxation policies on the survival of small businesses has not been extensively studied. This study seeks to appraise the effects of taxation on the survival and sustainability of small businesses in Taraba State, examining how taxes influence their profitability, growth, and capacity to reinvest (Umar & Garba, 2024).
Statement of the Problem
Small businesses in Taraba State often struggle with the financial burden of taxation, which can hamper their ability to survive and expand. While tax policies are essential for generating government revenue, excessive taxation or inadequate tax reliefs for small businesses could result in increased operational costs and reduced profitability. The lack of understanding of tax obligations further complicates the situation, leading to low tax compliance and limited access to government support. Therefore, it is crucial to understand the impact of taxation on the survival of small businesses in Taraba State to inform policy decisions that support their sustainability.
Objectives of the Study
1. To assess the impact of taxation on the survival of small businesses in Taraba State.
2. To identify the challenges faced by small businesses in complying with tax policies in Taraba State.
3. To recommend strategies for improving the tax environment for small businesses in Taraba State.
Research Questions
1. How does taxation impact the survival of small businesses in Taraba State?
2. What challenges do small businesses face in complying with tax policies in Taraba State?
3. What strategies can be implemented to improve the tax environment for small businesses in Taraba State?
Research Hypotheses
1. Taxation has a significant impact on the survival of small businesses in Taraba State.
2. Small businesses in Taraba State face significant challenges in complying with tax policies.
3. Improvements in the tax environment will enhance the survival and growth of small businesses in Taraba State.
Scope and Limitations of the Study
This study will focus on small businesses in Taraba State and their experiences with taxation. It will examine tax policies and their effects on businesses operating in various sectors, including agriculture, retail, and services. A limitation of the study is that it may not fully capture the broader economic factors, such as inflation or access to credit, which may also affect small business survival.
Definitions of Terms
• Taxation: The process through which governments collect revenue from individuals and businesses to fund public services.
• Small Business: An enterprise with a limited number of employees and relatively low revenue, often focused on local or regional markets.
• Tax Compliance: The extent to which businesses adhere to tax laws and fulfill their tax obligations.
• Business Survival: The ability of a business to continue operating and generating profits over time, despite challenges such as financial constraints and market competition.
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