An Assessment of Tax Incentives on Small-Scale Businesses in Jos North Local Government Area, Plateau State

An Assessment of Tax Incentives on Small-Scale Businesses in Jos North Local Government Area, Plateau State

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Background of the Study

Tax incentives are policies or benefits offered by governments to encourage investment, entrepreneurship, and business growth by reducing the tax burden on individuals or businesses. For small-scale businesses, tax incentives can provide crucial support for growth, innovation, and job creation, especially in developing economies (Olawale & Oyeniran, 2023). In Nigeria, small-scale businesses form the backbone of the economy, contributing significantly to employment, poverty reduction, and regional development. However, these businesses often face challenges such as high operational costs, limited access to finance, and burdensome tax obligations.

Jos North Local Government Area, located in Plateau State, has a vibrant small-business community, with businesses ranging from agriculture-based enterprises to trade and manufacturing. Tax incentives can potentially support the growth of these businesses by lowering the cost of doing business, encouraging reinvestment in the economy, and improving profitability. This study aims to assess the impact of tax incentives on small-scale businesses in Jos North, focusing on how these incentives influence business performance, sustainability, and job creation.

1.2 Statement of the Problem

Small-scale businesses in Jos North, like many other regions in Nigeria, face numerous challenges in growing and sustaining their operations. While tax incentives have been introduced to ease the burden on small businesses, there is limited evidence on the effectiveness of these incentives in the region. Many businesses continue to struggle with high operational costs, limited access to capital, and insufficient government support. This study seeks to assess whether the available tax incentives are effectively addressing these challenges and contributing to the growth and sustainability of small-scale businesses in Jos North.

1.3 Objectives of the Study

1. To assess the impact of tax incentives on the growth and sustainability of small-scale businesses in Jos North.

2. To evaluate the effects of tax incentives on business profitability and reinvestment in Jos North.

3. To examine the role of tax incentives in job creation and employment in small-scale businesses in Jos North.

1.4 Research Questions

1. How have tax incentives impacted the growth and sustainability of small-scale businesses in Jos North?

2. What effects have tax incentives had on the profitability and reinvestment activities of small-scale businesses in Jos North?

3. How have tax incentives contributed to job creation in small-scale businesses in Jos North?

1.5 Research Hypotheses

1. Tax incentives have positively impacted the growth and sustainability of small-scale businesses in Jos North.

2. Tax incentives have improved the profitability and reinvestment capacity of small-scale businesses in Jos North.

3. Tax incentives have contributed to job creation in small-scale businesses in Jos North.

1.6 Significance of the Study

This study will provide valuable insights into the effectiveness of tax incentives as a tool for supporting small-scale businesses, offering recommendations for policymakers to improve the design and implementation of these incentives. The findings will help local business owners and government officials understand the impact of tax incentives on business performance and provide a foundation for refining tax policies aimed at promoting entrepreneurship and economic development.

1.7 Scope and Limitations of the Study

The study is focused on small-scale businesses in Jos North Local Government Area in Plateau State, and it evaluates the impact of tax incentives over the past five years. It will not examine tax policies at the state or national levels. Limitations include the potential difficulty in obtaining detailed financial data from small businesses, especially in the informal sector.

1.8 Operational Definition of Terms

• Tax Incentives: Government policies that offer financial relief, such as tax reductions or exemptions, to encourage business investment and growth.

• Small-Scale Businesses: Enterprises that operate on a small scale, typically characterized by low capital investment, small workforce, and local or regional market focus.

• Business Profitability: The ability of a business to generate profit from its operations after accounting for expenses, taxes, and other costs.

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