The effect of taxation policies on small-scale businesses: A study of business owners in Ijebu North Local Government Area, Ogun State
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Background of the study
Taxation policies play a pivotal role in the sustainability and growth of small-scale businesses. In Ijebu North, Ogun State, business owners often contend with complex tax regulations that affect their operational costs, pricing strategies, and overall competitiveness. While taxation is essential for generating government revenue, overly burdensome policies can stifle entrepreneurship and limit business expansion (Olatunji, 2023). Small-scale businesses, which form the backbone of the local economy, are particularly vulnerable to changes in tax policies, as they often operate on tight profit margins. The dynamic interplay between government revenue needs and the economic viability of small enterprises creates an environment where tax policy decisions have significant implications for economic development (Fashina, 2024). Moreover, business owners face challenges in complying with regulatory requirements and often lack access to professional advisory services. This study examines the effects of taxation policies on the operational efficiency, profitability, and growth prospects of small-scale businesses in Ijebu North. By integrating contemporary literature and empirical findings, the research seeks to provide a balanced assessment of how tax policies impact business performance and propose recommendations for policy reform that supports sustainable small business growth (Adeyemi, 2025).
Statement of the problem
Small-scale businesses in Ijebu North face significant operational challenges due to complex and often burdensome taxation policies. The financial strain from high tax obligations, coupled with difficulties in compliance, adversely affects business growth and sustainability. Many business owners report reduced profitability and limited capacity for expansion, which ultimately hinders local economic development. This study seeks to investigate the specific impacts of taxation policies on small-scale businesses, identify key areas of concern, and propose reforms to create a more supportive tax environment that fosters entrepreneurial growth (Bello, 2024).
Objectives of the study:
- To analyze the current taxation policies affecting small-scale businesses.
- To evaluate the impact of tax burdens on business operations and profitability.
- To recommend policy reforms that support the growth of small-scale enterprises.
Research questions:
- How do current taxation policies affect small-scale businesses in Ijebu North?
- What is the relationship between tax burdens and business profitability?
- What policy reforms can alleviate the negative impacts of taxation on small-scale enterprises?
Research Hypotheses:
- High tax burdens negatively affect small-scale business profitability.
- Complex tax regulations correlate with decreased business growth.
- Simplified tax policies will improve the sustainability of small enterprises.
Significance of the study
This study is significant as it sheds light on the challenges posed by taxation policies on small-scale businesses. Its findings will assist policymakers in designing tax reforms that promote business growth and sustainability. The research offers practical insights to support the local economy and enhance entrepreneurial opportunities in Ijebu North (Ogunleye, 2023).
Scope and limitations of the study:
Limited to the topic only.
Definitions of terms:
- Taxation policies: Regulations governing the collection of taxes.
- Small-scale businesses: Enterprises with limited capital and operations.
- Entrepreneurship: The process of designing, launching, and running a new business venture.
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