THE EFFECTS OF TAX IN SMALL BUSINESS ENTERPRISE baraka

Improving fiscal performance by reducing budget deficits has for long been at the heart of many governments in developing countries. Budget deficit in all cases whether monetized or not, tends to generate inflationary pressures triggering uncertain crisis in an economic system. Majority of the developing nations, Kenya inclusive have had a dismal performance by attracting negative budget balances over the years. To contain fiscal vulnerabilities, there is need to understand factors behind fiscal performance in Kenya. The objectives of this study are to establish the trends and extent to which these factors determine fiscal performance in Kenya. The study employed unrestricted Vector Autoregressive (VAR) model in estimating how macro-economic, political and institutional factors affect fiscal balance using longitudinal data collected, consolidated and analysed for the period 1963 to 2013. In the short run, both the first and the second lags of fiscal balance, Treasury bill, Tax revenue and inflation significantly influenced fiscal balance. On the other hand, only the first lags of real gross domestic product per capita growth rate, the first differences of the Total Debt service and the Gross Government Investment affected fiscal balance significantly whereas only the second lags of the first differences of both the current account and the ratio of broad money to GDP were found to significantly determine fiscal balance. The study suggests therefore that the government should intervene through refocusing on the existing fiscal policies to mitigate the anticipated future problems likely to be associated with the existence of unchecked behaviors of these determinants. Finally, the government and the relevant agencies need to consider adjusting Treasury bill rates downwards to increase fiscal balance. As well, the government should be able to encourage internal investment by the local and encourage internal borrowing at affordable interest rates. This may ultimately spur economic growth through varied sectors of the economy. The study emphasises on sound fiscal policy which is a critical determinant of long-term economic success and recommends Kenyan government to balance her financial affairs and avoid imposing a tax burden. Tax burden becomes a disincentive for people to work hard, save, invest, and be entrepreneurial, while still ensuring adequate and efficient public services.

2020

This article analyzes the political and legal attention to the small business and private entrepreneurship along with the economic reforms and their development in the country, the factors affecting them, as well as the foreign and Chinese experience, theoretical and practical. Wide opportunities for entrepreneurship are being created. This helps to improve the standard of living of the people and improve their economic activity. The article analyzes the relationship between the ―person-family-state‖ in business relationships. It is known that in the creation of a business environment, currency relations and exchange rates are invisible. This is because various changes in monetary credit and currency relations have a direct effect on the exchange rate. Interestingly, sociologists have analyzed and commented on how women in several countries use and distribute income in their families. Also, special attention was paid to the Chinese experience in starting a business and analyzing the...

Springer Texts in Business and Economics, 2014

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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.

OECD Economics Department Working Papers, 2003

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