Abstract
The study examines the effect of tax policies on the survival of entrepreneurship in Ondo State, Nigeria. The study employed survey research design with the population of 18 local government areas. The study adopted multi-stage sampling techniques to select the sample size of nine local government areas that have duly registered small and medium enterprises (SMEs) under Small and Medium-Scale Enterprise Development Agency of Nigeria (SMEDAN) in Ondo State. Structured questionnaire was administered and returned by the respondents. Data collected was estimated using ordered logistic regression to test the hypotheses formulated. The study revealed that the three explanatory variables (multiple taxation, tax rates, and tax incentives) accounted for 43% of the variability of SMEs sustainability in Ondo State with a p value < 0.05, α = 0.0029. It also revealed that there was a negative significant effect between multiple taxation and sustainability of entrepreneurship; while tax rates and tax incentives have a positive relationship on entrepreneurship sustainability. Based on these findings, the study therefore recommends that for government to truncate unemployment rates that resulted to chronic poverty, banditry, kidnapping, and other social vices in the state, it is imperative that a favorable tax regime shall be provided which will encourage entrepreneurship sustainability and reduces social vises. This will not only enliven existing ones but also inspire the emergence of new ones. Friendly tax regime would engender voluntary compliance amongst the entrepreneurs in the long run with resultant tax yield.
Highlights
Entrepreneurship as a proxy to small and medium enterprises (SMEs) sustainability in Nigeria has recently received considerable attention because of their entrepreneurial ability and to create job opportunities
This study examined the degree of connection between tax policies and sustainability of entrepreneurs in Ondo State as a precursor to the sustainable growth of SMEs in Nigeria
The implication is that, even though the findings suggest that as tax rate and tax incentive increases, the probability that it will lead to increase in the sustainability of SMEs cannot be established statistically contrary to the general belief of the entrepreneurs regarding the effect of the increased tax rate on business sustainability
Summary
Entrepreneurship as a proxy to small and medium enterprises (SMEs) sustainability in Nigeria has recently received considerable attention because of their entrepreneurial ability and to create job opportunities This will perpetually reduce the unemployed population but the perceived tendency to influence the economic growth of the state; increase per capital income, capital formation, and boost government tax revenue in the long run (Muritala, Awolasa, and Bako, 2012). It is worrisome because a larger portion of these problems were self-inflicted either by failure on the part of the government, the entrepreneurs themselves, or the business environment they operate. One of these challenges was the tax policies of the government that flagged the complicated and unfriendly economy of the country (Eftekhari, 2009). This has been evinced in incessant multiple taxation, high tax rates, and poor tax incentives which resulted to tax burdens
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