Title:
TAX POLICY AND INVESTMENT DECISIONS OF SMALL AND MEDIUM SCALE ENTERPRISES: EVIDENCE FROM CROSS RIVER STATE, NIGERIA.

Authors:
Gabriel Femi Goodwill*, John Ogenyi Oboh, Emmanuel Takim Michael, Nigeria

Abstract:

This study is on the Cross River State tax policy and its effect on the investment decisions of small and medium scale enterprises (SMEs) in Calabar South Local Government Area. Over the years, small and medium scale enterprises (SMEs) have been an avenue for job creation and the empowerment of Nigerian citizens, providing about 50% of all jobs in Nigeria and also for local capital formation. However, the mortality rate of these small firms is very high. Among the factors responsible for these untimely close-ups are tax related issues, ranging from multiple taxation to enormous tax burdens. The study therefore examines the effect of tax policy on SMEs survival. The study involves a survey research design with a population of 104. The researcher derived their sample size to arrive at 75 and a self-administered questionnaire was used to collect data. This data was quantitatively analyzed with simple percentages and the research hypotheses were tested with Chi-square analysis. Findings revealed that Cross River State tax policy has significant negative effect on SMEs’ investment decisions and the relationship between SMEs’ size and its ability to pay taxes is significant. The research therefore, recommends that government should come up with uniform tax policies that will favour the development of SMEs in Nigeria and government should put into consideration the sizes of SMEs when formulating tax policies.