Abstract:
The main objective of this study is to examine the effect of tax policy
on growth of small and medium scale businesses. The study was carried out
in the New Juaben municipality of the Eastern region of Ghana. In this study
the researcher used questionnaires and interviews to collect data from the
sample size of 200 out of 400 owners and managers of small and medium
scale businesses. Both quantitative and qualitative methods were adapted to
analyse data. The data collected was screened, filtered and recoded. It was
then fed into SPSS which measured all the variables in percentages and bar
chart. The findings of the study revealed that personal income tax rate has
negative effect on all the growth indicators of small and medium scale
businesses. It was also revealed that most small and medium scale businesses
do not have in place strategies to minimise these effect and also it was
revealed that most operators of small and medium scale businesses see
payment of personal income tax rate and other levies as a civic duty, but the
problem with respondents is that the rate is not business friendly.
It is therefore recommended that the government should reduce the personal
income tax rate that are being tax on small and medium scale businesses. The
government should provide technical assistance to them example hiring tax
experts to educate them on how to minimise the negative effect of personal
income tax rate on their growth. Ghana revenue authority should also frequently
organise workshops to educate them and finally small and medium scale
businesses operators should upgrade themselves in the tax education.
