Tax policy and growth of small and meduim scale business: A study on business in the new juaben municipality

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.