EFFECT OF GOVERNMENT TAXATION PRACTICES ON THE PERFORMANCE OF MICRO ENTERPRISES. A CASE STUDY OF ONGATA RONGAI, KAJIADO COUNTY
Abstract
Micro-enterprise businesses play a significant role in the economic development of Kenya’s economy in a myriad of ways with the most prominent one being a source of employment opportunities which translate in improving and uplifting the living standards of the country’s population. This therefore implies that their performance is of great significance to the key stakeholders due to the benefits accrued. One of such stakeholders is the government who not regulates business performance environment through various policies and legislation but also act as a source of government revenue through taxation. Taxation is essential and has a lot of influence on the performance, growth and survival of micro enterprises. Specifically, the study established the effect tax policy on the performance of micro enterprises in Ongata Rongai sub-county, Kajiando County. The researcher used Ability to pay theory and Benefit theory to explain the relationship between the independent and dependent variables. The study adopted a cross sectional survey and descriptive design. The target population of the study constituted all the 410 registered micro enterprises in Ongata Rongai with a sample size of 123 respondents who selected randomly through simple random sampling. Data collected was analyzed through the use of SPSS version 23.0 software. The analyzed data were thereafter presented in frequency tables and charts. Findings of the study showed a significant strong negative relationship between tax rates and performance of micro enterprises in Ongata Rongai sub-county. This implied that as more taxes are imposed on microenterprises, their performance gradually declines. The study results also revealed that performance of microenterprises and tax policies had a significant strong positive relationship (r=0.711, p<0.05). The study therefore concluded that high tax rates implemented by the government have a significant negative impact on the performance of microenterprises and therefore, the government needs to review its tax reforms to develop tax policies and tax rates that are equitable and fair to enable growth of businesses and other key industry players. The researcher suggests for more studies on how specific taxation policies affect performance of other related businesses in the sector because the study only focused on a general tax policy perspective.
Key Words: Tax Policy, Development
CITATION: Hezron, A. O., & Omwenga, J. Q. (2021). Effect of government taxation practices on the performance of micro enterprises. A case study of ongata rongai, kajiado county. The Strategic Journal of Business & Change Management, 8 (4), 322 – 331.
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DOI: http://dx.doi.org/10.61426/sjbcm.v8i4.2103
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