Taxation And Performance Of Small Scale Businesses. A Case Study Of Nakasero Market Kampala District

ABSTRACT

The study sought to establish the impact of taxation on the performance of small scale businesses in Uganda with a case study of Nakasero market and was driven by mainly three objectives. These objectives include; the need to examine the impact of taxation on the performance of small scale businesses in Kampala district, the need to establish the relationship between taxation and the performance of small scale businesses, and the third objective is to examine the consequences of twation on the performance of small scale businesses.

To achieve these objectives, the researcher sampled twenty (30) respondents from Nakasero market. The study utilized qualitative and quantitative research methods; three data collection instruments were used, structured interview guides and questionnaires and the collected data was presented in table form and analyzed statistically to decipher findings.

The researcher was guided by three research questions; the first research question sought to find out the impact of taxation on the performance of small scale businesses and the research revealed that there are so many positive and negative impacts of taxation on the performance small scale businesses.

The second research question sought to find out the relationship between taxation and the performance of the small scale businesses and the findings revealed that; there is great relationship between the two in a way that high taxes reduce the profits and performance of small scale businesses.

The third research question therefore sought to find out the consequences of taxation on the performance of small scale businesses and the findings revealed that; taxation has both positive and negative impacts on the performance of these small scale businesses. That is to say, when high taxes are charged on small scale businesses that are financially weak, their performance is reduced but when small scale businesses are charged lower taxes, their performance will greatly improve smce they will have adequate profits to plough back to the business.

In summary therefore, the researcher concluded that taxation can be used to control the performance of the economy in a way that high taxes can be used to control the consumption of harmful products such as opium, stabilize the economy during the time of economic stability and so on. On the other hand, the researcher identified that poor taxation policy has numerous impacts on the performance of small scale businesses. This is in way that when those small scale businesses that a financially unstable are charged high incomes, it may result into their collapse or poor performance. On the above basis the researcher recommends the corrective measures, steps and procedures of taxation such as fiscal policies, monetary policies among others so as to achieve satisfactory results by the owners of small scale businesses in Uganda most especially those trading at Nakasero market.

The information obtained through observation of the traders' activities and other documents, questionnaires, interviews and focus group discussions shows control procedures laid down by the management are adhered to, to a certain extent, however, some weaknesses distort the process and procedures but not to the extent of disqualifying the control in place so as to realize the positive impact of taxation on the performance of small scale businesses.