EFFECT OF TAXATION ON PERFORMANCE OF MEDIUM-SIZED ENTERPRISES IN KAJIADO COUNTY, A CASE STUDY IN KITENGELA TOWN, KAJIADO EAST WARD
Keywords:
Gross Domestic Product, Tax, Medium enterprises.Abstract
This study examined the effect of taxation on the performance of medium-sized enterprises in Kitengela Town, Kajiado County. The study sought to address the following specific objectives; to determine the effect of Value Added Tax on the performance of medium-sized enterprises in Kajiado County, to evaluate the effect of Income Tax on the performance of medium-sized enterprises in Kajido County and to assess the effect of Excise tax on the performance of medium-sized enterprises in Kajiado County. The study was anchored on three theories; Ability-To-Pay theory; Benefit Theory of Taxation and Kaleckies Theory of Taxation. The research adopted cross-sectional research design. The target population of this study comprised of 1,229 MEs. Simple random sampling was used to select the sample size of 302 from the different business/activity sectors. This study used questionnaires with fixed choice formats, as well as interviews as the main data collection instruments. A pilot study was undertaken on 30 of the respondents to test the reliability and validity of the questionnaire. Quantitative data were analyzed using SPSS version 25 where relationships between the variables were assessed using correlation and regression analysis. Quantitative data were analyzed using SPSS version 25 where relationships between the variables were assessed using correlation and regression analysis. The study found out that there was a positive and significant relationship between Value Added Tax and performance of MEs. Further, the results revealed that there was a positive and significant relationship between Income Tax and performance of MEs. Lastly, there was a positive and significant relationship between Excise Tax and performance of MEs. Based on the findings, the study concluded that Value Added Tax, Income Tax and Excise Tax have a positive and significant effect on performance of MEs. The study recommends that as a broad-based tax on final consumption, VAT regimes must determine whether, or the extent to which, the purchase should be treated as acquired for business purposes or for private consumption. To eliminate the tax burden among MEs brought about by income tax, policy makers should extend exemption to transactions necessitated by regulatory changes, compulsory government acquisitions and internal restructures considering that such transactions are rarely undertaken for a commercial gain. Excise tax should be developed in such a way that it would stimulate rather than stop the development of entrepreneurship.
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