1.0   Introduction

The history of taxation in Nigerian dates back to the pre-colonial era. Before the colonization of the different entities which were later amalgamated under the name Nigeria. There were different systems of taxation, existing in the forms of compulsory services, contribution of goods, money, labour etc. amongst the various kingdoms, ethnic groups and tribes, controlled by the Obas, Emirs, Ezes, Attahs, Ohinoyis and Amanyanabos, in order to sustain the monarchs. The deportation of king Jaja of Opobo in 1893, due to his opposition to the imperialist taxation, is illustrative of this point. The traditional rulers imposed taxes, in one form or the other, on their subjects.


These taxes took the form of “Zakkat”, levied on Moslems for educational, charitable and religious purpose; Kudin-Kasa” a form of agricultural tax on the utilization of land (equivalent to present day land ground rent). Shuka-Shuka levied on the ownership of cattle based on the number of cattle; “Ishakole”- contribution of farm products, as a form of land tax, in exchange for the use of land for agricultural products, as a form of land tax, in exchange for the use of land for agricultural purposes, payable to Obas, Chiefs, family/community heads “Owo-Ori”, that is individual taxes payable in cash or kind in return for services; war-tax, payable by a vanquished community to the victorious one after a war; community tax payable by all adults within a community to execute projects beneficial to the community “Osusu Imachi Nkwu” (levies for palm fruits) taxes are payable by those who harvest palm fruits and who are expected to contribute.

Taxation can simply be seen as a compulsory transfer or payment of money from private individuals, institutions or groups to the government. It may be levied upon wealth or income in the form of sure-charge on prices. Taxes therefore are a proportion of the produce of land and labour of a country placed at the disposal of the government.


Multiple taxation on the other hand, is the imposition of different types of taxes that could have come under one major tax form on the people by the government. At times some of the taxes are christened levies. However, within the context of this work, all compulsory payment made by individuals and institutions to the government are regarded as tax. Taxes generally provide basis for government revenue, which help them in carrying out their functions. This is why Ojo (2010) defined tax as a means by which government appropriate part of private sector’s income and expenditure as its revenue for the purpose of meeting recurrent expenditure and creating public capital formation towards the development and growth of goods and services of the economy.


A good tax possesses the following qualities: fairness, convenience, simplicity, and minimum cost of collection and minimum distortions. Musgrave (2013) noted that taxes should be chosen so as to minimize interference with economic decisions in otherwise efficient markets. Imposition of excess burden should be minimized. Again, a good tax system should permit efficient and non-arbitrary administration and it should be understandable to the taxpayer.


1.1   Background of the Study

In recent times the world economy has developed tremendously and this has been linked to activities of small and medium scale enterprises (SMEs), especially in developing countries. A study carried out by the federal office of statistics shows that in Nigeria, small and medium scale enterprises make up 97% of productive units of the economy (Ariyo, 2005). Although smaller in size, they are the most important enterprises in the economy due to the fact that when all the individual effects are aggregated, they surpass that of the larger companies because in Nigeria the importance of small business is as a creator of jobs, particularly for those with low skills levels, is widely recognized. Small, medium or micro enterprises (SMME’s) contribute 36.1% of the country’s gross domestic product (GDP) and employ 68.2% of the workforce in the private sector. For instance in the agriculture, construction and retail sections, (SMMEs) employ more than 80% of the total workforce over the last few years, the growth in their contribution to GDP highlighting the job creation potential of this sector of the economy.


The social and economic advantages of small and medium scale enterprises cannot be overstated. Panitchparkdi (2006) sees SMEs as a source of employment, competition, economic dynamism, and innovation which stimulates the entrepreneurial spirit and the diffusion of skills. Because they enjoy a smaller geographical presence than big companies example in terms of the location or site of the business and the cost of establishing the business; the small and medium enterprises can manage a piece of land space, and can established the business with a little capital compared to the big companies. Being highly innovative, they lead to the utilization of our natural resources which in turn translates to increasing the country’s wealth through higher productivity. Small and medium scale enterprises have undoubtedly improved the standard of living of so many people especially those in the rural areas (Ariyo, 2005).


However, the mortality rate of these small firms is very high due to financial constraint example the sources of fund is mostly from one source (the sole proprietor) also poor management skills, lack of staffs training, lack of incentives, lack of workers motivation. According to the Small and Medium Scale Enterprises Development Agency of Nigeria (SMEDAN), 80% of SMEs die before their 5th anniversary.


1.2   Statement of the Problem

The multiplicity of taxes, including levies rates, imposed by the various tiers of government unit, village, local government area and states etc. impact on their operation. Tax burden is a major problem in Nigeria as many business organizations are not favoured by the tax systems and policies in some place.


Although there is a general perception that tax is an important source of fund for development of the economy and provision of social services, the problems faced are in the area of negative relationship between taxes and the business’ ability to sustain itself and to expand. SMES are faced with the problem of high tax rates, multiple taxation, complex tax regulations and lack of proper enlightenment or education about tax related issues. Not minding other challenges that SMEs are facing in other developing countries like Nigeria; inadequate capital, poor technical and managerial skills, environmental effects and government regulations which is a worm eating deeply and large chuck of revenues generated by these SMEs for their growth and survival. These have led to increase in record of dearth of Small and Medium Scale Enterprise.


1.3   Objectives of the Study

The general objective of this study is to examine the effect of multiple taxations on small and medium enterprises performance in Akwa Ibom State.