CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

                                     Taxation is one of the major fiscal policies the government of any nation such as Nigeria can use to achieve economic stability and in the financing of capital expenditure. Various taxes are levied upon the income, wealth or gain of an individual, family and business firm by the government for the purpose or benefits of the general public.

Tax by a simple definition is a financial charge or other levy imposted upon a tax payer which could be an individual or a legal entity from the point of view of the student researcher by a state such that failure to pay is punishable by law. Thus, taxation cannot be regarded as a voluntary payment or donation but an enforced contribution exacted pursuant to legislative authority. In modern taxation system such as Nigeria, taxes are levied, in money which could be use for myriads of functions or purpose such ay a expenditure on public order, protection of lives and property, economic infrastructure  cures such as roads, public works,   social  engineering  and  the  operation  of  government itself (Carrol, et al 2000).

The taxes collected by the government no doubt emanate from varying sources ranging from personal income tax, company income tax, capital gain tax, property tax, education, tax, task but to list a few.

The Nigerian government in attempt to raise revenue and enhance the economic development of Nigeria has subjected many firms to multiple taxations which they are mandated or made compulsory to pay irrespective of the sector the business firms operate or else take the wrath of the law A survey carried out by the Manufacturers Association of Nigerian (MAN¹) and (Centre for International Private Enterprise ICIPE) identified multiple taxation as the bane of private sector business growth in Nigeria (Anyamvu, 2012).      The survey established the relationship between multiple taxations in the pilot state across the three tiers of government and re-affirmed its negative effects to private sector growth and businesses in Nigeria.

According to the survey, it was established that multiple taxation could lead to divestment as well as jeopardize foreign direct investment coming into Nigeria, while adversely affecting the Competitions of

existing businesses and their survival, Moreover it was also established that currently most businesses in Nigeria consider the tax environment as unfriendly and disincentive to business, stressing that it engenders loss of man hour to both the government and private businesses.

According to Osagie (2012) tax environment in Nigeria especially the policy on multiple taxation increases the cost of doing business in the country. As a matter of fact, some business including manufacturing companies have shut down production while in some cases, have relocated their factories to other West African countries which are considered to be more investment friendly. Against this back drop, this project examines the effects of multiple taxation on business survival in Nigeria.

1.2 Statements of the Research Problem.

There is no doubt multiple taxation has effect on the business survival of a nation and the government income generation. Researches have indicated that multiple taxation increase cost of running a business while other prior researchers have advocated that multiple tax assist the government in revenue generation in any country, (Osagie, 2012).

1.2.1 Research Questions

1. To what extent does multiple taxation affect business survival in Nigeria?
2. Is there a relationship between multiple taxation and the profitability of firms in Nigeria?
3. What is the relationship between the influence of multiple taxation on foreign direct investment against business survival in Nigeria?
   • Objective of the Study

The objective of this study is divided into two; general arid specific objective. The general objective has to do with the effect of multiple taxations on business survival. However, the specific objectives are put in sentence form as follows:

4. To examine the extent of multiple taxation effect on business survival in Nigeria.
5. To find out the relationship between multiple taxation on the profitability of firms in Nigeria
6. To ascertain the relationship between the influence of multiple taxation on foreign direct investment against business survival in Nigeria.

1.4       Statement of the Research Hypotheses

The null hypotheses for the purpose of this study are specified as Follows:

1. Ho: There is no relationship between multiples taxation and business firms’ profitability in Nigeria.
2. Ho: Multiply taxation does not negatively influence foreign direct in vestment on business survival in Nigeria.

1.5 Scope of the Study

This study examines the effects of multiple taxations on business survival in Nigeria. The period 2000 to 2012 is considered using such variables as personal income tax, company income tax, petroleum profit tax, deferred tax and profitability of firms.

1.6 Significance of the Study

This study will be relevant to the government to know the effects multiples taxation has created on the operation and survival of business in the Nigerian environment. It will also enable them to see the reason to revert the policy on multiple taxations enforced by its agency, the tax authority with the aim of encouraging entrepreneurship, reducing unemployment in Nigeria. Future researchers definitely will have this study useful as a material in terms of further researches.

1.7       Limitation of the Study

This study is limited by such factors as inadequate empirical research materials dealing extensively on the subject matter in Nigeria.

There is also the problem of generalizing the outcome of the study to such sector as the oil sector. Data constraint is another factor that may hinder the perfection of this study.