MJAMR

Relationship Between Taxation Polices And Growth Of Small Scale Business In Kasubi Market Kampala.

Kuguma Sharon, Babirye Shamirah


Abstract

The study examined the relationship between taxation policies and growth of small scale businesses operating in Kasubi Market, Kampala District, Uganda. The research was motivated by persistent concerns about the impact of taxation on small business sustainability and expansion in informal market settings. Using a cross-sectional survey design, data were collected from 184 small business operators through structured questionnaires and interviews. The study employed descriptive statistics, Pearson correlation, and multiple regression analysis. Results revealed a significant negative relationship between tax burden and business growth (r=-0.697, p<0.01), while tax compliance costs showed an even stronger negative correlation (r=-0.743, p<0.01). Conversely, perceived tax fairness (r=0.612, p<0.01) and tax education (r=0.578, p<0.01) demonstrated positive associations with business growth. Regression analysis showed that taxation policy variables explained 58.7% of variance in business growth (R²=0.587, F=43.254, p<0.001). Specific findings indicated that tax compliance costs (β=-0.389, p<0.001), tax burden (β=-0.334, p<0.01), and tax enforcement approach (β=-0.267, p<0.01) were significant negative predictors, while perceived tax fairness (β=0.298, p<0.01) positively influenced growth. Businesses facing high tax compliance costs reported 54% lower growth rates and 41% lower reinvestment compared to those with lower compliance burdens. The study concluded that while taxation was necessary for government revenue, current policies and implementation approaches constrained small business growth through excessive burden, high compliance costs, and enforcement methods that disrupted business operations. Recommendations included: simplifying tax procedures through presumptive taxation, reducing compliance costs via digital platforms, improving tax education and sensitization, ensuring equitable enforcement, establishing dedicated small business tax units within Uganda Revenue Authority, and reviewing tax rates to reflect small business realities.

Keywords

Taxation Policies Small Scale Business Business Growth Tax Compliance Informal Sector
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Kuguma Sharon & Babirye Shamirah (2025). Relationship Between Taxation Polices And Growth Of Small Scale Business In Kasubi Market Kampala. Metropolitan Journal of Academic Multidisciplinary Research, 4(12). https://journals.miu.ac.ug/pages/article.php?article_id=545

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