Relationship between Tax Policy, Growth of SMEs and the Nigerian Economy

This research work tries to establish if any relationship exists between the growth of SMEs and the tax policyenvironment within which they operate. Using business sustenance and expansion as indices of growth, itanalyzes responses obtained questionnaires distributed to SMEs in Zaria, North Central Nigeria. Sampling forthe survey was done using the non-probability sampling method specifically by judgmental sampling. Thehypothesis was tested using Spearman’s Rank Correlation. Although there is a general perception that that tax isan important source of fund for development of the economy and provision of social services, the study revealeda significant negative relationship between taxes and the business’ ability to sustain itself and to expand. In orderto obtain a vibrant and flourishing SME sector, the tax policy needs to be appropriate such that it will not be anencumbrance to the growth of small and medium enterprises.