The Effect of Tax Rate on the Incentives to Grow Small Enterprises: The Case of Small Enterprises in Montserrado County, Republic of Liberia

Abstract

Over the years several developing countries have prioritized providing powerful new resources including incentives to grow the economy and small businesses in their region, revitalize targeted areas of various cities and promote strong, balanced growth throughout the communities. However, the provision of incentives to grow small businesses and the economy at large is still in its infant stage in Liberia. Against this background, the objective of this study was to investigate the effect of the tax rate on the incentives to grow small enterprises in Montserrado County, Republic of Liberia. The specific objective of this study was to identify the effect of the tax rate on the incentives to grow small enterprises in Montserrado County and identify the factors that leads to the high tax rate on incentives to grow small enterprises. To carry out this study, the study used the casual mapping model and the Decision Explore software introduced by Ackermann et al. To identify these effects/factors. The study also used publish reports from the IMF (International Monetary Fund) on small enterprises in Liberia, specifically Montserrado County, Government official websites, including the Liberia Revenue Authority website (LRA), etc. These reports were cited and analysed using the casual mapping model, and coded using the Decision Explorer software. To identify the effects the of tax rate and the factors that lead to a high tax rate on incentives to grow small enterprises, the map central analysis was used for analysis purposes. Findings from the study revealed that there is a significant effect of the tax rate on the incentives to grow small enterprises in Montserrado County Republic of Liberia as a result of several factors. The study also concluded that tax is a tool for fiscal policy employed by the government to influence small Enterprises negatively or positively depending on the nature of enterprise activities in a country. The study recommended that the Government of Liberia adopt china’s incentives policy that has been successfully implemented in providing incentives to small enterprises for them to grow. Considering how China’s economy has grown tremendously over the years as a result of the incentives policy, the research conclude that if this practices is adopted and implemented in Liberia, this will boost the growth of small enterprises and the economy to a larger extent.