Authored by Mustapha Kameel Aboki
Abstract
This research examines the relationship between taxation and economic freedom with particular focus on the effects of tax increment on Small and Medium Enterprises (SMEs) in Nigeria, using Kantin Kwari Market in Kano as a case study. SMEs are widely recognised as the backbone of economic development due to their contributions to employment generation, innovation, and
poverty reduction. However, their growth and sustainability are significantly influenced by government policies, especially taxation. While taxation remains a necessary tool for revenue generation and the provision of public goods, excessive or poorly structured tax systems can undermine entrepreneurial freedom, reduce investment incentives, and hinder business expansion. This study critically evaluates the Nigerian tax regime, particularly recent reforms, and their implications on SMEs. It adopts a free market analytical framework rooted in classical economic theories, which advocate minimal government interference in economic activities. The
findings reveal that increased tax rates, multiple taxation, and complex compliance requirements impose heavy burdens on SMEs, thereby limiting their capacity for growth and innovation. The study further establishes that such tax policies are inconsistent with the principles of economic freedom and free market systems. Comparative insights from low-tax jurisdictions demonstrate
that reduced tax burdens can attract investment and stimulate economic growth. The research concludes that for Nigeria to achieve sustainable economic development, tax policies must be restructured to promote fairness, simplicity, and entrepreneurial liberty. Practical policy recommendations are therefore provided to ensure a more business-friendly environment that supports SMEs and aligns with free market principles.