Leveraging Taxation for the Sustainable Development of Micro, Small and Medium Enterprises (MSMEs) in Nigeria

Abstract Micro, Small, and Medium Enterprises (MSMEs) are vital for Nigeria's long-term economic growth, driving creativity, job creation, and poverty alleviation. However, heavy taxation and limited access to financing significantly hinder their expansion and sustainability. This study examines the role of taxation, particularly Value-Added Tax (VAT), in the development of MSMEs in Nigeria, using government grants and commercial bank loans as additional variables. Data from the CBN Statistical Bulletin (2022) covering 1994–2022 was analyzed using ARDL estimation. The findings reveal that while financing positively impacts MSME growth, high taxes negatively affect their development. Consequently, the study advocates for effective tax policies, particularly regarding VAT, to foster MSME growth. Policies should prioritize access to finance through targeted loan programs and financial support to enhance the sustainability of MSMEs. Keywords: Commercial Bank Loans, Economic Growth, Financing, Government Grants, Job Creation, MSMEs, Poverty Alleviation, Sustainable Development, Taxation, Value-Added Tax