TAXATION issue in Nigeria has always been a truculent tale. The narratives had often come in discordant versions that spur effusive emotional slants to the teller’s side. Government believes tax revenue generation most times falls short of target, while citizens gnash their teeth in expression of huge burden tax places on their shoulders and a likely tendency to resist compliance with payment given any options.
Whatever berths the ambivalence, tax remains a duty responsible citizen must oblige and reciprocal huge responsibility of providing commensurate social infrastructure on the part of government to justify their collection.
Tax according to a financial expert and Chairman, Chattered Institute of Taxation in Nigeria, Abuja chapter, Monday Nwabuzor, is “a compulsory payment or contribution an individual, group or corporate body makes to the government to help it (government) discharge its duties to the people.” Other sources see tax as money paid to the government to sustain its (government’s) payments for public services. Give and take, tax comes with a mutual responsibility on both the payer citizens and the receiver (government).
Tax is not a novel in any modern governance system as Bible account records payment of tax to Roman government as far back as 1900BC. This received sanction from Jesus Christ, who charged the Scribes and Pharisees to pay their taxes to Ceaser, the Roman ruler at his time; dispelling swiftly, subtle moves veiled in the inquisition of the hard-line anti Christ Jews that sought to commit Christ with their own tendency for rebellion in the question, whether it was right to pay tax.
In Nigeria, as much as other climes, payment of tax is a civic duty, which failure to fulfill attract penalty. There are different types of tax in the system. There are withholding tax and payable tax; company tax, as well as, property tax. There are personal income tax, Value Added Tax and others with all socio-economic activities well built into the regimentation of prevailing tax policies.
The subsisting tax law in the country mandates payment of taxes in all financial earnings whether as an individual, group or corporate organisation across all formal and informal sectors of the economy. The challenge had been, effecting a seamless collection of the supposed taxes from all operators in the system.
While it has been somewhat easier for government to collect taxes from employees in the formal sector, (civil and public servants), the situation is not the same in the informal sector in the chain.
The recent drop in revenue generation from tax according to Federal Inland Revenue Service (FIRS) report shows that compliance with tax policies in the country is not too encouraging. According to their report, the first quarter of 2019, revenue generation decreased N798.82bn. a drop from last year’s performance which had raked-in N1121.55bn to the country coffer as at the same period.
Experts have attributed this drop to many factors, including volatile oil price in recent time. Fingers point at United States, China lingering trade war as central in the oil price swings. More so, economic lull compounded by insecurity, inflation and unemployment at the home front all affect economic activities leading to tax payments.
Whatever factors that could be responsible, government looks forward to the revenue derivable from its tax policies in drawing its budget. Suffice it to say that the report about fall in tax revenue is already a danger to budget funding which compositely means threat to delivery on social contracts of the people with the government- infrastructure, social services and other capital projects.
The questions are, what is the chief factor to this development and can there not be quick response to checking it before it snowballs into sectoral paralyses?
Some economic observers believe that Nigeria fritters away substantial amount of her tax revenue through waivers.
According to a Non Governmental Organisation in Nigeria, Oxfam, the country loses over three billion dollars in tax waivers to multinational companies yearly. The organisation through its Country Director, Constant Tchona, had in a presentation in Abuja on July 17, 2019, stated that 30 percent of companies in Nigeria evade tax payment while 25 percent of companies duly registered in the country do not pay tax. “The fiscal incentives granted with the hope of stimulating investments into the country’s economy are eroded with poor governance and lack of transparency, especially when the Central Bank of Nigeria has confirmed that there is no cost benefit analyses to justify the exemption and when there is no check on the discriminatory powers residing with the executive in granting exemptions.”
While big companies make huge revenues and get away with tax evasion in the country, citizens are ambivalent in their perception of tax matters. In a three-day workers’ workshop held at Anambra Newspapers and Printing Corporation (ANPC), Awka, a participant, Polycarp Onwubiko contended that casual workers in the organisation’s employee should not have their stipends tampered with in the form of tax deduction, given that the said stipends fall within a subvention realm which its tax had already been deducted, leaving them with net income.
“Taxing someone whose name is not in the civil service nominal roll, how will the payment be accounted? Again, such person pays tax through services in the form of VAT. In paying for electricity bill, the person pays VAT and government collects their tax. The same goes with water rate and even rent which its tax is collected under property and tenement taxation. It will be oppressive to collect any further tax from their net pay.” He opined.
A business operator in Onitsha, Sunday Nwandu says, his problem with Nigeria taxation is its multiplicity. He is of the opinion that many private business operators do not pay tax but government in their own way oppresses people from this non- formal sector with multiple taxations in the form of levies and charges. “You pay for your business premises and when you go and bring goods from your store, you pay tickets on different charges and other levies. These levies are so numerous that you lose count of them.
Then, they talk about income tax and somebody still says, we are not paying enough tax. Even when one does not pay assessed income tax, they pay it through multiple levies. It is just too much but my biggest worry is what government has done or does with the taxes they collect. Go and take a look at the federal roads in almost all parts of the eastern region; is it anything that can compel one to make honest contribution to government through prompt tax payment? In fact, Nigerians are so good-natured that they condone nearly everything, including oppression by their own government. Is there any functional government’s pipe borne water running anywhere? What can one say they are paying tax to federal government for? How about electricity? The list goes on. I can only urge the government at all levels to be alive to their responsibilities, so there can be moral ground for them to demand and collect taxes from the ordinary people without looking belligerent in people’s estimation.”
In a tax gap analyses from baseline study by Civil Society Legislative Advocacy on fair taxation in Nigeria, the study showed a massive gap in tax structure as well as low citizen’s perception of the tax system in the country. Their study revealed that paramount factor to the low tax to GDP ratio, is humongous uncaptured population in the tax net in the informal sector. This, they said has helped in spreading poverty and widening of inequality.
They however affirmed that this population bears the heavy brunt of oppressive levies, rates and charges collected from them sometimes in the most cruel way.
While it is important that government be helped to effectively implement its obligation to the people by imbibing the culture of prompt tax payment, government should as well be conscious of delivering on its responsibility to the citizens.
Anambra State Government should draw experience from the dipping tax revenue base of the federal government in recent time, to plug all holes in her revenue generation machinery. The people should not be harangued and hounded with tax related activities only for the funds to go into private pockets that will not help the state in her projected growth.
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