The Nation Newspaper

Tag: taxation

  • ‘Address multiple taxation in private schools’

    Director, Everest Heights Academy, Gwagwalada Abuja, Dr Olubukola Dosunmu, has called on the Federal Government to address multiple taxation against private schools operators in the country. Dosunmu also called for strict regulations and control of private schools, as well as access to funds from financial institutions.

    She spoke at the inauguration of its Junior Secondary School arm in Abuja.

    According to her, the plan of the school is to have a university in the next few years to address certain needs in the education sector.

    Dosunmu, a pathologist, attributed the success of the school to discipline, trust in God, dedication of staff and the unflinching support of her husband who stood by her when she started operating the school from their living room 12 years ago.

    She said: “At the beginning, we had a lot of challenges, in fact around 2011 and 2013, we almost went bankrupt because of the difficulties and problems associated with running a private school. There is the problem of multiple taxation, overhead costs, teachers’ salaries, water and electricity bills, high interest rates and inability to access funds from financial institutions.

    “Education is capital intensive and people going there need the support of government, institutions and individuals. But here the support is almost zero. A lot of times I was discouraged because of the harsh environment and the fact that some parents when they are angry, use harsh words against you. Most times I would tell myself if I had remained in my Consulting Room at the teaching hospital, maybe I would not be facing this challenge.

    “But I thank God who makes it possible for me to receive support from a lot of people especially the teachers.  I am very passionate about education.

    “It is my prayer that the government would address certain areas that have to do with multiple taxation, and the need for strict regulations and control, access to funds from financial institutions and reductions in levies and taxes imposed on private schools by so many government agencies.”

    He said the institution does not compromise standard to passing exams.

    The school which was established in 2004 with four pioneering pupils, now has over 500 pupils across its day care, nursery, primary and secondary arms.

     

  • ‘Address multiple taxation in private schools’

    Director, Everest Heights Academy, Gwagwalada Abuja, Dr Olubukola Dosunmu, has called on the Federal Government to address multiple taxation against private schools operators in the country. Dosunmu also called for strict regulations and control of private schools, as well as access to funds from financial institutions.

    She spoke at the inauguration of its Junior Secondary School arm in Abuja.

    According to her, the plan of the school is to have a university in the next few years to address certain needs in the education sector.

    Dosunmu, a pathologist, attributed the success of the school to discipline, trust in God, dedication of staff and the unflinching support of her husband who stood by her when she started operating the school from their living room 12 years ago.

    She said: “At the beginning, we had a lot of challenges, in fact around 2011 and 2013, we almost went bankrupt because of the difficulties and problems associated with running a private school. There is the problem of multiple taxation, overhead costs, teachers’ salaries, water and electricity bills, high interest rates and inability to access funds from financial institutions.

    “Education is capital intensive and people going there need the support of government, institutions and individuals. But here the support is almost zero. A lot of times I was discouraged because of the harsh environment and the fact that some parents when they are angry, use harsh words against you. Most times I would tell myself if I had remained in my Consulting Room at the teaching hospital, maybe I would not be facing this challenge.

    “But I thank God who makes it possible for me to receive support from a lot of people especially the teachers.  I am very passionate about education.

    “It is my prayer that the government would address certain areas that have to do with multiple taxation, and the need for strict regulations and control, access to funds from financial institutions and reductions in levies and taxes imposed on private schools by so many government agencies.”

    He said the institution does not compromise standard to passing exams.

    The school which was established in 2004 with four pioneering pupils, now has over 500 pupils across its day care, nursery, primary and secondary arms.

     

  • Benue traders protest multiple taxation

    •BIRS: don’t blame us

    Market unions and traders in Benue State have protested the “multiple taxation” imposed on them by the government.

    The protest held at the tomato markets in Tarka and Ushongo local government areas.

    Tarhembe market in Tarka council was shut as traders blocked the Makurdi-Gboko highway, causing a gridlock for about four hours.

    Traders in Lessel market in Ushongo council blocked the highway and made a bonfire.

    There was no vehicular movement for hours as stranded passengers lined up at both ends of the Ogoja, Cross River State, express road.

    Provost of the College of Education, Katsina Ala, DR. Ndyer said he was caught in the unpleasant situation for over three hours.

    Youth leader of the All Progressives Congress (APC) in Tarka, Comrade Justine Anzembe, supported the protest. He berated the idea of asking a J5 bus loaded with tomatoes to pay N40,000, saying this would make it difficult for both the sellers and buyers to make profit.

    Comrade Anzembe warned that if the government does not check the action of the Benue State Internal Revenue Service (BIRS), voters will react negatively come 2019 general election.

    However, an official of the BIRS, who pleaded for anonymity, said the multiple taxation was caused by the traders and their associations.

    He said the federal, state and local governments collects revenue in various markets, thereafter, market unions also imposed their own tax on members.

    According to him, the BIRS operates within the tax law passed by the State House of Assembly. He, however, promised to look into the allegations.

    At press time yesterday, the road was still blocked and travelers remained stranded, even as officials of BIRS headed to the troubled areas to calm tension.

  • Diversification: Push for adequate taxation takes centre stage

    Diversification: Push for adequate taxation takes centre stage

    Attempts to shore up the country’s revenue with the upward review in taxes have always been resisted. Experts say only fiscal diversification can rescue the economy, which has been weakened by tumbling global oil prices, Assistant Editor CHIKODI OKEREOCHA reports. 

    Not a few Nigerians have resisted previous attempts by successive administrations to broaden the nation’s revenue base with the introduction of new taxes. They have always argued that the government has not been able to justify what accrued to the coffers in the past.

    The endemic corruption in tax administration, which hindered past administrations from making judicious application of revenues generated in the past to improve socio-physical infrastructure has also not helped matters.

    Besides, Nigerians were reluctant to buy into government’s proposal of widening its tax net as a way of diversifying the economy from oil.

    Some have also cited the weak manufacturing base, which according to them, rendered the economy unproductive and therefore not supportive of remittance of new taxes by impoverished operators.

    However, despite these misgivings, tax experts and some real sector operators have pitched tent with the government. They are insisting that there is no better time than now to embark on fiscal diversification of the economy.

    The experts told The Nation that the prevailing economic realities have made the payment of more taxes inevitable, considering the urgent need to mitigate the crippling impacts of dwindling revenue triggered by crashing oil prices at the international market.

    One of them, Mr. Taiwo Oyedele, said fiscal diversification, which involves increasing tax revenues from the non-oil sector to reduce reliance on oil revenues for financing spending has become imperative.

    Oyedele, who is Head, Tax & Regulatory Services, PriceWaterhouseCooper (PwC), explained his support for such position. He said that as at 2014, the contribution of taxes to Gross Domestic Product (GDP) ratio was estimated at eight per cent, making it the second lowest in Africa and the fourth lowest in the world.

    Oyedele, who spoke in Lagos last week at a stakeholders’ forum on the state of the economy on the theme: ‘Nigeria: Looking beyond oil said despite the fact that Nigeria’s population is thrice that of South Africa, the Rainbow nation rakes in more revenue from tax than Nigeria.

    The forum, organised by the Lagos Chamber of Commerce and Industry (LCCI) in collaboration with PwC Nigeria, was organised to provide a platform for experts to brainstorm on how the country can wriggle out of its economic challenges through diversification.

    In his presentation, Oyedele said that at eight per cent, Nigeria’s tax to GDP is also lower than those of other African countries including Kenya and Angola.

    Both countries boast of tax to GDP ratio of 17 per cent and 43 per cent respectively.

    According to him, Nigeria is trailing far behind the United States (U.S.) China and Germany, which paraded tax to GDP of 17 per cent, 23 per cent and 45 per cent. He added that the ease of paying taxes in Nigeria remains one of the lowest in the world, raking 181 out of 189 nations assessed.

    He argued that the trend accounts for why oil related receipts continue   to dominate budget revenues. In 2014, oil related receipts accounted for 80 per cent of the country’s total earnings.

    “Non-oil revenue remained largely unchanged as a share of non-oil GDP at about 3.3 per cent over the past four years to 2014,” Oyedele said,

    Describing development as regrettable despite a flourishing non-oil sector, Oyedele blamed it on the existing tax system, which comes across as cumbersome and ambiguous for tax payers to comply with.

    “Compared to an average of 16 per cent for emerging markets and 18 per cent for sub-Saharan African economies, there is massive room to improve tax receipts by improving compliance and broadening the tax base to include the informal sector, which is estimated at 58 per cent of GDP,” the expert recommended, pointing out that Nigeria’s tax revenue declined by 20 per cent to $30 billion two years ago.

    Some real sector operators have also thrown their weight behind the need to improve tax compliance and also broaden the tax base.

    To the LCCI President, Mrs. Nike Akande, the need for appropriate taxation has become imperative considering the dwindling revenue from the Federation Account and the failure of state governments to meet their obligations.

    Waxing patriotic, she spoke of the need to encourage individuals and corporate bodies to pay taxes.

    Her words: “Without adequate taxation the government would not be able to provide key infrastructure. Everybody that is in a position to pay tax should do so without prompting. That is the only way government can work.

    “The challenging economic environment provides opportunity for innovative policies that should encourage people to pay their taxes and for government to reward those who are faithful to their civic responsibility.”

    Incidentally, Mrs. Akande, a former Minister of Industry, is one of the tax ambassadors appointed by the Lagos State overnment.

    The award, which she earned for her diligence in income tax payment, may have been a shot in the arm, prompting her to be one of those leading the renewed advocacy for appropriate taxation.

    At the stakeholders’ forum, the LCCI president pointed out that the sustained decline in global oil prices since 2014 has boxed the nation to a corner and consequently led to various fiscal and economic challenges.

    Some of the challenges include: drop in foreign earnings; decline in foreign reserves; huge financial bailout for some state governments and unstable macro-economic environment.

    Mrs. Akande admitted the desirability of a holistic and sustainable economic diversification strategy.

    She said: “We need to put an end to the high dependence on oil. Strategic decisions and policies that will put the Nigerian economy on a path of sustainable recovery have become imperative.

    “Without doubt we need to pay greater attention to manufacturing, agriculture and agro-allied industries, solid minerals, Information and Communications Technology (ICT), entertainment, tourism and many other areas in the non-oil sector.”

    In her admittance of need for appropriate taxation, she, however, cautioned against multiple taxations.

    “Multiple taxation is unhealthy for the manufacturing sector”, Mrs. Akande said, calling for the harmonisation of taxes among the various levels of government to create an enabling environment for businesses to thrive.

    Imperative of tax harmonisation

    The position of other experts in tax administration must have brought about the imperative of tax harmonisation.

    They argue that if the country gets it tax administration right, revenue from tax alone could sustain the economy without oil.

    President, Chartered Institute of   Taxation (CIT ), Mrs. Somorin Teju, was emphatic that revenue from taxes could sustain the country, even if earnings from oil dwindle further.

    Recalling that recession was not alien to as had similar experience in 1991, which necessitated the introduction of Value Added Tax (VAT) to replace sales tax, Mrs. Somorin said that with the current fiscal challenges, the government could earn enough revenue to finance capital and recurrent expenditures in the budget from tax sources.

    She said: “The government has to pay adequate attention to tax. Without tax, I don’t see how government can do what it plans to do in a particular year. People must pay tax; businesses must pay tax, if they are making profit.

    “But, the tax must be based on the principle of progression, fairness, and equity among others. What we are going through, as a nation is not the first time.

    “It happened in 1991, when government set up a study group to look for alternative revenue sources, from direct to indirect taxes and to shift emphasis from oil. It was then VAT was introduced to replace sales tax. Since then, VAT has attracted lots of revenue. So, revenue from taxation alone will be sufficient for the country, with good attention.”

    According to the CIT president, taxation is based on income and profit. “If there is no income, there will be no tax. But when you are jobless and you have investment income, like rent from landed property, you have to pay tax”, she said, calling for reform and autonomy for states’ Inland Revenue Services for efficiency and better performance.

    Mrs. Somorin said: “The reform in the Federal Inland Revenue Service (FIRS) has made to become efficient as it attracted competent hands from other sectors of the financial institutions.

    “So, it became more efficient, when it became autonomous. The states Inland Revenue Services should be given autonomy also for them to be more efficient.”

    She urged Nigerians to be patient with the government, admitting that the country has been going through a temporary recession, which is global in nature.

    Those pushing for fiscal diversification as a viable option for the government to generate revenue from tax, toed the line the Managing Director, International Monetary Fund (IMF), Ms. Christine Lagarde.

    The IMF chief, during her recent visit, advocated the broadening of the country’s revenue base by increasing the VAT paid on goods and services.

    According to Ms. Lagarde, it had become imperative for the Federal Government to broaden the country’s tax base, pointing out that Nigeria’s VAT rate was not only among the lowest in the world, but below VAT rates in other countries of the Economic Community of West African States (ECOWAS).

    “The current VAT rate is among the lowest in the world and well below the rates in other ECOWAS members. So, some increase should be considered,” she had recommended.

    Her recommendation appeared to have hit the right chord in the ears of some senators, who during a debate on the general principles of the 2016 Budget of N6.08 trillion, called for heavy taxation of Nigerians to make up for the shortfalls that may arise in the projected revenues.

    The senators argued that heavy taxation could be a better option than relying heavily on borrowing to implement the budget.

    Senate Chief Whip Olusola Adeyeye (APC Osun Central), who led the debate, said that without spreading the dragnet of taxation, there would be no money to fund the budget, especially in the face of dwindling oil revenues.

    However, the President, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. Bassey Edem, said though he supports taxation, multiple and spurious taxation are injurious to business and should be discouraged.

    He also aligned with Mrs. Akande on the need to harmonise state and local government tax agencies.

    Frontline industrialist Mr. Duro Kuteyi, dismissed as erroneous that manufacturers unwilling to pay taxes, but that they want to be taxed fairly.

    The fear

    However, as altruistic as the experts’ calls to widen the tax net may be, it has not gone down well with many.

    A Lagos-based legal lawyer and public affairs analyst, Mr. Obiora Akabogu, said an unproductive economy like Nigeria’s cannot survive with the upward review of IGR and VAT.

    He said that raising the IGR and VAT to cushion the effects of the oil revenue shortfall will not work because not a few Nigerians have been impoverished by the economy’s unproductiveness.

    Akabogu told The Nation: “VAT is derived from a productive economy, but an economy that is near comatose makes it difficult for federal and state governments to raise money by increasing IGR and VAT, because the masses are impoverished.

    “Nigeria is operating a mono-cultural and precarious economy, which is dependent on one major revenue source, which is oil.”

    He insisted that imposing heavy taxation on already impoverished masses in whatever form amounts to overkill.

    According to him, the hash operating environment caused by the nation’s huge infrastructure gap, particularly electricity supply, has rendered the real sector, including manufacturing and agriculture unproductive and uncompetitive.

    “Diversification is the only way to go,” Akabogu said, pointing in the direction of manufacturing, agriculture and agro-allied industries.

    He said other sectors that hold promise of turning around the economy if properly exploited, include: solid minerals, ICT, entertainment and tourism among others.

    Besides economic reasons, Akabogu said alleged corruption in the nation’s tax administration system could pose serious hurdles to the proposed shift to tax revenue as to bail out the economy.

    He said: “The truth is that most Nigerians are unwilling to pay tax unless they are compelled. And they hinge their refusal on the belief that government’s officials will misappropriate any money they pay.

    “The thinking, and rightly so, is that Nigeria’s tax system allows for compromises, which tax officials have exploited to defraud the government of its revenue. This is why despite the fact that tax is the most reliable source of revenue for government all over the world, of tax evasion rate has been very high in the country.”

    Apart from alleged collusion between tax collectors and tax defaulters to defraud government of the needed revenue, many individuals and corporate organisations are unwilling to pay tax because they believe the authorities have not shown evidence of previous remittances.

    Those on government payroll who remit through the Pay As You Earn (PAYE) method also complain that the authorities do not account for deductions.

    Analysts believe that such public perception of the tax system may take more time to change, even as they agree on the importance to save the economy from total collapse.

    Mrs. Somorin said that small-scale enterprises must be assisted to stimulate production.

    “A lot of people are being encouraged to go into production. Small-scale enterprises should be encouraged to engage more hands outside the white-collar jobs. Small-scale industries are dying because there is no form of assistance from the government. They need to be assisted.”

    She added that tax revenues could be generated from the SME sector if given necessary encouragement.

    Edem said the challenge of inadequate electricity supply must be

    Tackled once and for all, urging the government to invest in the energy sector by harnessing alternative sources of energy, such as wind, coal and solar, to improve electricity supply to support the manufacturing sector.

    How far the government demonstrates its political will to address these issues will determine the success of fiscal diversification to revamp the battered economy.

  • Multiple taxation: LCCI urges Fed Govt, Lagos to cooperate

    The President, Lagos State Chambers of Commerce and Industry (LCCI), Chief Nike Akande has urged the State House of Assembly to work in collaboration with the Federal Government to address the issue of multiple taxation and traffic congestion  to aid economic development of the state.

    Speaking when she led other members of LCCI on a courtesy visit to the Speaker, Hon. Mudashiru Obasa at the Assembly complex Alausa, Ikeja, she said:  “Lagos being the home for all, and commercial capital of Nigeria cannot but show the lead by tackling the menace of multiplicity of taxes, challenges associated with certificate of occupancy, tenancy related issues, waste disposal and traffic congestion among others.

    “We believe that this is the time for Lagos State to work with the Federal Government to address the factors that are stifling the investment climate in the state, especially in

    Akande pointed out that the lawmakers should also look into the issue of late invitation to the LCCI for public hearing, adding that “an investment-friendly legislation and oversight is critical for good governance and the progress of the Lagos economy.”

    While congratulating Obasa on his emergence as the Speaker, she noted that there has been a cordial relationship between the executive and legislature, which according to her has been responsible for the stability of democracy in the state.

  • Taxation and dis-alienation of citizens (2)

    Taxation and dis-alienation of citizens (2)

    In particular the decision to call on citizens to take charge of funding governance is tantamount to calling on citizens to rescue their country and its economy from collapse in the wake of low revenue from petroleum and decades-long reckless looting of the nation’s resources.

    There is no room for failure over FIRS’s attainment of its 2016 target of N4.97 trillion to the Federal Government. This is not a joke. We need everybody to do his/her beat to ensure that everybody contributes (sic) to the achievement of the target. The nation will depend on FIRS to fund the budget. We need the money to stabilize the economy. –Mrs. Kemi Adeosun, Finance Minister
    Democracy is founded on the principle that the moral authority of government is derived from the consent of the governed. That consent is not very meaningful, however, unless it is informed. When a government makes decisions in secret, opportunity for corruption increases and accountability to the people decreases. That is why government transparency should be a priority. When official meetings are open to citizens and the press, when government finances are open to public scrutiny, and when laws and the procedures for making them are open to discussion, the actions of government enjoy greater legitimacy.-Jerry Brito

    The first section of this article stated that decades of military rule during the period of oil boom and lack of will by civilian rulers to move beyond military notion of governance distanced the citizenry from government. It argued that the decision by rulers-both military and civilian-to use funds from petroleum as they wanted without having to be accountable to citizens created a conducive condition for corruption at the level of governance and created lack of concern for public accountability on the part of the average citizen who saw government as the business of those in whatever form of power was in vogue from time to time in an ethos of easy revenue from non-renewable fossil energy. The piece concluded that now that the chicken seems to have come to roost in respect of the seeming omnipotence and omnipresence of oil revenue, those saddled with a depleted economy after decades of venality in governance have found solace in asking citizens to pay taxes to fund governance and restore the country’s damaged economy. It ended by stating that payment of tax is larger than citizens’ obligations to government; it should strengthen the culture of accountability while enhancing citizens’ ownership of their government.

    Today’s piece will focus on what government at all levels should do, not only to encourage citizens to pay taxes but also to make them see clearly how their taxes are used for the purpose for which they are meant. It will also make suggestions on how citizens can ensure that they are not taken for granted by those they have chosen to use their taxes on their behalf for national security and physical, social and human development. The overarching thesis for today’s concluding piece is that democracy is larger than choosing leaders at elections; it is about nurturing an open government for the purpose of making citizens have and grow confidence in the process by which they are governed by involving citizens to participate fully in their governance.

    The onus of initiating and sustaining Change or the New Politics promised before the 2015 election by General Mohammed Buhari and the All Progressives Congress (APC) is on both the government and the voters. With relation to the government, it is salutary that it has decided to outgrow the laissez-faire approach to government as an opportunity for those in power to spend revenue without any reference to citizens. In particular the decision to call on citizens to take charge of funding governance is tantamount to calling on citizens to rescue their country and its economy from collapse in the wake of low revenue from petroleum and decades-long reckless looting of the nation’s resources. But let nobody be fooled; the best way to encourage citizens to pay their taxes is to let them see in unmistakable terms that the taxes they pay are used to improve the quality of their life. And the most assured way to make this happen is for those in government-executive, legislative, and judiciary-to be accountable in all they do.

    The old culture of spending without explanation and without involving citizens in discussion of budget projects is not acceptable in an ethos in which citizens fund governance through tax. The old habit on the part of military and civilian rulers that oil money belonged to nobody and could be used as rulers feel has been made obsolete by the new reality thrown up by precipitous fall in the price of oil. There is no better time for those in power under the Government of Change to remember the old saying: “He/she who pays the piper calls the tune.”Political office holders need to realise that citizens need evidence of accountability at every stage of spending their tax money. The example of Lagos State in the last sixteen years of Tinubu, Fashola, and now Ambode with making tax money work for those who made it possible is a model that the federal government in particular should borrow and build on, especially the readiness of the Lagos State government to mix provision of elite and mass goods and services.

    As the federal government goes the way of e-governance, it must seize the opportunity of improving access of citizens to information about the activities of government. Such information should include budget details and how funds are used on projects, apart from aspects of governance that have to be classified for the security of the state. Citizens are not likely to (and should not) tolerate the present situation of continued impunity by those in government. For example, despite the directive by President Buhari that the number of police officers being used as personal guards or Maiguards for members of those designated as Big men and women in the country be stopped or curtailed, there are still hundreds of policemen sitting in front of houses beside drivers of former members of legislature and even of the executive. Former legislators are still driving cars with NASS plate tags almost one year after they had ceased to be lawmakers. Citizens who pay tax to fund governance would prefer that the police are used to provide security for all citizens, and not just for a handful of citizens who happened to have been minister or legislator in the past.

    On the part of citizens, agreeing to pay tax to save the polity and economy should be seen as the return of the public, which had been repressed, ignored, or marginalised for over four decades of free flow of revenue from rent collection by the government. Citizens have to insist on not just executive accountability but also on legislative and judicial accountability.  Citizens should be given opportunity in discussion of salaries and allowances to those in governance at all levels. Full disclosures on federal budgeting, state, and local government budgeting should be high on the menu of government-citizen relations. For too long, citizens have been denied benefits of having local governments through failure of states to conduct regular local government elections and the propensity of governors to hamstring local governments by holding on to statutory allocations to the third tier of government under the guise of managing state/local government joint accounts. Both governments and citizens should listen to and learn from Donald Gordon’s admonition on transparent governance: “Openness, accountability, and honesty define government transparency. In a free society, transparency is government’s obligation to share information with citizens. It is at the heart of how citizens hold their public officials accountable. Governments exist to serve the people. Information on how officials conduct the public business and spend taxpayers’ money must be readily available and easily understood.”

    Citizens must not only remain steadfast in their support to fight corruption; they must also be vigilant to the extent that they can prevent corruption by insisting that they are fully consulted before decisions to spend their tax money are made. The power to take decisions about the polity and economy should not rest in the era of modern democracy on only elected representatives. There is no better time to push the tenets of modern democracy and citizen participation than under an administration that has pledged to uphold high moral and ethical standards in governance.

    – Concluded

     

  • Taxation and dis-alienation of citizens (1)

    Taxation and dis-alienation of citizens (1)

    A more optimistic view of the call on residents and companies to pay taxes is for citizens to see this as inevitable return of their sovereignty to them by those who had distracted citizens from their primary political responsibility in the past.

    There is no room for failure over FIRS’s attainment of its 2016 target of N4.97 trillion to the Federal Government. This is not a joke. We need everybody to do his/her beat to ensure that everybody contributes (sic) to the achievement of the target. The nation will depend on FIRS to fund the budget. We need the money to stabilise the economy.–Mrs. Kemi Adeosun, Finance Minister
    The subjects of every state ought to contribute to the support of the government, as nearly as possible in proportion to their respective abilities: that is, in proportion to the revenue which they respectively enjoy under the protection of the state. In the observation or neglect of this maxim consists what is called the equality or inequality of taxation. -Adam Smith in Wealth of Nations
    A democracy requires accountability and accountability requires transparency. -Barack Obama

    Nigeria has been for too long a state run on the model of landlordism by those charged with rent collection from petroleum, who generally relish treating Nigerians not as citizens but as tenants. This philosophy of governance and of citizen-state relations had not always been so. Towards the end of the colonial era, taxation at the instance of colonial administrators and later of pre-Independence political leaders applied the principle of social contract with citizens, by assuring them in their rhetoric and praxis that the taxes citizens paid would address their social needs. This was why resistance to tax by citizens, especially in Western and Eastern regions weakened until when citizens joyfully paid their taxes, particularly during Chief Obafemi Awolowo’s unmistakable use of tax funds for social programmes that citizens could identify with. Now that Nigeria has been forced by collapse of oil price to return to funding of governance through taxes from citizens and non-citizens, as it is done in most self-sustaining countries of the world, this column will return to addressing previous themes covered on this page in the past: complementary responsibility of the taker and giver of taxes in a democracy.

    In the years before the onset of military rule in 1966, especially after the civil war when the principal source of funding for the government was rent collection from sale of petroleum, it was money collected directly and indirectly from citizens, residents, and companies that drove governance. For example, most of the infrastructure and institutions created in the four regions before the 1970s derived from funds collected directly and indirectly from the people and the economic activities they engaged in.  However, continued surge in revenue from petroleum not only encouraged military rulers to create a bloated central government in terms of functions and revenue; it also drove the policy of proliferation of states and of intended or unintended alienation of citizens from governments. Military rulers (and later civilians) of the central government in particular had the courage to delete the support of citizens from consideration, once they felt there were sufficient funds from petroleum sale to create whatever appealed to the fancies of rulers-be they military or civilian between 1975 and 2015.

    Military rulers who came to power by force of arms or civilian governments rigged into power found encouragement in the assured and growing revenue from petroleum to distance citizens from the state. This policy over time kept citizens away from scrutinising how they were governed, thus saving political and bureaucratic leaders from accountability.  Military rulers were content with citizen apathy generated by alienation, as this situation made it easier for rulers to manage civil society organisations and the media that had the courage to hold rulers to account periodically.  Corruption of some members of the media and sponsoring by rulers of civil society organisations to counter those that were genuinely pro-citizens’ interests gained ground during decades of military rule. The result of such policy on the part of government, especially the central government, is estrangement or withdrawal or separation of a person’s or group’s affections from an object or group such as those in charge of governance.

    Such alienation erodes or represses citizens’ political efficacy that should have allowed them to exercise their sovereignty. Instead, a polity committed to alienating citizens created a culture in which citizens largely, in the words of Dan Hind in The Return of the Public, “accept government’s authority almost to the point of autocracy.” It has taken the election of 2015 and the ascendancy of Mohammed Buhari as president to know the dangerous implications of decades of separation between those who governed the country and those that were governed. Suddenly, citizens now get to see the difference between discussion of corruption in the media as abstract ideas and the details of corrupt acts by those charged as politicians or civil servants to serve as minders of the state.

    It is possible that if the price of petroleum had not slumped, partisan traditional and social media could still have been able to urge the public to move on and forget the past, in order to mask the details of corruption in the polity. But the coming at the same time of an austere anti-corruption president and the loss of value of petroleum in the international market has unearthed the venality of crass political and bureaucratic corruption in the country. This has also compelled those newly charged to govern the country decades after consolidation of the culture of corruption to come back to citizens for collaboration with government through putting the onus of funding the country on citizens, residents, and their businesses. The return to the public by the Finance Minister when she said, “We need everybody to do his/her beat to ensure that everybody contributes (sic) to the achievement of the target” of raising 4.97 trillion from tax to fund a the 6+ trillion budget and to stabilise the economy knowingly or unknowingly calls on citizens to take their country back from banditry of decades-long irresponsible and unresponsive governance.

    It is conceivable that many citizens who did not feel pressured for decades to pay taxes religiously because of the culture of parasitism made possible by assured flow of revenue from petroleum and stratagems on the part of military and civilian rulers to save themselves from public scrutiny are likely to feel inconvenienced by government’s demand for prompt payment of taxes to fund governance. This may be a pessimistic view of the new reality by such citizens. A more optimistic view of the call on residents and companies to pay taxes is for citizens to see this as inevitable return of their sovereignty to them by those who had distracted citizens from their primary political responsibility in the past.

    Putting as many corrupt citizens in jail after proper trial; strengthening regulatory regimes to discourage corruption, and teaching young people in all schools about the value of honesty may not end corruption, without the readiness of citizens to invoke their power to read the riot act to politicians and civil servants that abuse their office. Such readiness will be stimulated and sustained once citizens provide the bulk of funds put in the care of politicians and civil servants. If citizens want to eat the omelette of good governance, they have to be prepared to break the eggs of reading riot acts to those who rob them of their commonwealth, by enthusiastically re-claiming their ownership of the state. Citizens’ readiness to invoke their sovereignty during and after elections is now required, more than ever before, to end a culture in which representatives of citizens as members of the executive, legislative, or judicial branches of government act as if they are sole owners of the republic.

     

    To be continued

  • Taxation: Borroffice cautions Mimiko

    Taxation: Borroffice cautions Mimiko

    The Senator representing Ondo North District, Prof. Ajayi Boroffice, at the weekend, urged the Ondo State Government to give its taxation policy in the state a human face in the interest of the citizenry. The Chairman, Senate Committee on Science and Technology, who was reacting to the face-off  between the state government and commercial motorcycle operators over the payment of N20, 000 per head as tax, warned the state government against crippling the economy of the state.

    According to Boroffice, who spoke through his media aide, Kayode Adeniyi, taxation is adopted to drive the economy, redistribute wealth and not to run people out of business.

    He said, “gainfully-employed people, whether civil servants or self-employed, in Ondo State are duty-bound to pay taxes as the Internally Generated Revenue (IGR) should be improved upon. In fact, the few good steps taken by the government in this regard are belated; however, extortion of impoverished citizens by the imposition of oppressive pressure through burdensome tax regime is not an option.

    “Therefore, the present administration in Ondo State should exercise caution and restraint. If it is keen on improving revenue generation, the government should devise strategy to attract new persons to pay taxes.

    The statement added that tax net should be diversified to cover many persons in the informal sector, whilst government supports the unemployed populace to create Small and Medium-Scale Enterprises (SMEs).

    Boroffice urged Governor Mimiko to create a platform for amiable resolution of the contentious issues on taxation for the benefits of both parties, while the interest of Ondo State is being sustained.

     

  • Ondo govt, Okada riders disagree over taxation

    Ondo govt, Okada riders disagree over taxation

    Commercial Motorcycle Operators under the auspices of Amalgamated Commercial Motorcycles Operators (ACOMORAN) in Ondo state are set for fresh show down with the state government over what they termed “heavy” taxation.

    They vehemently rejected the N20, 000 per head being charged by the government payable within one week.

    It would be recalled that last year, there was a row between the ACOMORAN members and the statement over similar issue in which motorcycle operation was banned in Akure for over two months.

    The motorcycle operators protested and damaged some property belonging to the state government including flower beceause of unbearable demands.

    Already, the state government demanded the payment of N2, 000 residency card (kaadi igbeayo) purchase of reflective jacket and registration for new plate number totaling N20,000 per operator which they should pay within one week.

    ACOMORAN members have rejected the charges, insisting that government should be considerate on the issue.

    The aggrieved Okada riders on Tuesday marched to a private radio station in Akure to plead with leaders of thought and stakeholders in the state to intervene with a view to persuade Governor Olusegun Mimiko for leniency.

    One of the Okada Operators said; “we are ready to dare the state government on this exploitative rate this time around, it is too much, there is no way we can cope with it. Many of us are on hired purchase agreement; we are ready for any eventuality.”

    The State Commissioner for Transport, Nicholas Tofowomo could not be reached for comments.

  • Wanted: Progressive taxation

    Wanted: Progressive taxation

    The Organised Private Sector (OPS) is worried about the multiple taxes being paid by its members.  It attributes the high cost of doing  business to the taxes, contending that they could discourage investors, if not scrapped. The body is urging the government to streamline its tax policy and create a conducive environment for local production. OKWY IROEGBU-CHIKEZIE writes.

    The shift in focus from oil revenue to Internally Generated Revenue (IGR), analysts say, is a positive development. They noted that it will have a long-term effect and foster rapid economic development. They are also of the opinion that it will make the states more resourceful and enhance their entrepreneurial capabilities as they seek avenues to generate more revenue.

    A recent World Bank report stated that reforms such as improvement of tax agencies could lead to much higher tax collection. Kieran Holmes of the Britain’s Department for International Development helped Rwanda to increase its tax revenue by six-and-half-times after automation of the tax collection process.

    Lagos State government was also reported to have made N276.1 billion in 2014 and N384.2billion in 2013 from taxes, because of automation and reform of its tax systems.

    Tax experts in developed countries also believe that the more tax revenue a country generates, the greater developmental growth it attains. They also agree that for the private sector to be constructively engaged in taxation principles, there is the need to satisfactorily provide basic structures and facilities that support positive economic amenities and performance.

    According to the United States National Infrastructure Improvement Act of 2006, the amenities include water supply and distribution system, wastewater collection and treatment facilities and surface transportation facilities. Others are mass-transit, airports and airway, resource recovery facilities, waterways, flood-control facilities, docks or ports, school buildings and solid-waste disposal facilities.

    President, Lagos Chamber of Commerce and Industry (LCCI), Remi Bello asked for a review of the tax regime to make the tax system more progressive in character, especially with regard to consumption tax.

    “VAT on luxury items and services should be reviewed, tax administration needs to be strengthened for effectiveness and reduction of leakages in tax revenue. The issue here is not about increased tax rates, but making the system more efficient.” he added.  Bello said the Organised Private Sector (OPS) is in support of efficiency in taxation and the supporting infrastructure to stimulate business operations.

    The LCCI boss outlined some of the challenges faced by the economy especially with regards to self-reliance and poor productivity. He urged government to accelerate investment in infrastructure and build quality institutions for better productivity and competitiveness in the economy. “It is difficult to diversify an economy where there are no infrastructures, where institutions are very weak and where the cost of funds is prohibitive. These are fundamental issues”, he said.

    Manufacturers Association of Nigeria (MAN) also said they are not averse to taxation but that their position is that it must be progressive and supportive of the sector. They identified Rivers, Anambra and Lagos states as some of the most unfriendly areas in the country in terms of excessive taxation.

    MAN made this known in a 96-page report it submitted to the National Economic Council, (NEC), on the business environment in some states and Federal Capital Territory, Abuja, last year.

    The document was entitled, ‘’MAN Presentation on Multiple Taxation Across the country at various levels and its effects on Manufacturing Sector’s Productivity.’’

    The report, showed that apart from the 19 taxes or levies approved by the Federal Government as contained in the Taxes and Levies (Approved List for collection) Act Cap T2 LFN, 2004, there were multiple taxation on investors or entrepreneurs in 17 states of the country.

    It stated that manufacturers pay 44 additional taxes or levies in Lagos State, just as 59 additional taxes/ levies were paid by them in Anambra State.

    According to MAN, 54 additional taxes or levies were paid in Rivers State while manufacturers paid a total of 97 taxes or levies in the state.

    However, in Edo State, manufacturers pay altogether, 16 taxes and levies while 20 different taxes and levies were paid in Delta State.

    In Kaduna, manufacturers pay altogether, ‘’22 approved and other charges,’’ with the local governments imposing nine additional taxes/ levies.

    In Kogi, the state government collects 18 taxes and levies while the local governments imposed five other multiple taxes or levies on entrepreneurs.

    In some of the unfriendly states identified by MAN, the state governments, local governments and development centres task entrepreneurs same taxes or levies they had paid to the Federal Government, even when the levies or taxes were on the exclusive list.

    ‘’In addition to the taxes paid/payable to the local governments under the Act 2004, a total of 24 additional taxes and levies are collected by the local governments in Lagos State…,’ the report stated.

    Under the harsh tax environment, the federal, state and local governments collect multiple taxes/levies on seven items respectively, while six other forms of taxes were jointly collected by both the federal and Lagos State governments separately. Furthermore, the Lagos State and its local governments collect 32 other multiple taxes from investors apart from those paid to both federal and the state governments.

    Apart from the 19 taxable items in the 2004 Act, 11 other forms of taxes were also said to have been introduced by the Anambra State government, while 39 other forms of double taxation were collected by the local governments in the state.

    ‘’In addition to the taxes paid/ payable to local governments under the Act 2004, a total of 36 other taxes and levies are collected by the local governments in Anambra State,’’ it added stating further that some of the levies included, ‘’ reform and conveyance permit, route identification, unified council emblem, loading and off-loading permit, oil and gas sticker, environmental pollution, mobilization fee; community fee and gate way permit, among others.

    In both Anambra and Lagos States, residents who go to the markets to buy food items pay land taxes before they were allowed to load their food items into vehicles in the motor parks.

    However, in Enugu State, where manufacturers pay 23 additional taxes and levies, the manufacturers identified only six forms of multiple taxations by both the state and local governments. They include property rent/ground rent tax, environmental levy/ Effluent tax and Sanitation rate/ refuse disposal levy.

    Members of the Cocoa Produce Merchants Association of Nigeria in Ondo State also raised an alarm over the effect of multiple taxes on their businesses.

    The Chairman of the association, Abiodun Jacob, and the Secretary, Oyelere Adebayo, said the various taxes levied on members of the association has created a great burden for them and the general public.

    The association had in a statement said Cocoa merchants in Ondo state are being levied heavily by the state government through its produce department, claiming that they pay nothing less than N500, 000 for the warehouse where they operate and at the same time made to pay another levy on same title in the name of another heading as business premises fees.

    The association said the measures by the produce department would affect the poor farmers and the economy of the state drastically, appealing to the state government to quickly redress the issue.