Taxation: Confronting The Challenge

Nigeria recently confirmed the harmonization of all taxes payable by individuals and organisations to check multiple taxation in the country, just as it also promised to check revenue theft, diversion and other fraudulent acts. The Accountant-General of the Federation, Jonah Otunla, said this at the just-concluded 17th Annual Tax Conference (ATC) of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja

Also speaking, Minister of State for Finance, Bashir Yuguda, said that the Federal Government was doing everything possible to improve its revenue profile through tax collection, with a view to bridging the gap in revenue created by the fall in the price of crude oil, adding that one of the measures adopted resulted in the saving of N60billion by eliminating ghost workers from the federation payroll.

Already, with the fall in the price of crude oil, the nation’s major source of revenue has triggered downward spiral in the finances of all tiers of government, with more than two thirds of States unable to pay salaries of workers, while development programmes and projects have been squeezed over the last couple of months.

It is also clear that tax administration in Nigeria has not been the best. As one of the oldest and permanent sources of income to any government, taxation must be developed and quickly too to meet the challenges of the time. There should be no excuses again.

It is clear that one way to bridge the revenue gap is to plug all loopholes in the tax system, and ensure that every tendency towards tax evasion was eliminated. It is also clear that the failure to give Tax Identification Number (TIN) to every tax payer in the country opens the way to corruption.

While some companies and businesses have perpetually failed to make annual returns or submit themselves for assessment as required by law, others have continued to compromise the system by promoting corruption and encouraging diversion of government revenue.

The Tide thinks that the major challenge is inability of the government to enforce tax laws, and also check the fraud within the tax boards, where huge revenues meant for government, are brazenly diverted to private pockets.

Government should, therefore, urgently embark on proactive tax reforms with a view to adopting global best practices. While it is great that the Federal Government has implemented the electronic payroll system, effort should be made for taxes such as Company Income Tax, Personal Income Tax, Petroleum Income Tax, Education Tax, Value Added Tax and Withholding Tax, among others, to be automated and collected as and when due by the various tax boards.

Government must ensure that everyone that pays tax gets receipt for such payments. By the same token, we suggest that all workers, whether in the private or public sector, should be issued with their TINs. This way, those in the habit of evading taxes will be dragged into the tax net, while accounting for such revenues becomes easier.

On the other hand, government must provide the enabling climate for businesses to thrive and open new windows for employment, manufacture and tourism. This will no doubt create more tax payers, while growing the economy.

Similarly, government should provide the average citizen the social services he or she needs to live a modestly decent life, so that complaints of official extortion or robbery would no longer find legitimacy. People will be happy to pay taxes if the government makes available social amenities and responsibly accounts for the revenues so generated.

It will be wrong for anyone to suggest that Nigerians don’t pay tax, in fact some persons are over-taxed, some are double taxed and the authorities have no answer for it. The other side of it is that the proceeds land in other accounts and no one is prosecuted.

This must change if Nigeria must build on the gains made in the economy, especially now that Nigeria has the biggest economy in Africa.