Sunday, August 14, 2016 10:50 pm
By Yushau Shuaib
Media reports about invasions of business premises by the task force of the Federal Inland Revenue Service (FIRS) could be worrisome. The enforcement exercise by the tax compliance team in shutting down tax-defaulting companies and ordering staffs out of the premises is quite discouraging.
A mere visit by tax team easily runs shiver into the marrow of business owners because of the reported gestapo-style invasions by official tax-collectors akin to the overzealous antics of anti-corruption and security agencies to embarrass and shame their victims to public ridicule.
We were discussing the attitudes of the tax enforcers, when coincidentally our security-man at the gate announced, through the intercom, the sudden arrival of members of FIRS task force. As young business owners we were perplexed but still had the courage to ask that the officers should be ushered in.
Surprisingly, this particular team from the FIRS looked more humane and courteous. In a friendly atmosphere, they started by stating how the FIRS operates a transparent and an efficient tax system that optimises tax revenue collection and voluntary compliance. They added that the agency, under its current Chairman, Babatunde Fowler, has delivered quality services to taxpayers in partnership with all stakeholders and in making taxation the pivot of national development.
They also revealed that majority of taxable adults never pay tax, while most companies in Nigeria have neither registered with the FIRS for the mandatory Companies Income Tax nor up-to-date with tax filings.
They then went ahead to discuss the tax liabilities of our firm for reconciliation. Meanwhile in between our discussion, national issues as regards taxation were discussed. The leader of the team disclosed that with the poor revenue from the Federation Account which is largely sourced from crude oil sales, the current administration of President Muhammadu Buhari is looking for other sources of revenue to execute capital projects and provide social services for the people.
We were shocked to realise that corporate organisations are mandated to pay various taxes and levies to boost the revenue of government. Apart from the popular Value Added Tax (VAT), the team disclosed that some major taxes to be paid include Personal Income Tax; Companies Income Tax; Withholding Tax; Education Tax; Stamp Duties; Capital Gains Tax and National Information Technology Development Fund Levy among others. More alarming is the fact that young employers of labour are also compelled to pay taxes on each staff they employed.
We interjected by saying that the government was not doing enough to warrant receiving different taxes and levies from the young business owners who are yet to grow fully. We queried the justification for multiple taxation when individuals and corporate organisations have to provide everything for themselves without palliatives from the same government. Apart from paying heavy tariffs for epileptic power and water supply, Nigerians now pay more for petrol, diesel and kerosene for the electricity supply, transportation and basic human needs.
In the face of the ominous hardship, ordinary citizens and corporate organisations have no option than to resort to providing their private security for protection of life and property; private water through boreholes; private electricity through Electricity Inverter and Solar energy; private healthcare system to remain alive and healthy and private school arrangements through exorbitant fees for their wards. In some cases, residents jointly contribute funds for road constructions without any subsidy from the government.
We also cited example of how some states, in their desperation to squeeze the meagre resources of their residents and business owners, demand nebulous taxes and levies on frivolities. A state in Nigeria recently introduced electricity generators tax to ‘maintain ozone layer,’ while other have been alleged to have introduce levies for marriage, new baby and corpses. The evidence of such tax-collections are only obvious in the jumbo remuneration packages and ostentatious lifestyle of political office holders.
While the taskforce team listened with rapt attention to our concerns, they nevertheless pointed out that taxpayers have the moral and legal right to demand a culture of accountability once they paid their taxes promptly. We also agreed on the necessity of diversification of the economy from mono-product to other sectors like improved investment in agriculture, solid minerals, manufacturing and entertainment industry through enabling environment that motivate willing taxpayers.
Though we enjoyed the convivial atmosphere of our discussion, it is necessary to point out that businesses have negative reactions to tax policy because there are no adequate public awareness campaigns to motive taxpayers to respond positively by paying willingly. The right message should be disseminated on a flexible tax system that is easily understood. Tax payers must be encouraged to smile while paying their taxes not frowning their faces and silently cursing bullying tax-collectors. Therefore, the task of growing tax revenue must be pursued with a human face and sustainability in focus.
The government must also streamline the number of taxes and levies that will be permitted within the economy. The prevalence of multiplicity of taxes at all levels of government is the bane of our economy. Tax laws should also be regularly reviewed to minimise avoidable and untoward hardships to taxpayers. The process of tax compliance should be simplified while tax burden is reduced, especially for small businesses.
It is interesting to note that not all tax-collectors are arrogant, power-drunk and extremely overzealous in their collection exercise, some are professional, well-mannered, decent and mindful of their social responsibility of convincing taxpayers on the necessity of compliance.
Yushau A. Shuaib