Informal Sector wants a more humane tax system

Informal Sector wants a more humane tax system

Saturday, December 16, 2017 1:58 pm

The event

Members of the Informal Sector in Lagos state have called for a more humane approach by officials in the collection of taxes and rates. It is also their view that the present taxes and rates are too exorbitant, unjust and burdensome and out of tune to their earning capacity. They also want government to reward dutiful tax payers with infrastructure. They want government to adopt a five yearly review plan of taxes and rates instead of the present yearly review.

At a recent advocacy and technical meeting of local government officials and the informal sector operators, organised in Lagos by the Community Life Project (CLP), they also ask for better engagement and consultation before taxes and rates are reviewed. They want government to ensure that artisans who are freely operating on the streets are compelled to be part of the respective trade associations while seeking for support to make the informal sector thrive.

Mrs Comfort Akinkuowo, chairperson, National Association of Hairdressers and Cosmetologists (NASHCO) says government does not appear to have “the interests of the informal workers at heart” as they are virtually left in the cold to fend for themselves.

“Government talks about salaries and minimum wage for government workers as if they are the only ones in Nigeria without any support for us. No provision whatsoever for informal sector. It’s only when they are talking about tax that they remember us. Is it that we are not human beings? Or we are not important? I can now understand the reasons why some are jumping into the lagoon. How do you tell people who have not eaten to pay tax”, she queries.

“I’m tired of taking information from the government to our members. You are not making sales, may be you make N500, how do you have money to pay tax? Let them treat the informal sector very well”, Akinkuowo says.

Echoing this view, Deaconess Oyewunmi Oyewole, also a member of NASHCO says, “There’s no work, my husband also has no work, we can’t pay because we have nothing. If you take away Okada, what else are you giving them? If I look around and I don’t know what to do, how do I survive? If they reduce the rates to N2,500, it will be easier. If you drive people from the roadside, the rates must be affordable. The cost of the markets is too high”.

“Hairdressers have no light at all to do their work. The price of fuel is too high, they’ll give you light for one day so that you can pay and leave you in darkness for weeks, how do we survive?”, she quips.

“There’s no provision for us but they want us to pay our tax. In Nigeria, government is doing nothing for the informal sector. If government can provide a conducive environment for our business, we’ll pay more. They should reduce out tax to N2,500”, ”, says Mr Joy Omiyale, chairperson, National Automobile Technicians Association (NATA), Oshodi Isolo LGA .

While members of the informal sector say they are not opposed to the introduction of electronic payment system scheduled to start in January, they are asking for a downward review of the rates. “Electronic payment is okay. It will eliminate corruption. What we are saying is that the tax should be reduced. No receipt has been issued up till now for the one we paid last year. My members may think that I merely fiddled with their money”, says Omiyale.

Also supporting this view, Alhaja Olabisi Fatimo Akinfala, chairperson of the Tie and Dye Association says, “ If something is done to support our business, we’ll gladly pay our taxes”.

But Bose Ogundare of the National Union of Tailors says, “If we keep complaining, we’ll not get anywhere. Let government reduce the taxes then we’ll heartily pay. We have to pay first before asking government to do its part”. “Taxes and rates are compulsory. If we are not comfortable with the electronic cards, we can say so, let us pay our tax. If we are asking for N2,500, let us agree and say so. Oil money is gone, if we want better life, we have to pay our taxes”, she says.

Mr Segun Apaoka, chairperson, NATA, Isolo branch who narrated how their mechanic villages were demolished after getting commendation for dutifully paying their taxes, says his members at the mechanic village in Aswani in Isolo pay as high as N600,000 per annum but have no road leading to their workshop. “We pay N600,00 per annum but they have not graded the road leading to our workshop. We also spend about one million naira to fill the road to make it passable every year”, he fumes.

While alluding to some of the complaints of the informal sector, Mr Bolaji Ishola, an official of the Oshodi LG says, “Tax is based on income. Members of the informal sector believe that the rates are excessive. We need to engage the informal sector so that they’ll see the need to pay tax. We need to properly educate the informal sector. We also need to break the payment to per day, per week and per month in order to make it appear less burdensome”.

Mr Omolayo Ayoola an official of Isolo LCDA is of the opinion that members of the informal sector are too difficult to engage. “Even when people see development and infrastructure, they won’t pay. No matter how you make it easier for them, they will still not want to pay”, he says.

The LG officials however say they are encumbered by poor remuneration, poor office environment, low morale and access to materials like vehicles to effectively perform their task as opposed to staff of Lagos State Signage and Advertisement Agency (LASAA) and Land Use who are well paid and go around in air-conditioned vehicles.

They also complain about periodic interference by LG chairmen and their aides in the performance of their job. “How can people respect us when we come in rickety vehicles unlike staff of LASAA and Land Use who are well taken care of? When they appear in their air-conditioned vehicles, you have no choice but to accord them respect”, says Ishola.

Dr Akanle Olayinka, who presented the report of the research on tax payment by the informal sector in Lagos state commissioned by CLP, say the informal sector is much bigger than the formal sector that does the PAYEE system and therefore there’s need for government to ensure that they are effectively captured in the tax dragnet.

“It’s not easy to bring artisans into the tax dragnet. Many artisans operate outside the associations and it’s difficult to monitor them. May be government can find a way of ensuring that they all belong to associations”

Alluding to the leakages in the tax system, Olayinka says, “People say most LG collectors are helping themselves. People believe that there are so much leakages in the system”.

He wants government to compensate areas where there’s high compliance with quality infrastructure while calling for better engagement and education of the informal sector. “Members of the informal sector should be invited when taxes are to be increased. Better engagement and education using the social media should also be considered. It is also important that government should deploy technology solutions to avoid leakages and enhance accountability”, he says.

Executive Director, CLP, Mrs Ngozi Iwere says it is important that the informal sector is not at the receiving end as Lagos is being developed into a megacity.. “We need to provide safety nets for some category of people. We also don’t want to move around in the sun without knowing what the taxes are being used for. The people that you serve are the ones that you need their partnership. We need to build their capacity to be able to engage them. We also have to be sure that we conduct ourselves with respect”, she says.

While conceding that the pay in the civil service is low, it is her view that “when the money enters government coffers, it’s important that we can engage the government on motivation”.

Stressing the need for evidenced based governance that will respond to the need of the people in terms of infrastructure, Iwere say, “Since we’ve been here, nobody has fixed our road, nobody has provided water. We should not be paying for kids in private schools. It’s in your interest to prevent government from contracting jobs and that the benefits for citizens that are paying taxes should come to us. We don’t want government to be PLC”.

She however cautioned against the clamour by the informal sector on government to build their associations, noting that “We should bear in mind that we want the associations to grow”. “If they help us to grow our associations, they’ll control us on what to do like what happened to the iya olojas”, she says.

• Tony Iyare, Media & Commucations Consultant?

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