June 20, 2019

A row has broken out in Tanzania over the government’s decision to impose a tax on wigs and hair extensions. Many male and some female MPs applauded and thumped their desks in approval when Finance Minister Philip Mpango announced the tax in parliament. Supporters of the levy say it will help women keep their hair natural. But there has also been public outrage, with women saying they are being punished for wanting to look good in wigs and hair extensions. Tanzanians tend to uphold traditional values, but society is changing and many women now wear wigs and extensions, the BBC’s Aboubakar Famau reports from the capital, Dodoma. In his budget speech in parliament on Thursday, Mr. Mpango announced a 25% tax on imported wigs and hair extensions and a 10% tax on those made locally as part of a series of measures aimed at increasing government revenue. The cheapest wigs currently costs around $4 (£3.40), but they can sell for up to $130. Mr. Mpango also scrapped the exemption on value-added tax placed on sanitary towels, saying consumers had not benefited as businesses did not reduce prices when it was introduced   Source: Hubnaija

Since 1956 when crude oil was discovered in commercial quantity in Nigeria’s Niger Delta region, a flurry of economic experts have continually pitched the benefits of economic diversification to no avail. The immediate fallout of this negligence seesaws between a government perennially starved of funds for capital projects and a citizenry disillusioned by the absence of the social contract they expect from strict compliance with government policies. At present, the federal government is reportedly grappling with a budget deficit of N3.8 billion and debt profile of N2.7 billion in a country that boasts 57 million economically active citizens, among whom only 15,000 are tax compliant. The International Monetary Fund (IMF) reinforced this argument in 2016 when it estimated revenue collected across all tiers of government at 6 percent of GDP (70% from the oil sector) and 30 percent from the non-oil sector (30% of GDP). Small wonder the government has shifted its focus to alternative strategies for revenue generation from the non-oil sector in its 2020 inclusive economic agenda. The Better Tax campaign launched by the Nigeria Economic Summit Group (NESG) in Lagos recently is one such revenue generation initiative.  With the benefit of hindsight, the average Nigerian may be understandably sceptical of tax reform. After all, several initiatives launched previously were long on execution but drastically short on sustenance and impact. In 2017, the President Muhammadu Buhari administration sought to include more Nigerians in the tax net with the launch of the Voluntary Assets and Income Declaration Scheme (VAIDS). To facilitate the process, government set up tax clinics to offer free service, consultation and legal representation for defaulting companies wishing to voluntarily file their tax returns. However, analysts argue that the euphoria over N30 billion sourced from the initiative was short-lived because compliance was primarily incentive-based and did not outlast the 11-month lifespan of the project.  The Federal Inland Revenue Service (FIRS) has also done its bit by introducing several digital payment platforms such as e-Registration, e-Filing, e-Tax Clearance Certificates and e-Stamp Duty, among others. But it is instructive that of the 4,926,053 taxpayers in the FIRS database, only 13,131 are registered for e-Filing and of that number, only a paltry 3,064 actually use the service. This development calls for a more wide-ranging system that will not only sustain tax compliance but also close knowledge gaps.  At the launch of Better Tax recently, the Chairperson of the NESG Fiscal Policy Roundtable Dr. Sarah Alade argued that contrary to general perception, Nigerians are not necessarily averse to paying taxes. In fact, the NESG Citizen Perception Report, which is the product of a tax survey cutting across households and small businesses in the revenue value chain, found that about 70 percent of respondents had no reservations about paying taxes. Rather, they would prefer that the process is sustained by proper education and transparency on the allocation and application of resources by the government. Tax officials, on their part, are constrained by inconsistent tax policies, limited resources, unrealistic targets and inability to influence service delivery from tax proceeds.   Source: Pro Share