July 15, 2019

All over the world, taxation is the means of funding government businesses. The fiscal and monetary policies of any government are essentially the use of taxation in combination with other policies to regulate the economy. But taxation policy of government is not only to raise funds, it is also to grow the economy. Taxation can also be used as an instrument to redistribute incomes. Taxation is therefore a handy tool for variety of uses. Taxation is a double edged sword. If correctly used, could boost the economy. Its wrong uses has grave consequences for the government, the people and the business environment. Kogi State seems not to have got its tax policy right. It is very sad to note that while other states use taxation policy to generate funds and correct imbalances in their economies, Kogi State is using its own tax policy to fast track and catalyze the killings of micro, small and medium scale businesses in its domains. It is even sadder to note that those who stole government monies to build sudden business empires in the State are not taxed, while the tax authority is running after the ‘Mama Alakara’, ‘Mama alata’, ‘Mama oniyo’,  ‘Mama oniru’ and slamming them with outrageous taxes. The effect of this regressive and oppressive tax system is that many of the businesses which are the engine of growth of the State are beginning to close shops. A case of killing the goose that lays the golden eggs. The problem is that the tax officials don’t want to know whether a business is making profit or losses before giving them unbearable tax burdens. The tax people keep taxing the capitals of these businesses rather than their profits. They capitalised on the fact that these poor people hardly know how to keep any accounting records for the purpose of taxation. Many of them have hardly started a business for a month before they were admitted to taxes. And since they know little about the operating laws of taxes, they yield to defeat. Those who understand the laws head for the Court. Today, there are so many tax cases against Kogi Government in various courts. Nobody is against taxes. Taxes are legitimate but government must first encourage the buildings of the businesses such that will encourage regular tax payments by the owners. The real problem is that many of these small, small businesses were established from LAPO or some forms of cooperative loans. The businesses die soon after because of regressive tax system of the government that makes payment of these loans impossible. The most painful aspect is that many of the businesses killed by government tax system are owned by some very old pensioners, who hoped to operate there businesses for survival since their pensions and gratuities were never forthcoming. So while this category of people could not access their pensions, the small businesses they place hope on for survival were forced to close down by heavy taxes. What a vicious circle The tax people know where to get real taxes but they will not go there. Drive round the city of Lokoja and other places and you will see huge houses, huge petrol stations, huge hotels, event centres, shopping malls etc. These businesses were being hurriedly put together by emergency billionaires who are stealing our money on regular basis without paying taxes. Let us look at a typical case of the State regressive tax policy. Recently, the Tax authority has asked all private schools’ operators in Kogi State to start paying about N350k as tax or risk being closed down. I am sure this will mark the end of many private schools in the State. And this is a State where public school system has collapsed completely. The new tax system on the education sector may collapse an era of good education in the State. I also know some transporters that relocated from Kogi because of excessive taxes. Many hotels in the State are closing down for the same reason. In effect, many more workers are being laid off because of inappropriate tax policy of the Government. If you go to the stalls of some provision stores, you can count on your finger tips the number of item there. Yet, these businesses are the focus of the tax drive of Government. The rural areas are also not spared of this regressive tax policy. Kogi can operate a good tax system without killing the businesses. All they need to do is to pay salaries of workers fully and regularly. These monies become the purchasing power by which the business environments thrive and are able to pay taxes regularly and with ease. At the moment, the government of Kogi prides itself on increased revenue accruing to the State from IGR. But I bet, this will be short lived. Except Government builds and sustains taxable persons and taxable businesses, it will soon have nothing to tax. Government must provide conducive environment for progressive taxation otherwise the present exploitative tax system can only last for a while. For very soon, there will be nothing left to tax.   Source: Kogi Report

The Nigerian Communications Commission (NCC) has said multiple taxation and regulation of the telecoms industry discourage investments and deny government of long-term revenues as well as destroy the foundations for future growth. The Executive Commissioner (Stakeholder Management) of the NCC, Sunday Dare, disclosed this on Thursday during the South-East edition of the NCC Stakeholders’ Parliament themed: “Optimizing The Benefits of Telecoms Infrastructure in Nigeria” held in Enugu. He emphasized that it was a matter of great worry that at this point in Nigeria’s history, “we are still talking about protecting telecoms infrastructure from interference by agencies of government, or from multiple taxation and regulations, when all levels of government should actually be the ones encouraging and incentivizing operators to build infrastructure in their domains.” Represented at the occasion by Mr. Alkassim Umar, Head, Compliance Monitoring at NCC, Dare said that in essence, “this is why we must all work towards win-win solutions that enable operators roll-out fast and efficient networks which create opportunities for our citizens and develop our economies.” He said the NCC must take a long-term view of the need to provide a conducive environment for the spread of telecoms infrastructure, “be they BTS sites or fibre infrastructure.” He, however, stressed that the current “practice of imposing heavy sector-specific taxes and charges on telecoms infrastructure; levying huge Right-of-Way charges and decreeing onerous regulations may appear to bring immediate revenues to the coffers of the state.” Dare said the NCC must always insist that all “our licensees must comply with all legitimate tax and other obligations binding on them anywhere they operate. “Section 135 of the Nigerian Communications Act is very clear on this point, and it is one of the key elements of the NCC’s Code of Corporate Governance for the Telecoms Industry.” He further said: “We must all appreciate that the growth and seamless operations of telecoms infrastructure is critical to the social and economic growth of our states and communities. “This is why they are called “Critical National Infrastructure”, and this is why both the Criminal Justice (Miscellaneous Provisions) Act, and the Cybercrime Act of 2015 both prescribe heavy penalties (including terms of imprisonment) for those who tamper with such infrastructure.” In his speech titled “Legal Framework For Telecommunications Infrastructure Rollout,” the National Chairman, Nigeria Bar Association (NBA), Paul Usoro (SAN), said some of the challenges plaguing the telecoms infrastructure included multiple taxation and duplicated regulations. He said these challenges were major hindrances to telecoms infrastructure rollout and broadband penetration. “Multiple levies by governments are major disincentive to investors and threaten investment opportunities. It subdues telecoms infrastructure rollout and expansion,” said Usoro, ably represented by Chinedu Anyaso. However, a tax expert and Professor of Commercial Law at the University of Lagos, Prof. Abiola Sanni, described telecoms sector as the bedrock for economic growth in the country, explaining that the main problem bedevilling the sector was the abuse of regulatory power by the agencies. He advised stakeholders to sustain the advocacy for curbing exorbitant, arbitrary and oppressive charges by government ministries, departments and agencies.” The stakeholders who attended the parliament were drawn the telecom operators and state government agencies related to telecoms industry.   Source: Daily trust

The absence of a witness for the Attorney General of the Federation   on Wednesday forced the Federal High Court in  Lagos to adjourn till October  for hearing of    a  suit filed by MTN Nigeria Communication Limited  against  the AGF over N242bn  and $1.3bn import duties and withholding tax assessments. The telecommunications company, in the suit instituted by a writ, had challenged the legality of the AGF’s assessment of import duties, withholding tax and value added tax amounting to  N242bn and $1.3bn. At the Wednesday proceedings, counsel for the AGF, Tolu Mokolu, told the court that their witness  could not appear  in court as he had some challenges  in Abuja. Mokolu also said the lead counsel, Tijani Gazali, was also held up in Abuja,  urging  the court to grant an adjournment. Counsel for the telecoms firm, Wole Olanipekun (SAN), said neither would  he oppose  the request  nor  ask for cost.  Justice Chukwukekwu Aneke  then adjourned the case till October 29, 31 for trial. In a statement  on Wednesday, MTN  said it had  faith  in the Nigerian court system and was ready to present its case whenever the opportunity arose. The company  insisted that it was in “full compliance with all extant tax and regulatory obligations. We reiterate our commitment to obeying all Nigerian laws, rules and regulations that govern and guide our business practices.” MTN is seeking  a declaration that the AGF’s demand  was premised on a process which was malicious, unreasonable and illegal. It is also  seeking  a declaratory relief that the purported revenue asset investigation  carried out by the Federal Government  between 2007 and 2017, and its decision conveyed through the office of the AGF in a letter dated August 20, 2018, violated the provisions of Section 36 of the  Nigerian  Constitution. It also sought a declaration that the AGF acted in excess of  his  powers by  demanding  payment of import duties on the importation of physical goods. The company  wants  a declaration that the AGF acted illegally by usurping the powers of the Federal Inland Revenue Service to audit and demand the remittance of withholding tax and value added tax and declaration that the purported self-assessment exercise instituted by the AGF via a  letter dated May 10, 2018, is unknown to law, null and void and of no effect whatsoever.   Source: Punch

The Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, has said the Voluntary Assets and Income Declaration Scheme (VAIDS) generated N93 billion at the end of the exercise. Fowler, who disclosed this while speaking with Daily Trust, yesterday on the side-line of an official assignment in Lagos, said: “We realised a little over N93 billion. Out of which about N66 billion has been paid. It also helped increase the numbers of tax payers in the country.” Speaking on the next line of action, Fowler said, part of the conditions was that those believed to have been honest in their dealings will not require further audit. He said a few others did not provide sufficient information and the service had contacted them to bring forward more information failure of which will lead the FIRS to take the normal cause of action. Fowler further disclosed that in the last two years, FIRS had a 100 per cent increase in terms of the number of tax payers: from 10 million to 20 million. “We already have machinery in place right now and we believe that if we get the required cooperation, that number should go to 45 million before the end of July,” he added. He said FIRS is set to launch the new Tax Identification Number process. “We call it a new TIN (TAX identification number) registration process. That is going to be launched by the vice president, Yemi Osinbajo, on the first of July. Prior to now, we have people undergoing training on how to utilise it. “What this system basically does is that, it takes the information already in a system plus what we have in our national tax data base. Once launched, we have one tax data base for the whole nation, both for corporates and individuals. “What that implies is that, if you have a tax clearance in Kano State and you are coming to Lagos for a transaction, instead of the man in Lagos confirming your physical tax clearance paper, he just hits a button and your tax history will show life,” Fowler stated. He further noted that the system also helps with the capacity to capture biometrics from individuals’ BVN or those captured from the Corporate Affairs Commission. He argued that the benefit will be convenient and transparency. “If you have a resident who goes to transact business in another state, immediately, your tax position is shown. If you are going to bid for a government contract in line with the law, part of the criteria is to have a tax clearance certificate,” he added. He disclosed that the information from the data base will be made available to all revenue collection agencies and government agencies where one has to transact business and it will improve revenue generation. “Even for politicians, they require tax certificate. So INEC will have access to it and can tell if the politicians have tax certificate,” he also said. Speaking on meeting the N8 trillion target for 2019, he said “As at today, we are on course, but our high months of collection are June, July, August and September.   Source: Daily Trust