October 22, 2019

The big pot of water half buried at the middle of Malam Bizi’s expansive compound has served the family and guests for about two decades, providing cool water for drink especially during the dry season in northeast Maiduguri, known for its hotness in dry season. But something unusual is happening to the mud pot. It appears to be ‘drinking up’ the quantity of water kept in it and sometimes leaves the family in dire need of the natural gift. On the day Sunday Sun visited, Hajara and Hauwa had filled the pot with about four buckets of water in the morning but were surprised to note that the pot was half filled an hour later. Ironically, none of the family member had drank from the pot. In fact, the plastic cup usually placed on the pot for use still lay on a small table in the kitchen. Surprisingly too, the surrounding of the pot had remained unusually wet in recent time. “I eventually discovered the pot was licking,” Bizi told Sunday Sun during a visit to the family compound at Njimtilo, a suburb of Maiduguri. “The more my children fetch water into the pot, the more the water ends up in the soil around the pot. It is as if the pot is drinking the water,” he added. The case above clearly illustrates how officials siphon public funds through tax diversion without the authority knowing – in much the same manner that the Bizis couldn’t detect the water in the big pot was drying up. Millions in revenue had been reportedly diverted from the points of collection in Borno State. Sunday Sun investigations show that some officials collect taxes (water) in the name of government (big pot). Sadly, either half of the revenue is remitted or in most extreme cases, never get to the government coffers. Borno State Board of Internal Revenue (BSBIR) is empowered to collect all taxes on behalf of the state government. It is one of the busiest public offices in the state with more than 300 staff both in the state capital and local government areas. Human movements, brief conversations and movement of documents characterized activities at this office as the reporter observed for two weeks. There are also over a dozen racketeers around the building ready to procure various documents ranging from vehicle particulars to motor license for a fee. It is such a business centre but behind this lay a profiteering move by some officials, Sunday Sun gathered. According to information on the website of the board, www.bornosirs.bo.gov.ng,  BSBIR collects both income and personal taxes. Taxes are collected from individuals either in employment of the state government or from those running their own small businesses under any business name or partner, a Lagos-based banker and tax analyst, Bamidele Bello told Sunday Sun. “The state government is responsible for collecting such taxes,” he explained. He said banks and commercial institutions also remit their taxes based on their profits. The Personal Income Tax Act (Cap P8 LFN 2004) guides the current taxation of personal income. The law empowers the federal and state tax boards to identify persons living in or earning income from the areas of their abode who are required to pay tax, assess incomes and tax their incomes using specified guidelines and rules. The law also guides tax officials to identify the residence of potential taxpayers, the sources and origins of their incomes for the purpose of taxing them based on their income. However, there are alleged leakages in the process of collecting these taxes by some officials of government, very credible sources in the tax offices revealed to Sunday Sun. Double invoicing/receipts. Some officials of the board have developed strategies to circumvent tax collection in Borno State. A source revealed that one of the ways is double invoicing. “It is a common thing and it has been happening for a long time,” the well placed said. “We have receipts for ourselves, sometimes we give return to our bosses in the office,” another official added. “It is not a new practice,” he insisted. A copy of the receipt shown to the reporter indicated a marked difference between the government own and the one done by the officials. The Nigerian coat of arms on the government’s receipt is bold and darker. Likewise, the receipt is thicker while the other one is lighter. Though, the board was said to have introduced e-payment few years ago to block leakages but it was gathered that some officials still found a way around it especially with taxes on businesses. Sunday Sun discovered it is one of the worst affected. Some officials also charged payees, especially owners of businesses, different amount without checking any income book. “Taxes are charged based on income and gains,” Bello explained but the approach of these officials differs. The poor collection system has not helped the matter,” a tax officer said. Taxpayers speak; The Board of Internal Revenue has a form which tax officials use in assessing amount payable by payee especially owners of business as part of the revenue to the state. “They have a form. They look at the shop and calculate what I will pay. Sometimes they charge higher and then we negotiate like from N15,000. You can beat down to N6,000,” Yohanna Ali (not real name) revealed. Sunday Sun probed further on why taxes would be negotiated without checking the book. “The men collecting aren’t remitting to government. This is why they are not following the right process,” he added. It was gathered that often times, receipts are not provided for the payment made. But many of the taxpayers alleged the officials often made promises to return with the receipts but never surfaced until another year. “It is a very clumsy situation but we can’t question them,” he said further. Taxpayers said they are sacred they could be victimized if they demanded explanation from officials. “We are here doing business. We don’t want problem with government people,” Aminu Ibrahim said.

The Federal Government recently announced plans to increase Value Added Tax from five per cent to 7.5 per cent. Do you feel this is appropriate? It is appropriate. There is no right time for it. The problem in this country is that we fail to face reality. The VAT Act was promulgated in 1993 and came into effect in 1994. Our VAT is the lowest when compared with other countries. The idea then was that, let us start from there and continuously, we will move it up. But 25 years on, nothing has been done. In 2007, when the idea was moved, it was killed. Earlier this year, when it was moved, it was killed. So when is the right time? You know it is a consumption tax, so it is very easy to collect, it is very easy to pay because you pay without knowing that you are paying tax as you are enjoying what you are collecting. There are exempted items that affect everyday life of the common people. All those things have been exempted, leaving virtually the luxury items. It is the middle people and the rich that will buy the luxury items. What are the other side effects of this increase? The problem is that it will affect cost of goods and items in the fact that manufacturers will have to pay higher VAT. And what should be done is to amend the tax law. There should be threshold for registration for VAT. Companies with less than N10m revenue should be exempted from registration. For manufacturers, they should exempt raw materials from VAT, so it will not affect the cost of production. We need to look at the areas of the companies income tax to amend. We can reduce the companies income tax and personal income tax. That will release more money to employees and they will have more money to spend, and they will pay tax. I think what we need to do is to request for accountability because we are doing our obligation to the country. The government should reduce the cost of governance. Going by the query that tax collection between 2012 and 2014 was better than 2015 and 2018, is that not an indication that the decline was caused by the bad economy under the present administration? They need to make some research before they come out to condemn somebody. Between 2012 and 2014, how much was oil price? Oil was over $100 per barrel. And if you look at the figure for collection for those years, oil majorly was over 50 per cent. While in the period of Babatunde Fowler, we saw oil price falling below $50; look at the disparity. Of course, collection will be low. When things like that happen, you are forced to look inward, and that was what Fowler did. What were the areas he looked at? He looked inward by looking at the Value Added Tax. He looked at what was happening, looked at the people who were outside the tax net, and brought them in. By that, he succeeded in moving the number of tax payers from 10 million to 20 million. If you look at collection now, we are moving from oil revenue to non-oil revenue. And that is the way it should be. He is institutionalising taxation away from oil revenue. This is what the government should appreciate. People who are making noise are making noise because they are not looking at the economic climate of the nation. It is very bad. I don’t have the figures now, but I can tell you non-oil revenue is over 50 per cent, oil revenue is less than 50 per cent. That is the way it should be and going forward. He has given us indices of how to go about it. Look at people who are not in the tax net. Issues of Voluntary Asset Income Declaration came, issues of bank statement, using data, that is what this country needs. Bringing out people who have millions in their accounts and are not paying taxes. How will you have billions in your accounts and you are not contributing to the economy that gave you those billions. How can you have N100m in your account and you are not even paying a kobo to the coffers of the government that gave created a conducive environment and the enablers for such person to make that money. As far as I am concerned, I think it is the people that Fowler has touched that are fighting back. He is fighting them and they want to fight back. I know that Fowler means well for this nation, and it will be sad if he is sacrificed just like that. Voluntary Assets and Income Declaration Scheme was being implemented before it was stopped. How will you describe the impact of this on the revenue? VAIDS was just for a period, it was a targeted period of one year. The Federal Government started it on the first of July 2017, and it was meant to end in March 2018. But it was extended till 30th June 2018. With the Voluntary Assets and Income Declaration Scheme, they said ‘if you have not been paying taxes, come and pay. This is my asset, this is my income, I want to pay tax.’ And the opportunity came that once you do that for those periods, ones you pay the taxes and you are cleared, you will not be audited for that same period again. For instance, ‘you come out to say since 2014, I have earned N1bn; I have not paid taxes on this N1bn, now I want to pay. This is the value of my assets and my income and it is taxed,’ you now pay tax on it, that is from 2014 to 2015. What the law says is that for those periods, you will not be audited again. You are forgiven. But beyond that period, 2015 to 2016, you can still