The executive chairman of the Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler has set for the agency a target of N750 billion to be recovered from 55,000 defaulting taxpayers. The money is what millionaire tax debtors are owing and the effort to recover it is coming at a time the government is unveiling plans to woo owners of undeclared foreign assets with amnesty and permanent waiver of criminal prosecution through the Voluntary Offshore Assets Regularization Scheme (VOARS).
Fowler said this while addressing the House of Representatives joint committee on Finance, Appropriations, Aids, Loans and Debt Management, Legislative Budget and Research and National Planning and Economic Development on the 2019/2021 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP). The FIRS chairman told members of the committees that the recent substitution exercise carried out by the service led to the recovery of N23.25 billion. He further told the lawmakers that from the bank accounts substitution exercise, the FIRS used banking information to bring non-compliant taxpayers with N1 billion and above turnover to comply. He explained that the exercise has also been extended to cover those with a turnover of N100 million and above and that currently, about 500 of the millionaire debtors have come forward to pay their taxes in the region of about N24billion. This newspaper is gratified that VOARS will complement the Voluntary Asset Income Declaration Scheme (VAIDS). VOARS is a scheme that gives taxpayers, who have defaulted in the payment of their taxes, a platform to voluntarily declare all offshore assets and foreign- sourced income relating to the preceding 30 years of assessment in exchange for a one-time levy of 35 per cent on all offshore assets in lieu of payment of default taxes amongst other benefits. The scheme is scheduled to run for a 12-month period commencing on October 8, 2018. Similar to the recently concluded VAIDS, this Scheme provides some form of clemency to taxpayers who would take the opportunity to regularize their tax affairs. It is sad that in Nigeria today, the low income earners tend to pay more tax than the high income earners. Many millionaires in the country pay little or no tax at all. The government must continue to make efforts to bring them into the nation’s tax net so as to boost its internally generated revenue. Taxation is an issue that concerns everyone. Widening the tax net would help in improving the process. Nigeria, with an estimated population of about 189 million people, almost half of whom are aged 15 to 64, according to World Bank data, still has one of the world’s lowest tax ratios to Gross Domestic Product (GDP) of six per cent, the lowest among the sub-Saharan countries the International Monetary Fund (IMF), an arm of World Bank, has measured. South Africa has 24.7 per cent. This narrative must change. In contrast, the wealthy are being heavily subjected to taxation in Europe, the United States and Australia. Revenue, Ireland’s tax body, offers a sterling illustration. Periodically, these countries publish a list of defaulters. It is our considered opinion that every Nigerian must pay tax. The FIRS and state revenue agencies must continue to act creatively and firmly in bringing in more people into the tax net. It is unacceptable that millionaires who earn much pay unusually meager tax. Government should intensify policies on progressive taxation, in which case, the richer you get, the more you pay, as is the practice in Europe. We also believe that the move to expand the tax base should be accompanied by liberalizing initiatives to stimulate the economy through private sector-led investment, attracting foreign investment and privatizing state-endowed commercial assets. The current effort to widen the tax net for increased revenue generation must go together with improving the ease of doing business. While paying tax is a necessity, the government must intensify effort to address the genuine concerns of Nigerians who complain that they do not see the impact of the tax they pay on the provision of social infrastructure such as good roads, efficient healthcare system, stable electricity supply and others. Government, at all levels, should let the people see what they are doing with the tax revenue. That will make the expansion of the tax base worthwhile. Looting public funds by government officials, including tax proceeds, make compliance a difficult habit to cultivate by most Nigerians. As part of the move to bring more people into the tax net, the authorities must ensure that cases of tax diversion by public officers are eliminated entirely.