Tax yes, but structures first

News of the query issued to Mr Tunde Fowler, the FIRS(Federal Inland Revenue Service) boss, has once again put the issue of tax in the country in the spotlight. The importance of taxation to a country’s development cannot be overemphasized, especially as without tax revenues the civil service will be grounded, and we know what that means. It is also from taxes that funding for our defence, education, hospitals, roads and other infrastructure projects is sourced. If this is the case, why is there so much brouhaha about tax issues in Nigeria?

Why are Nigerians not motivated to pay taxes? In line with democratic tenet, the relationship between government and the people is like a contract, with obligations from both sides to fulfil. If there is a violation of the contract terms by any one of the parties, the purpose for which the contract has been entered into will be threatened. Government is to provide security, infrastructure, education, healthcare, housing, roads and other such obligations to the people. The people, on their part, will contribute their resources to keep the government going and this is usually done through the payment of taxes and other such levies that the government deems fit to impose. That is why in developed societies, issues of tax payment are not treated with levity. Why is the Nigerian case different? Ideally, government should make the environment conducive for business to thrive; taxes are not meant to stifle businesses, but to ensure a mutually beneficial growth of all parties. We do not have that type of situation here. According to Head, Tax and Corporate Advisory Services at Pwc Nigeria, Mr Taiwo Oyedele: “The focus should not only be on revenue collection but how the tax system was managed”. He also said: “We need to review our tax laws that are creating problems; we have to reform the tax policies, tax laws so that they will enable businesses to grow, protect the poor and vulnerable people and help Nigeria to develop.” The query to Mr Fowler from the Presidency “noted that there were variances between the budgeted collections and the actual collections made by the agency”. And, in his response, Fowler was quoted as citing “recording increases in CIT(corporate income tax) and VAT(value added tax)”. He went further to state that the non-oil tax collection grew by over N1.31tn. On his own part, Shehu Garba, the Senior Special Assistant to the President on Media and Publicity, said: “It is noteworthy and highly commendable that under this administration, the number of taxable adults has increased from 10 million to 20 million, with concerted efforts still ongoing to bring a lot more into the tax net”. What Messrs Fowler and Shehu did not make public in their individual statements is the number of businesses that have been driven underground or totally eliminated by their over bearing tax policies and drives. If it continues this way, as was done these past few years, more businesses will simply vanish. Businesses are routinely harrassed with extortionist taxes when a conducive environment has not been created for them to thrive. Unemployment rate is increasing, businesses are closing down, foreign investment is nothing to write about, insecurity remains a constant threat, inflation hitting the roof and interest rates unaffordable for businesses. Yet government is breathing down the neck of citizens and the few business operators who are providing jobs for the citizens. How do we go forward in this manner? This is why, despite the efforts of Fowler and his firs team, overall revenue has not improved. It can only increase when businesses are allowed to thrive and people are provided with jobs. You do not hound the few entrepreneurs risking their lives and businesses because you are on tax drives. And that is what the query will do to Fowler and his FIRS team: they will intensify their harassment of the few businesses available with resultant dire consequences. We must be careful with the way we handle these tax drives, especially as it affects our entrepreneurs and genuine employers of labor. They are the ones providing jobs for people. If they are encouraged, more jobs will be created for the people and when people are gainfully employed, they will pay tax. When you harass and hound them, they move their funds and businesses elsewhere and the country suffers in the process. We must be more careful now that there is drop in oil activities in the land. Oil price is down and related businesses are closing shop. Every direction the average businessman faces in Nigeria is clogged with obstacles. So, Nigerians are buying up dollars and other foreign currencies and moving them offshore, afraid to invest as our economic environment is too harsh for business. Some of our West African neighbours are now the beneficiaries of these lapses in our system. It still cannot be imagined why our neighbouring Benin Republic enjoys constant electricity supply when we cannot run ours for six hours in a day.


Source: vanguard