Most governments around the world survive on taxes their officials generate from corporate organisations and citizens. Even the traditional African societies find ways to impose various forms of taxes to run their domains. Despite the important role revenues from taxes play in the country, many people since time immemorial fail to pay their taxes willingly. The Trumpet reporter, JOHNMARK UKOKO examines the import of the resistance, its implications for government revenues, the general wellbeing of society and a way out of tax evasion.
Governments around the world have relied on and used tax revenues to survive and embark on infrastructure development to lift their citizens and countries out of poverty.
By their very nature, organisations and individuals are usually not willing to pay taxes if the authorities do not enforce tax obligations. The same applies to firms, institutions and brands, who, in most cases, are taken to court for failure to pay their taxes or transparently declare their earnings.
Even before the birth of Jesus Christ about 4,000 years ago, the Roman forces that were governing the Jews used force to enforce compliance with tax payments.
To that extent, most Jews never liked the tax collectors, who enforced the collections due to their tendency for corruption and sharp practices.
In most countries of the world, governments live on tax revenues, hence they go all out to ensure that most adults in their society are recruited into their tax nets.
But in Nigeria, the reverse is the case, like most Nigerians, apart from workers who are by the country’s laws made to remit their Pay-As-Your-Earn (PAYE), do not willingly pay their tax obligations.
The same also applies to most companies who underpay taxes by not declaring their real profits in most cases and sometimes connive with tax officials to defraud the government.
In Nigeria, the colonial masters were efficient in collecting taxes from adult Nigerians.
Shortly before independence, the three regions of the country administered their various regions with the taxes from the cash crops each region depended on.
For instance, the western region used taxes from cocoa to build many landmarks structures in Ibadan and Lagos, such as the Cocoa House, Ibadan, Liberty Stadium, WNTV, Ibadan, the first in Africa and a host of other magnificent buildings, as well as the Obafemi Awolowo University, Ile-Ife and funds used to give free education in the region.
Similarly, the Eastern region used the taxes from palm oil, rubber and other products to run their administration of the region.
Also, the North used the taxes from groundnut, cotton, cashew and other agricultural products in the region to run the region.
However, shortly after Nigeria’s independence, the country discovered crude oil in commercial quantity that brought the country a lot of foreign exchange earnings.
To that extent, successive administrations neglected tax revenue, as the country relied heavily on crude oil wealth, which was why former military Head of State, General Yakubu Gowon (rtd), was quoted then as saying: “Nigeria’s problem is not money, but how to spend it.”
But in the last few years, with limited Foreign Exchange (FX) and the government’s huge financial burden, President Muhammadu Buhari’s administration focused on tax collection to shore up its revenue base.
Despite efforts of the Buhari-led administration to shore up its tax base, many people are of the view that there had been massive tax leakages and the problem of multiple taxations imposed on Nigerians and business concerns.
To address the issues, the government instituted an annual tax dialogue in 2021 to address the issues militating against efficient tax administration in the country.
Speaking at the second annual tax dialogue in Abuja recently, Buhari said a key deliverable of the dialogue was to promote synergy in tax administration among the different tiers of government.
He also noted that harmonising taxpayer’s identification across the country was a good start, but the government must do more to promote the ease of doing business and easy tax compliance in the country.
“On our part, we have stated by clarifying in the 2021 Finance Act that the Federal Inland Revenue Service (FIRS) is the sole authority to administer Federal Government taxes. This clarification becomes necessary to avoid taxpayers being burdened with multiple tax compliance obligations towards different agencies of government
“Multiplicity of tax administration is as undesirable as multiplicity of taxes, as they create uncertainty and instability and above all, they are inefficient,” he said.
On his part, Executive Chairman of FIRS, Muhammad Nami, said the survival of the nation is dependent on tax revenue, adding that the theme of the second annual national tax dialogue with the theme: Tax Harmonisation for Enhanced Revenue Generation.
He disclosed that his agency had contributed a monthly average of 59.45 per cent of the revenue shared by the Federal Account Allocation Committee (FAAC) last year to all tiers of government.
He stressed that all hands must be on deck to support the tax system and make it function efficiently, adding: “However, it is surprising that some people have begun to play politics with tax revenue generation.
“We urge the president to step in to dissuade political tax gladiators to sheath their swords. Tax revenue is inherently a political issue, it should be treated as such by all irrespective of their political earning,” he said.
Nami further disclosed how the FIRS was able to record an impressive feat in tax revenue generation in 2021, where the service surpassed its target, as it collected N6.4 trillion, being the highest collection ever in the history of FIRS.
Speaking on the importance of the dialogue, he stressed that it was imperative, given the prevalent issues of competing revenue agencies.
On her part, Minister of Finance and Budget and National Planning, Mrs Zainab Shamsuna Ahmed, stressed the importance of national tax dialogue, stating that it was designed to engage stakeholders in the Nigeria tax space in meaningful discourse, to information, ideas and experience for policy formulation and implementation.
She submitted that the dialogue would help the country in the area of policy formulation and improved tax environment, saying: “We have observed that countries with lower economy and fewer tax base, but streamlined tax administration have fared much better in terms of tax revenue collection and ratio of tax to Gross Domestic Product (GDP).”
Ahmed noted that the goal of the second tax dialogue was to begin a discussion on the harmonisation of the fragmented tax systems into a coherent whole for improved tax revenue collection at all government levels across the country.
“The most important testament to the success of the first edition of the dialogue was the fact that FIRS achieved 100 per cent of its collection target in 2021 and surpassed N6 trillion revenue, the first in the country’s history,” Ahmed said.
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While President Buhari, Ahmed, Nami and other government officials were celebrating the FIRS feat in 2021, some Nigerians see things differently.
Chief Executive Officer of the Centre for Private Enterprises, Dr. Muda Yusuf, said the country’s businesses were being over-taxed.
He said the multiple taxes were killing investments in the country, adding that the local manufacturing sector was being made to pay too many taxes.
Yusuf was reacting to the latest tax imposed on soft drinks and carbonated drinks, which commenced on January 2, 2022, as being capable of leading to several job losses and the closure of some firms.
“The government in its bid to shore up its revenue base is over-taxing the country’s manufacturing firms in particular and business in general. I am not in support of this new tax. The country’s manufacturing firms are already paying too much taxes, so I can’t understand the rationale for this new tax,” he stressed.
Respondents say there is no doubt the country is in dire need of funds to meet its yearly budget after it has overborrowed money locally and from abroad.
They however say the people and the business sector have been massively taxed in the past few years, as such the government should be cautious in imposing additional taxes on Nigerians and the business sectors.
Making a case for judicious use of the tax proceeds to bridge the infrastructure in the country, they said Nigerians deserved to get value for their taxes, adding that it would be unfortunate to pay all the taxes and have nothing to show for them.
A respondent said: “It is not wrong to pay taxes to government but after paying all the taxes, every Nigerian is still a local government to himself or herself in terms of providing basic necessities.
“An average Nigerian provides his or her own security, borehole, electricity, road, and other items. After paying taxes and providing infrastructure, what is the essence of all the taxes?” the source asked.
In all, government at all levels should do everything possible to let the people feel the benefits of the taxes they are being made to pay, to be able to hold government accountable.
