Economic depression: FG cautioned over 10% tax increment


14 Jul 2016

Economic depression: FG cautioned over 10% tax increment

Views

By Nkiruka Nnorom, Ediri Ejoh and Monsuru Olowoopejo
A FORMER president of Chartered Institute of Taxation of Nigeria, CITN, and Managing Partner, Saffron Professional Services, Mrs Adebimpe Balogun, yesterday, faulted the move by the Federal Government to increase Value Added Tax, VAT, to more than five per cent, saying the present economic situation in the country does not support such irrational development.

Balogun who spoke at the eighth Wole Soyinka Centre Media Lecture Series, themed: “Tax Education, National Development and the Seminal Role of the Media”, said that rather than increase taxes payable by Nigerians as being mulled by the federal government, government at all levels should broaden their tax base by bringing more people in the formal and informal sectors into the tax net.

 Minister of Information, Culture & Tourism Lai Mohammed, Minister of Labour & Employment Chris Ngige, Minister of Finance Kemi Adeosun, Minister of Solid Minerals Kayode Fayemi and Minister of Agriculture Audu Ogbeh at the Emergency Federal Executive Council in Statehouse on 8th April 2016
Minister of Information, Culture & Tourism Lai Mohammed, Minister of Labour & Employment Chris Ngige, Minister of Finance Kemi Adeosun, Minister of Solid Minerals Kayode Fayemi and Minister of Agriculture Audu Ogbeh at the Emergency Federal Executive Council in Statehouse on 8th April 2016

Minister of Information, Culture & Tourism Lai Mohammed, Minister of Labour & Employment Chris Ngige, Minister of Finance Kemi Adeosun, Minister of Solid Minerals Kayode Fayemi and Minister of Agriculture Audu Ogbeh at the Emergency Federal Executive Council in Statehouse on 8th April 2016. File Photo 

Speaking on ‘Falling Crude Prices: How can effective taxes help limit the hardship’ , Balogun, who was the first female president of CITN charged the state governments to look inward and develop other products that could generate additional internally generated revenue that would help them cope well with the economic recession rather than depend solely on the monthly federal allocations.

READ ALSO: FG welcomes China’s support for Nigeria’s digital switch-over project

Dynamic tax reform

She further called on the law makers and other highly placed government officials who earn heavy salaries to lead by example by paying taxes commensurate to what they earn. While noting that lawmakers were not exempted, she called for a more sustainable and dynamic tax reform system. She said: “Anybody that is thinking of increasing the VAT rate, is a suicidal attempt for our economy. Right now, people are suffering over the inability to pay for many tax required fees, ranging from the schools, rents, etc.

“This is not the time to start asking tax payers for higher rate. But rather it is the time to expand the tax base and the tax net, to capture those who are not in the tax net at the moment. We have a misconception about who are the informal sector stakeholders. The informal sector are not just the traders, or the ‘Balogun, Ojo market traders’, but rather those who do portfolio contracts and collect the juicy contracts from the government and are not charged adequately. The question I have for the Federal Inland Revenue Services, FIRS, is; to what extent are they using our withholding tax system to capture these people? This is because the federal government agencies that give out these contracts are obliged to withhold taxes. And so, how much of that do we leverage to be able to attract taxes from those informal sectors and not collecting much taxes from employees, though I am not saying that employees should not be taxed.”

States’ IGR

READ ALSO: FG to establish broadband optic fibre in N-Delta

Balogun, further noted that there is need for the federal government to harness its local resources that will shore up development across the states away from dependency on the oil revenues allotted them from federal allocations. While regretting that about 75 per cent of states in the country still depend on oil revenue, she said: “It is time to develop other products of our economy. The natural resources ranges from agriculture, tourism and entertainment industry. They should be improved upon as they employ quite a number of persons. Dubai for instance survives on tourism. Let us look inward, as well as other areas where we can actually improve their productivity and not just taxes. Also there is need to invest on exports and creating an attractive environment, as  massive revenues are generated from export.”

Meanwhile, on states with increased IGR, she identified Ogun, Anambra and Borno States, saying that they have done significantly well in developing other sources of revenue. For instance, she said that Ogun State increased its IGR by 49.42 percent from N17.57 billion in 2014 to N34.65 billion in 2015, while Anambra achieved  29.32 percent increase from N10.45 billion in 2014 to N14.79 billion in 2015.  Borno State on the other hand, increased its IGR by 21.8 percent from N2.766 billion in 2014 to N3.53 billion in 2015.

On PIB

Balogun who stressed the need for the passage of the Petroleum Industry Bill, PIB, maintained that much revenues are lost to tax waivers to big firms in the oil and gas sector.  She said, “The PIB, I’m not sure how relevant it is at the National Assembly. But, it was meant to contain the various incentives in the oil and gas industry. However, given the fact that these companies are supposed to have recovered all their capital by now, the PIB has not been passed into law. And as such, it is creating so much problem for that big industry. Now that we are not getting much out of it, why are we leaving all the incentives out these companies?”

READ ALSO: Dasuki has large followership nationwide – FG begs court for witnesses’ protection again

Also speaking, Vice President, NECA’s Network of Entrepreneurial Women, NNEW, Mrs. Enobong Akpabio, lamented the imbalance in information disseminated by the FIRS.

She said, “We are asking of transparency of information. If you go to the tax offices, you are going to have disparities in information from the least to the top management. Information across board should be followed at both offices, walls, and website to guide us on what to do as it is quite frustrating.

“For instance, in Lagos State, most of our members do not go to tax offices to fill their tax forms. Rather, we just go to the banks, pay and pick up our receipt after three years.

“However, such practice is not obtainable at the Federal and local government level,’ she added.

READ ALSO: FG To Reposition Cowpea (Beans) Subsector – Minister

She added that tax reforms should be made clear on the rights of individual. “For instance what should happen when government is owes an individual an overpaid tax, because It is expected that they would shut your businesses if you are owing.

“What determines tax payment and what should be the right way to collect.

She urged the government to increase tax incentive and provide adequate infrastructures  for SMEs and other tax payers to encourage complaince. “Other are increase tax incentives for local investors by reducing their tax rate in order to meet up their establishment on mobility and sustainability. This is because if more business do not come into the tax net, government will not have enough tax to collect; if companies are shut down due to burdensome tax invasions, government will not be able to meet its tax revenue base and more importantly, the tax offices should be conducive and rid of touts and other undesirable elements currently bedevilling their operations”, she added.

.

News Source: VanguardNigeria, 9jaTales

  • 0Blogger Comment
  • Facebook Comment
  • Disqus Comment

Post a Comment

Be the first to comment among your friends

comments powered by Disqus