Multiple Taxation has not only discouraged many people from paying tax but it has also prevented genuine investors from investing in the economy.
THE Federal Government's recent ban on multiple taxation across the country is a step in the right direction.The new policy which is aimed at harmonising all taxes and levies throughout the country, will sanitise the present corrupt and disorganised system of tax and levy collection, as well as improve considerably, the practice of the tax profession in Nigeria.
We recall that during her memorable tenure, the immediate past Executive Chairman of the Federal Inland Revenue Service (FIRS), Mrs. Ifueko Omogui-Okauru strongly advocated the need for a law to ban multiple taxation.Stakeholders in the real sector under the umbrella of the Manufacturers' Association of Nigeria (MAN) had complained bitterly that multiple taxes and levies have contributed to the virtual collapse of the manufacturing sector.We commend the Minister of Finance and Co-ordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, state finance commissioners, as well as representatives of local councils for placing national interest above political inclinations to finally adopt this tax policy. Since 1999 engagement of tax contractors by state governments to collect illegal levies has been greatly abused by the contractors.
Following the adoption of the new tax policy, it will be unlawful for any state government to engage individuals or organisations to collect taxes and levies approved by the federal government as only the Board of Internal Revenue Service (BIRS) is charged with the responsibility. The Joint Tax Board (JTB) should publish without delay, all the approved taxes so that the citizenry can be adequately informed to ensure total compliance.
Until now, failure by government to streamline the tax system had led to over taxation of few individuals and corporate organizations while a lot of people, including the rich, have continued to evade tax. Multiple Taxation has not only discouraged many people from paying tax but it has also prevented genuine investors from investing in the economy.
The tax system is not people-friendly and this is why many people evade tax. Only those in the formal sector are captured under the tax system while millions of those in the informal sector do not pay tax. We are of the opinion that if the tax system is well structured and made to be people-friendly, a lot of people will volunteer to pay tax.
Definitely the high level of taxation in the country is a disincentive that has been scaring away genuine investors. The cost of production in Nigeria is about the highest in the world in addition to the fact that since there is lack of essential infrastructure, the overall cost of doing business is high. This invariably, is also responsible for the high cost of products. The lingering problems of electricity and multiple taxation have led to shutdown of many manufacturing companies while many notable blue-chip firms have since relocated to neighbouring countries with conducive operating environments.
If Nigeria seriously wants to be among the foremost 20 economies in the world by 2020, government must use the new tax policy to encourage more people to pay tax and also create an enabling environment for investors to invest so that the economy can achieve sustainable growth and development. If the problem of multiple taxation is effectively tackled, trade and investment will flourish and more jobs will be created to gainfully engage the army of graduates roaming the streets.
Introduction of the Tax Identification Number is a laudable policy but not many tax payers have access to it. It should be made available to tax payers to prevent them from being embarrassed by overzealous tax officials.It is worrisome that many employers are not remitting tax deductions to the appropriate quarters. These erring employers should realize this is a serious criminal offence as this is responsible for the shortfall in total tax revenue.
The state and local governments should co-operate with the Joint Tax Board to ensure end of multiple taxation.The Federal Inland Revenue Service should perform its duty with unwavering commitment. Many Nigerians must have heaved a sigh of relief after learning that the stakeholders had resolved that Federal Ministries, Departments and Agencies (MDAs) be banned from collecting taxes and levies as this violates the Taxes and Levies Act. This is a welcome development as this has been a contentious issue between the citizenry and such establishments. We support the stakeholders by urging President Goodluck Jonathan to issue an Executive Order to the affected establishments to stop collection of illegal taxes and levies.
We urge government to ensure full compliance by stakeholders while those that flout the policy are sanctioned to serve as a deterrent to others.
