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Nigeria’s tax laws need modification

Mr. Abimbola Odunsanya is the chairman, Lagos chapter of the Chartered Institute of Taxation of Nigeria, a tax practitioner and financial analyst. In this interview, he speaks on how an effective tax system can become an alternative revenue earner for the government and help drive the country’s economy especially with the dwindling fortune of the oil price

President Yar Adua
President Yar Adua

AS chairman of Lagos chapter, CITN,   what role has the institute played          in ensuring an effective and efficient tax regime in the country?

Well, the institute has been doing its best particularly as the only professional body in the country that has the sole power over the practice of taxation in Nigeria. It is one institution that is permitted by law to practice taxation in the country. So far we have been living up to expectation because the institute itself is made up of tax practitioners and administrators.

In other words, it is made up of people that are being taxed everyday and also people from  the other side of the fence. So, we have been  issuing recommendations on how the loopholes in our tax system could be corrected.

It has been discovered that greater number of people that pay taxes are from the formal sector in a country with over 140 million population. But the question is of this figure, how many people are even gainfully employed as tax payment is restricted to people that are employed in some organisations. So, the fraction of tax payers is not up to ten percent in the country. Out of that  ten percent many are still tax evaders which was why we advised that the government should ensure that everybody is having identification number. So, there is the need for us to build up a data base as that would help in monitoring and ensuring an effective tax system in the country.

The dwindling fortune of the oil revenue forced the government to resort to taxation as new means of driving the economy. Given the high rate of poverty in the country, do you think that the decision was a step in the right direction?

Sincerely speaking, taxation is one avenue open to government to generate revenue for its programmes. Here we are not only talking about vat or company tax, it also include other levies payable by individuals or organizations as part of their civic responsibilities.

If the government now says that the  economy would be tax driven, due to meltdown, if it is properly executed, it would help the economy come out of difficulties and also encourage economic growth. But the government must ensure good use of tax payers money as it is only then that people would willingly comply. In Lagos today people including market women are willingly paying their taxes because the state governor has ensured prudent use of revenues generated from tax.

It has been observed that people most times evade tax due to unethical practice by tax practitioners, how do you think this could be tackled?

We have a body in place called Joint Tax Board. One of the functions of this body is to streamline the various taxes in the country. It’s composition is made up federal, state, local government tax office and other stakeholders such as representatives from Ministry of Finance, Industry etc.

So, because of complaints by the members of public over the issue of multiple taxation, government is now trying to streamline the taxes and publicise them for the citizens to know what they are expected to pay into government coffers as tax.

Before now, we use to have tenement rate, land use tax but unknown to people one is alternate to the other. So, tenement rate goes to the local government while land use tax goes to state government.

So, ideally if you pay for one, you don’t have to pay for the other but because of ignorance and lack of awareness many are being forced by their local governments to pay for the two especially as there is no adequate machinery in place to correct the wrongs in the system. So there should be a balanced approach in our tax system and our tax laws should be modified to streamline difference as there are still a lot to be done to ensure an efficient tax system in the country.
What mechanism do you think government should employ to make the country’s tax system convenient for every tax payer?

As much as possible, the government should bring out a tax identification number for all tax payers in the country. So, we need an adequate data base for tax payers in the country. Also, the eighteen years age limit for tax payers should be widened a bit to accommodate those who are below the age limit but are gainfully employed. With the identification number we can easily detect those that are not paying their taxes.

More importantly, we should as much as possible ensure that the people up there pay adequate taxes and if they are found to have defaulted, the law should deal with them. Many of them own property worth millions of naira yet they don’t pay their taxes as required by law.

The government should also strive to impact meaningfully on the lives of the people by ensuring that the tax payers’ money are judiciously utilised on laudable projects. That way the citizens would be encouraged to pay their taxes regularly. Basic amenities such as water, electricity, roads, health care centres should be made available to the people.

How in your own view can the country overcome the issue of multiple taxation?
It is unfortunate that the country is yet to fully address the problem of multiple taxation. Multiple taxation is one of the reasons why our industries are dying off. Most of the companies today are still struggling to survive not because there is an economic meltdown but because they do not have anything in return in form of profit.


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