By Moses Nosike & James Ezema
Prince Kunle Quadri is the President of the Chartered Institute of Taxation and Chairman, CITN Governing Council. In this interview with Saturday Vanguard Business, he bares his mind on tax issues and why the government needs to professionalise the practice ofÂ taxation in the country. He alsoÂ states the need to educate and carry Nigerians along when there are new developments in every sector. Excerpts:
How would you assess tax system in Nigeria?
The Nigerian tax system is gradually coming of age in view of the various reforms that are now being implemented by the government.Â But I can tell you that the system, through the reforms being implemented by government is gradually coming to what is expected. Youâ€™dÂ recall that in 2007, some bills were passed into law and the executiveÂ sent some other bills to the National Assembly.
So, weâ€™re expecting that we are going to have aÂ moreÂ robust tax system that is comparable to what is happening outside the country, especially in the developed countries. And I must really give kudos to the Federal Government because they have been able to ensure that the national tax policy is also being implemented.
It has been adopted by the National Executive Council and itâ€™s now being considered by the National Economic Council. To a large extent, I think we seem to be having a lot of issues coming up in the Nigerian tax system and the only way that the government can really benefit from all these is by ensuring enlightenment and by ensuring that the people are well educated as far as Nigerian tax system is concerned, because in the past, weâ€™ve not had much. Presently, some states are already carrying out a lot of educational programmes and the Federal Government also, in some instances, have been doing that.Â But we still need a lot of enlightenment to enable the populace know what they should do as far as the Nigerian tax system is concerned.
You talked about the bills that were sent to the National Assembly in 2007, donâ€™t you think it is taking a long time?
The bills were actually sent to the National assembly in 2004. About nine of them were sent, one was withdrawn but by 2007 when the last tenure expired, only four have been passed into law and the remaining four had to be represented by the executive and those are the ones being represented to the National Assembly. We want to appeal to the National Assembly that they should expedite action in looking at those bills so that they will not suffer the same fate suffered by the one that were not passed by the last Assembly in 2007.
What are the major challenges facing taxation practitioners in Nigeria and what is the institute doing in order to address them?
The major challenge that we have now is the issue of employing unorthodox ways of collecting taxes. And, again, I want to thank the National Economic Council for restricting the use of consultants in collecting taxes. Weâ€™re not saying that consultants should be banned, but weâ€™re saying that they have to be restricted to the various parts of the job that they are able to do.
The jobs of officials ofÂ Â the Board of Internal Revenue should not be taken over by consultants. The are expected to raise assessment, collect taxes and account for taxes collected. But you find out that a lot of states now have consultants taking up these jobs.
And this is not good and it is not even in line with the law. Apart from this, in terms of local government statute rates and fees, you find so many levies coming up and they just employ consultants to take up what should be done by the local revenue committee.
So, we are appealing to the governments at all levels to ensure that professionals are broughtÂ into the system because it is only when you have professionals there that they will be able to net in as much as possible as far as internally generated revenue is concerned. The major area the government should look into is the area ofÂ professionalising the system, making them autonomous. When you have a Board of Internal Revenue that cannot hire the right calibre of staff,Â that does not have the right type ofÂ equipment, that cannot really mobilise, that cannot carry out enlightenment, that does not have political backing of the government, it will not be able to function. Weâ€™re appealing to the government to professionalise the tax system and make their tax offices very conducive for the people who are there to be able to do their work.
From what you are saying, are you implying that government loses revenue by engaging these consultants?
What we have, strictly speaking, are not even tax consultants but tax contractors. A lot of them donâ€™t even know what they are supposed to do.
Most of them are not our members. And there have been series of cases, especially in the local governments, where receipts are being duplicated; photocopies of receipts being issued to people. Tell me, will that go to the coffers of government? Of course, it will not. And theseÂ Â issues have to be stopped. If things are done properly, people are ready to pay.
But you cannot just accost somebody on the road and say that person must start making payment. It is even illegal to have road blocks on the way. There is nothing that suggests road block should be part of the Nigerian tax system. It is alien to the system, it is illegal and should not be accepted by anyone.
In view of your position on this matter, what is the institute doing to ensure the elimination activities of quacks from the system because there may even be cases of over assessment by these tax contractors so that part of the tax revenue can go into their pockets?
From time to time we advise governments at various levels that we are ready to partner with them. We have over 10, 000 members all over the country that can be of assistance to them. We have ways of disciplining our member if our members misbehave. So, the government should look at this and stop patronising contractors. That is just the only way. Weâ€™re not in government but we have the right to tell the government what should be done and what is right and what is the best practice all over the world.
Are there specific steps taken by CITN to develop the practice of taxation in Nigeria?
The Chartered Institute of Taxation of Nigeria is established to create standards by which people who wants to become members of the institute are given membership. All that we do is to educate, not only our members but also to provide platform for the enlightenment of the public.
Apart from this, we also relate with governments agencies in terms of training their staff. We relate also with public organisations in terms of providing training schemes for them. We just ended our national conference last week and the communique will come out in the next two weeks and it will be quite useful to both government and those in the private sector as it has been in the past anyway.
The federal government has proposed a 100 percent increase in VAT for the country. What is the position of the institute on that?
It seems the only issue people are talking about is the increment of VAT rate. Nobody is looking at other issues that will go along with that increment. Weâ€™re having an holistic reform as far as tax reform is concerned. When you leave this country and go outside, you find out that people talk more about indirect taxes rather than direct taxes.
Indirect taxes happen to include VAT, exercise duties and allÂ that. In that case, you pay according to consumption. The emphasis is more on indirect taxes to personal income tax. And Nigeria having realised this, is now looking for ways of reducing personal income taxes and increasing the VAT so that even people who have been evading tax will now pay tax according to what they are consuming.
Unfortunately, what we have been hearing is that they want to increase VAT rate.
I saw in one of the electronic media where people were asked to comment on whether the government should increase VAT rate from five percent to 10 percent or not. Nobody wants to pay. But let them understand why the government should do this type of increment. And in this line, government has to do a lot of enlightenment. They have to carry a lot of stakeholders along otherwise they will not be able to achieve their aim. The aim really is to reduce direct taxes and increase indirect taxes.
So, we support the increment from five percent to 10 percent. But we also advise that there should be better machinery for collecting all these taxes because we lose a lot of money when we do not have the right approach to collecting taxes. People are willing to pay taxes. But on how they should pay it, there must be a lot of enlightenment. We are far behind in terms of people recognising their obligations to pay tax.
The government still needs to do a lot of educational programmes; a lot of enlightenment to be able to tell people why they should pay tax. And government should see this as an investment rather than a waste. It is only when they have invested in a particular thing, just as they have invested in oil that they can now start reaping the fruit in future by the time people have known why they should pay tax.