By Babajide Komolafe
The three tiers of government should develop a centralised, technology driven tax payment system to reduce the cost of paying taxes.

A tax professional and lawyer, Mrs Titilayo Oke made this recommendation in the second volume of the Nigeria Leadership White Papers.

In a paper titled, “The Burden of paying taxes in Nigeria,” she observed that there are two major constraints to tax payments in Nigeria, and these are: the financial burden characterised by actual tax costs through rates and multiple taxes; and the administrative burden resulting from the inefficiency of regulations and tax authorities in their dealings with taxpayers.

She said the impact on this is reflected in the World Bank’s Doing Business 2012 report published in November 2011, Nigeria ranks 138 out of 183 countries, on the indicator of measuring the ease of paying taxes.

“According to the World Bank, in 2011, a typical medium-sized Nigerian company had to make 35 payments of 13 different types of taxes and spent 117 days (938 hours) of compliance time. The effect of this administrative inefficiency is that investors are discouraged while also placing the Nigerian economy among the most difficult economies in which to pay taxes and in general, carry on business.”

To address this problem, Oke called for a centralised tax payment system driven by technology, as well as professionalism and orientation of tax authorities.

She said, “In making tax payment simpler, the government must devise mechanisms of centralising the collection of tax revenue and then carrying out apportionments as necessary. Also means of interconnecting tax payments of different types of taxes in such a way that an overpayment of one can be used to offset another should also be considered thoroughly. For the government, it is more efficient and cost effective to reduce and interconnect the windows through which tax payments are made while considerably reducing compliance time and burden of the tax payer.

“Nigeria has come of age and with its vision of becoming one of the largest economies by the year 2020, embracing technology should be top priority. Creating a platform for taxpayers to file and pay taxes online will reduce compliance time and the associated costs. However, most importantly, taxpayers need to trust the system and must be assured of the protection of their data through high quality security systems. If properly implemented and adopted by businesses, electronic tax systems speed up processing, improve tax collection and reduce error rates.”