Amidst increasing pressures on the three levels of government to increase revenue generation, albeit, non-oil for the federal government and Internally Generated Revenue, IGR, for states and local governments, more unintended negative consequences are surfacing.
Many observers and affected stakeholders have lamented the aggression by revenue agencies of the various governments. Their method, most times, borders on abuse of power and excessive use of force resulting in violation of citizens’ rights.
We are particularly concerned with small business category, micro, small and medium scale enterprises, MSMEs. The importance of this group to the economy, especially at a critical time like this , cannot be over emphasised. All over the world, this category of businesses is the engine of growth and largest employer of labour. Nigeria cannot afford to pull down this economic power house for whatever reason.
Current statistics show that about 400,000 of the estimated 37 million operators in this segment are registered with the Corporate Affairs Commission, CAC. A first step towards formalisation of business and entering the tax net.
Out of the figure, only an estimated 170,000 are in the tax net. It was against the backdrop of this abysmal record that the Federal Inland Revenue Service, FIRS, in fighting the federal government’s non-oil revenue war, boasted that it would bring an additional 700,000 companies into the tax net.
At the states and local governments levels, the situation is more serious. Local village markets and farm lands are invaded to forcefully collect tax from women traders and individuals.
We unequivocally condemn this unconventional method of generating revenue, particularly resort to aggression. We appreciate the importance of tax collection to governments at the three tiers and the need for citizens to perform this civic obligation, we however call for decorum and consideration for the larger economic interest.
Thugs and sundry unemployed individuals should not be hired for tax collection. Paying such people on percentage of targets delivered can create lawless and chaotic revenue mobilisation environment. This should be checked. The overall economic end dictates that the larger interest can be served better when tax measures complement, rather than subvert business development, especially at the MSME levels.
Tax defaults are responses to unfriendly regimes and strategies. The harsh economic realities have made businesses not to subject themselves to tax burdens. Many of them were company names abandoned by the promoters over outstanding tax obligations, and have gone to register new companies in order to continue their businesses.
We recommend that governments at all levels should be more aggressive with tax holidays and grant amnesty to deserving small businesses that default . It is better for the economy to have these businesses running than folding up because of tax burdens.