Lagos – The Lagos Chamber of Commerce and Industry (LCCI) on Thursday decried freezing of customers’ bank accounts based on “disputed tax assessments’’ by Federal Internal Revenue Service.
The Director-General of LCCI, Mr Muda Yusuf, also described the new tax revenue recovery strategy adopted by FIRS as damaging to the economy.
“The attention of LCCI has been drawn to the recent decision of FIRS to appoint banks as collecting agents and subsequent freezing of the accounts of taxpayers considered to be in default of tax payment.
“Such an account will be debited to the tune of the alleged tax debt,” he said.
Yusuf said that the FIRS move was premised on the power conferred on it in Section 31 of the FIRS Act.
“It gives FIRS power to appoint collection agents for the recovery of tax payable by the taxpayer.
“Under the provision, such an agent will be mandated to pay any tax payable by the taxpayer from any money held by the agent on behalf of the taxpayer.
“This provision is draconian and can be used as a tool of intimidation, coercion and harassment of taxpayers.
“It should be invoked with utmost discretion and caution,” the LCCI director-general advised.
Yusuf said that freezing of customers’ account raised concerns on whether the claim of tax liability by the FIRS of the affected investors applies to a final and conclusive assessment.
According to him, it also raises concern on which should be an outcome of an exhaustive engagement between the tax authorities and the taxpayer, among others.
“There is no evidence that this has happened in some of the cases to which this provision has been invoked.
“The disruption to businesses of account holders of a sudden freezing of accounts for reasons of alleged default in tax payment can cause an irreparable reputation damage to businesses,” he said.
Yusuf said that the move also posed a risk to financial inclusion, as some SMEs might avoid the use of banks for their transactions and might also affect liquidity in the banking system.
“It portends adverse implications for investors’ confidence resulting from a negative perception about tax administration in the country,” the LCCI director-general said.
He noted that the timing was wrong as many investors were reeling under huge burden of high cost of doing businesses.
Yusuf identified other factors as grappling with high energy cost, astronomical cost of logistics and multitude of taxes and levies imposed by the state and local governments.
He urged FIRS and banks to exercise utmost restraint in the adoption of such tax revenue recovery strategy, warning of the grave implications for investors and the economy.
“The damage to the economy may be much more than the contemplated revenue.
“Revenue generation is not an end in itself; it is a means to an end and the ultimate objective is to ensure equity, improve welfare of citizens, create jobs and promote advancement of the economy,” he said.
Yusuf said that activities of government agencies should be in tandem with the Ease of Doing Business Agenda of government and the promotion of the ideals of the Economic Recovery and Growth Plan (ERGP). (NAN)