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May 4, 2019

We need better businesses, not more taxes



By Morenike Taire

Last January, FIRS chairman Tunde Fowler proudly announced that the organization he heads has broken the all time record in tax revenue collections in Nigeria, taking in a whopping 5.3 trillion naira against the former high of 5.07 trillion in 2012.



Kudos followed, but it is all the more remarkable that it was in a year when the economy was struggling to emerge from stagnation. This on the other hand is the very reason why questions ought to be asked.

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Fowler had become the blue eyed boy of the tax world  When he served in a similar capacity at the Lagos Internal Revenue Service. With a fair measure of antecedent and a churchy background, those who gave him the responsibility as well as those whom he served had due confidence in his ability as well as his discernment.

His job is to drive the taxes up and then collect them, and both the FIRS and the LIRS under his leadership have demonstrated uncommon creativity at these. Yet there are ironies. In a country where real mass access to the internet is still expensive and erratic, he identified in his January victory speech the increased use of virtual technologies as a cost cutting measure in the organization’s operations.

More alarming has been the ever present hint of connivance of officials of the tax bodies with dastardly bodies and individuals.

The story broke  A few years ago of a young lady who dealt with customers on behalf of one of our telecom giants and was summoned alongside her colleagues by a supervisor and directed to approach Alausa in order to pay her tax.

This she found distasteful as she was hired on contract and already paid withholding tax. Moreover she was not inclined to lie to the tax men as instructed. She did a   memo to that effect and the next day her access card no longer worked. She hired a counsellor who contacted all stakeholders including the telecom giant and the LIRS. Nothing came out of it.

This was nothing compared with the scandals that were to come. There is the very frightening recent case in an Abuja High court of a firm which claims  FIRS colluded with their bank to slap fake tax bills on them and are suing big time. In fact these are generally not the best of times for the tax body as in another twist of irony,   many of it’s officials were recently taken in by the nation’s antigraft body, EFCC, and if you are thinking it’s just family business, there is every indication that it will not end there.

As the economy becomes of more concern, it ought to be instinctive to our tax bodies to realise their roles ought to change somewhat and that they do have a responsibility to help expand the economy as well as to create jobs. The value in this for them is immediately obvious: the more people earn or make, the more the tax men can take. It is a thing of concern if rather than exploit this clear and obvious correlation they are instead trying to squeeze Juice out of grapes that have already been over pressed.

The results of a study recently presented to the public by a body called the Society of Women in Taxation, SWIN, said as much as 70percent of federal tax takes still come from Lagos state.  This ought not to be. Nigeria needs to catch up with the rest of mankind like Ghana, Rwanda and even Ethiopia are trying to do.

To the common man, our GDP growth having recovered to almost 2percent and projected to reach unprecedented highs by next year, provides gains which flatten out in the face of a weak currency. We have been told that small businesses are the backbone of the economy and this is true but what we have are not small businesses but solo haphazard ventures hurting desperately from lack of organization.

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We have unfortunately missed the industrial age but can catch up with gains of organization by taking advantage of corporate co-operation and the economy of scale. The reason made in Nigeria goods are not able to compete with foreign ones in spite of cheap labour is not just   lack of competence but the inability to scale, resulting in monumental wastes.

When organization happens it not only becomes easier to collect tax, there will actually be something to collect

Moreover the cavalier attitude of government and its agencies towards accountability to the people and businesses they tax exposes a level of entitlement that is almost naive. They fail to provide simple infrastructure and services tax payers in more organized societies can almost take for granted, particularly electricity which has continued to suffer from extreme incompetence and corruption in spite of its supposed privatization to the clear detriment of the entirety of the real sector.

It ought to be taken seriously that while tax takings are going up, development indices are going down. Tax policies ought to take all these things into serious consideration. Otherwise it remains exploitative and can not serve their purpose.