‘Collection of police fund from companies’ net profit is wrong’
A former Accountant-General of the Federation (AGF), Dr James Kayode Naiyeju, has criticised the collection of the Nigeria Police Trust Fund from corporate organisations’ net profit, describing it as a step in the wrong direction.
He said the collection of the fund does not give room for proclaimed accountability since it did not go through the appropriation channel of budgeting.
Naiyeju, a former President of the Chartered Institute of Taxation of Nigeria (CITN), who spoke as a moderator at the Institute’s sensitisation seminar on current issues in Nigerian taxation in Lagos, said the institute would make its position known on the issue.
The Nigeria Police Trust Fund Act, which was signed into law by President Buhari on 24 June 2019 will be in force for a six-year period will require corporate organisations to part with 0.005 per cent of their net profit to fund the training of personnel, procure equipment, and instructional materials for police colleges, and boost welfare.
“Even though it is a law, human beings make the law. We will tell the parliament as an institute without mincing words; because when we begin, very soon the Prison will come that they need prison fund tax, and other security agencies would come to ask for theirs, and it is going to be on the same corporate companies’ profit.
“Very soon, nobody will go into any kind of business again, because all the profits would have been given to the security agencies.
“Also, the collection of the fund doesn’t give room for the proclaimed accountability. Project did not go through the appropriation channel of budgeting,” Naiyeju said.
On the call to increase Value Added Tax (VAT) from five per cent to 7.5 per cent, he recalled that when VAT was introduced in the country, it was agreed that tax would be increased bi-yearly by 0.5 per cent.
“You grow rate in conformity with the buoyancy of the economy. But with what we are having now, there is a problem; the economy is not too buoyant and you are increasing VAT. Are you trying to say you are increasing the hardship of the citizens? That is a dilemma from the government,” he argued
Rather than the increase taking effect next year, the former AGF proposed a law to back the commencement date for new VAT take-off to 2021, adding that the economy would have grown by then.
Speaking on the effects of the increase in VAT on the economy/stakeholders and issues on the Nigeria Police Trust Fund Act, Partner, Deloitte & Touche, Lagos, Yomi Olugbenro, represented by Ashiata Agboluaje, said increasing VAT to 7.5% would have an impact on Nigerians.
She said with about 20 million people in Nigeria’s tax net and paltry 6.1 per cent tax to gross domestic product (GDP) ratio, one of the lowest globally, Nigeria is still a far cry to where it is supposed to be.
She said: “To make meaningful development as a nation, World Bank says tax-to-GDP should at least be a minimum of 15 per cent. Nigeria is still a far cry to where it is supposed to be. Increasing VAT to 7.5% would have an impact on Nigerians, but it would lead to inflation, but we will survive it.”
Earlier in her remarks, President/Chairman of Council, CITN, Gladys Olajumoke Simplice, said the seminar fits into the Institute’s advocacy efforts. These are targeted at providing professional thoughts and input towards government policies and programmes in such a way that misconceptions are clarified and shades of opinions on the subjects are elicited, collated and forwarded to government for consideration and to guide future actions.
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