CITN harps on social contract’s performance to aid tax compliance

• Rues loss of economic gains

• Seeks effective integration of informal sector

THE Chartered Institute of Taxation of Nigeria (CITN) has called on government and citizens to respond actively to the social contract binding the two.

  The institute, which also noted that tax laws on its own do not guarantee total compliance, canvassed more socio-economic projects that impact the citizenry for increased participation of the citizenry in funding government in return. 

 The President and Chairman of Council, CITN, Chief Mark Anthony Dike, made the appeal while presenting a paper titled: “Tax Compliance in 2015 and Beyond: Fiscal Imperatives of Utilisation of Internally Generated Revenue,” at the eighth yearly Lagos State Taxation Stakeholders’ conference.

  According to him, projects must leave the consultant’s table or drawing board and see the light of day by way of implementation as testament to government’s fulfilment of its social contract to the citizenry. 

  However, citizens in turn, will begin to take interest in the government’s call for participation for funding, even more so for the purchase of public goods.

 “In the eyes of citizens, the sustained provision of public goods such as security, health, education, vocational training and other socio-economic needs of  society is a continued referendum of how readily committed the government is in looking after their welfare. This social contract between government and taxpayers does much to enhance compliance cohesion by revenue.

  “Although Nigerian tax laws do not predicate tax compliance on efforts of government in providing and caring for the citizens before they come forward with their taxes as with other climes, the social contract between government and taxpayers bind both sides in the interest of economic prosperity and development. 

  “Both parties must know their rights and exercise same responsibly. For the taxpayers, calls for defunding of badly behaved government agencies that become an economic drag on the common wealth should not sound out of place, as government’s performance also constitutes part of the yardstick for determining continued flow of resources from the hands of the citizens to the public coffers,” he said.

  Dike lamented that the country did not translate periods of momentary economic gains to a consolidation of economic activities to guarantee economic self-sustenance, as currently, “litany of excuses tell the economic state of the nation that has been sent into a state of shock and panic once again, from activities of the petroleum sector.”

  The tax chief pointed out that the nation’s revenue profile today looks bleak such that it has developed different economic austerity gears in the form of scenarios, changes that might impact positively and/or negatively, on the macroeconomic indicators.

  While lauding some state governments, which have over the years, deliberately tinkered with their revenue mix for funding operations thereby insulating selves from oil revenue volatility, to a large extent, he flayed others that have chosen not to establish a marked departure of doing things differently.

 Noting that the present economic situation is a lesson, he said: “This is an opportunity to put the economic ship of the state on an even keel through a rebirth that puts the nation on a sure footing to becoming a strong, vibrant and virile one, which fundamentals are self-reinforcing towards greater economic prosperity for the good of all. The time to act is now.”

  Commending Lagos State government for the conference, he noted that it is acceptable to recognise good taxpayers as well as showcasing what government has been doing with taxpayers’ money entrusted to its care. 

  Dike said the institute was pleased with the across board cuts in taxes and fees for processing of land title documents in Lagos, reiterating that a broader tax base would enhance revenue compared to a narrow tax base.

  To this end, he called for the integration of the informal sector, referred to as informal economy or in tax parlance “the-hard-to-tax-group,” which is the part of the economy that is not taxed, monitored or included in any National Gross Product. 

  “The self-employed that belongs to the informal sector are outside the formal economy and generally are not on anyone’s payroll. We understand that tax authorities are facing numerous challenges in taxing the informal sector and its size is growing day by day.

  “We therefore, encourage the state’s revenue service to develop strategies on how to integrate the informal sector into the tax system to improve tax revenue generation from the sector and also how to meet their specific needs as a means of encouraging compliance,” he added.