How multiple taxation threatens investment in capital market, by operators

Market operators have decried the imposition of multiple taxes and levies by state and local governments, describing it as disincentive for investment in the market.

The operators, who spoke in a chat with The Guardian, described multiple taxation as a ‘hydra- headed monster militating against the growth of the economy, adding that it is already having a multiplier effect on the stock market.

Specifically, the managing director of Highcap Securities Limited, Imafidon Adonri said: “ Multiple taxation is big problem in the capital market. Save for suspension of Contract Stamp and Value Added Tax (VAT), local government and states still harass market operators with all manner of levies and taxes. It is disincentive for investment in the industry.”

Similarly, a senior stockbroker, who spoke on condition of anonymity pointed out that operators pay company income tax, VAT, withholding tax, among others, while at the state level, there are numerous taxes such as business permit for both radio and television. He added that they also pay income tax at the personal level.

He argued that government has not provided the needed infrastructure and amenities to justify this tax system practiced in Nigeria. “Multiple taxation has been a hydra- headed monster militating against the growth of our economy and it also affects the stock market. For instance, as corporate organization, we pay company income tax, vat, withholding tax, among others and at the state level, there are numerous of taxation such as business permit, radio and television (whether you have them in your premises or not) and at personal level your income tax among others.

“It is enumerable and yet there are no infrastructure, no schools, no improved healthcare, no constant electricity, no good roads. What has government done for the citizens?

“Yet aside from the tons of funds raised from taxation, there is money from federation allocation accounts. Where does all this money go? That is why people fight tooth and nail to go into government because once in there, you are made, be it at the legislative level or at the administrative level,” he added.

The Managing Director of Cowry Asset Management Limited, Johnson Chukwu, explained that the company suffered the problem of multiple taxation in the past.

He, however, explained that there seems to have moderated significantly in the immediate past in some states of the federation, particularly as it relates to direct taxes.

“A few years ago, several government agencies or tiers of government levied the same taxes under different guises. For instance same premises used to be double taxed under ‘Tenement Rent’ and ‘Land Use charge’ but have now been harmonised into a single charge.

“It can safely be said that the Joint Tax Board, which is responsible for harmonising taxes in the country has done a relatively good job is reducing incidence of double taxation in some states such as Lagos. The progress made in harmonising taxes is however not even as many states still impose multiple taxes on taxable adults and companies.”

He added that a good number of states have introduced sales tax in addition to federally collected ‘Value Added Tax (VAT)’ thereby imposing double consumption tax on their residents.

At a maiden edition of The Guardian Economic Forum series on Tax, titled: “Unlocking Nigeria’s Tax Revenue Potential for Sustainable development”, held in Lagos recently, the President CITN, Dr. Olateju Somorin, has pointed out that the huge gap between tax collection and the quantum left uncollected year after year must be addressed if the nation must make meaningful and sustainable progress in the face of parlous infrastructure across the country.

“A review of some of the tax laws has become overdue. Moreover, sustainable economic growth cannot be attained with only tax reform, without the review of the obsolete laws and tax rates in consonance with macroeconomic objectives and efficient tax administration machinery.

“Despite growth in terms of GDP, our tax ratio has only managed to record seven per cent, compared to 15.3 per cent for Cote D’Ivoire; 15.4 per cent Benin Republic; 15.8 per cent, Egypt; 18.2 per cent, Cameroun; 20.8 per cent, Ghana; 23.2 per cent, Cape Verde; and 26.9 per cent, South Africa.