Lack of political will, responsible for tax evasion
The absence of political will and commitment, to enforce tax laws has placed undue burden on the country’s oil revenue. Also, failure to review tax legislation and lack of strict adherence to tax policy have been identified as major impediments to effective tax system in the country.
These were the findings at a recent forum organised by Niger Delta Budget Monitoring Group (NDEBUMOG) and sponsored by OXFAM’s country office in Nigeria.It was also noted that the lackadaisical attitude of the three tiers of government in most states, excluding Lagos, to improve on Internally Generated Revenue (IGR), has equally led to the arbitrary exercise of regulatory powers for revenue purposes.
Experts lamented that despite the potentials of taxation as a dynamic tool for sustainable national development, Nigeria’s tax system has been unable to achieve its objectives. They blame it on lack of robust framework to tax the informal sector and high network individuals, thus, limiting the revenue base and creating inequity.
In his presentation titled: ‘The Complexities Of Nigerian Tax System – Federal, States And Local Governments): Imperative For Justice and Harmonization,’ Mr. Akpanobong Umoh identified fragmented database of taxpayers and weak structure for exchange of information by and with tax authorities resulting in revenue leakage, which is a major obstacle in tax system in Nigeria. He also identified insufficient capacity as a major challenge, which has led to the delegation of powers of revenue officials to third parties, thereby creating complications in the tax system.
However, Umoh argued that the judiciary has a critical role in interpreting taxing statutes in the country, saying that tax law is entirely statutory and tax disputes almost always raise issue of statutory interpretation.
His words: “As a rule, tax statutes are interpreted vey strictly. There is no common law of taxation; hence no general principle of law can displace the true meaning and effect of a tax statute, which has been validly passed. As a result, the key issue in tax disputes is whether or not the words of a statute cover the alleged subject of taxation.
“Since process of tax Administration by Relevance Tax Authority revolves around Assessment, Enforcement, Collection and Reporting, it is pertinent to note that there are always disputes between the tax payer and the tax Administrator requiring the adjudication of the Judiciary.”
In his paper titled: ‘Analysing FGN’s Budgetary Stream and Connectors to Taxation,’ Chief Executive Officer of NDEBUMOG, Dr. George-Hill Anthony, noted that fiscal justice must connect tax justice and social equity, adding that such leads to effective service delivery and a good balancing between social accountability and political rights.
On the way forward to a just tax system, Anthony identified: prioritising fair taxation, monitoring extractive revenues, tracking internally generated revenue and seeking justice for victims of unfair taxation. Anthony said there is tax inequality when there is arbitrary issuance of tax waivers to the rich, whilst goods of peasant traders are ceased and offices/shops of low/medium income earners are billed with excessive tax assessment. He recommended the mobilisation of international pressure, through sustained campaigns globally for responsive tax regime as human rights obligations of state parties to United Nations Covenants and Conventions and through peer reviews, among others.
Anthony said: “Seek for Tax Violation and Remediation windows with all tiers of government with appropriate MDAs, carry out advocacy programmes and campaigns to enlighten the citizenry about responsive taxation, demand accountability and effective service delivery to serve as booster for voluntary tax compliance, reform Nigeria’s Tax Justice Platform and make it sustainable beyond the life of Oxfam’s SPP and introduce innovations into the platform.”
In its presentation, delivered by Mr. Chinedu Bassey, Civil Society Legislative Advocacy Centre (CISLAC), called for a clear and equitable tax system in the country at all levels of government, through collaborative partnerships and support.
According to him, part of the anomalies identified in taxation include: tax incentives for the rich against tax burden on the poor (corporate entities against MSMEs), no clear framework on informal sector taxation, unmonitored tax incentives given to companies, and issues around multiple taxation. Bassey noted that tax education was important for confidence building, saying that this would regain the trust of the people.
“Demand for accountability can only come through knowledge and the integration of the budget monitors and the sub-national tax justice platforms will foster adequate monitoring of the tax expenditures.”
In his presentation, a lecturer at the University of Calabar, Dr. Peter Oti, added that Tax education was necessary for citizens to understand the financial resources that government has at its disposal. He noted that Public revenue reporting forms one of the basis for public revenue monitoring, which ensures that revenues were properly managed, thereby supporting citizens engagement with the government on issues of public finance.
Oti urged the Civil Society Groups to ensure that aspiring political office holders clearly understand the Tax Policy and are able to articulate their plans for the tax system to which they will be held accountable.
“This can be done by forming strategic alliances with government on budget formulation and other legislative issues. Government authorities can also work strategically with CSO partners to pursue policy initiative, which may otherwise be undermined or blocked by vested interests. For example, a government considering reallocating funds from underperforming public enterprises to its basic education budget could enlist the support of CSOs to present some data to support its case
“CSOs can serve as an important asset in monitoring the implementation of government budgets, particularly when decentralized units are implementing projects in remote parts of a country. In this regard, CSOs can serve as whistleblowers to alert government officials of any improper practices.”
While speaking on the topic: ‘Influencing for Impact’, Programme Officer, Public Private Sector Transparency and Accountability Officer, Oxfam International, Mr. Henry Ushie, identified the need for a change in tax practices.As parts of the intervention strategies, he canvassed public campaigns, media, coalition building and lobby as major tools. He noted that there was need to engage directly with decision makers to promote change at private meetings, phone calls, group meetings and petitions, among others.
He said: “How do we improve on the way we collect taxes from people, does the government observe best practice and respect human rights, do they respects rights within their own space? What we see is that governments go into the street and bully people, using consultants. The tax policy has said that the use of consultants to collect tax is prohibited but we still see local government using touts going around to collect tax, we want to see how we can use all these influencing strategies to appeal to the government and their agencies to be more humane when they go out to collect taxes.
The event witnessed stakeholders from civil society organisations, private sector, academia, community groups, shadow budget platforms and members of Nigeria’s Tax Justice Platforms and related groups.In the communiqué at the event, participant observed absence of political will to enforce Nigeria’s National Tax Policy, multiplicity of taxes in all the states, confusion and collection-conflicts over tax jurisdictions, use of touts for tax collection as some problems mitigating against effective tax administration.
As part of efforts to curtail these irregularities, it was recommended that more tax awareness and education should be encouraged, as well as a review and adoption of key policy interventions and tax reform strategies implemented by the government of Lagos to improve domestic (resource) mobilization in various states.
The communiqué also stressed the “Need to streamline and outline statutory taxes for informal sectors through appropriate tax collection entities at various levels to address issues of multiple taxation and tax-borders and encroachment within sub national collection boundaries.
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