The Tax System & Vision 20:2020 – Will Nigeria arrive early?
With the renewed commitment by the Federal Government to diversify the economy by growing the non-oil tax revenue in order to develop stable and sustainable revenue source to finance developmental projects, the tax system must be re-wired to be more flexible and adaptive to facilitate these aspirations
Nigeria’s archives are littered with series of programmes geared towards social, political and economic transformation of the nation. These programmes have either been poorly implemented, neglected or outrightly abandoned. The magic word for such programmes in the last 15 years is Vision. Thus, Nigeria has had Vision 2000, Vision 2010 and now the latest, Vision 20:2020. The latter is the vision that expects Nigeria to be one of the 20 largest economies in the world, able to consolidate its leadership role in Africa and establish itself as a significant player in the global economic and political arena.
Some key parameters of Vision 20:2020 as set by the Federal Government are as follows:
• Polity: a peaceful, harmonious and a stable democracy
• Macro-economy: a sound, stable, and globally competitive economy with a GDP of not less than $900 billion and a per capita income of not less than $4,000
• Education: modern and vibrant education system which provides opportunity to maximise potential and develop adequate and competent manpower
• Agriculture: a modern technologically enabled agricultural sector that fully exploits the vast agricultural resources of the country, ensures national food security and contributes to foreign exchange earnings
• Manufacturing: a vibrant globally competitive manufacturing sector that contributes significantly to GDP with a manufacturing value added of not less than 40%
• Infrastructure: adequate infrastructure services that support the full mobilisation of all economic sectors
• Health: a health sector that expects and sustains a life expectancy of not less than 70 years and reduces to the barest minimum the burden of infectious and other debilitating diseases
Delivering on these parameters demands significant financial commitment/investment by the Government. Despite the enormous human and natural resources that Nigeria possesses, the frustration at the parlous state of infrastructure and social service delivery systems is manifest in the almost perennial lamentation and agony by young and old, rich and poor, “nothing works in this Nigeria”. And the reason for the apparent failure of governance is the elusive and unknown but ubiquitous scapegoat called the “Nigerian factor”.
Many citizens wonder whether there is any justification for the continuing deduction of taxes on their incomes or payment of other levies/fees when the expected social benefits to which the revenue were to be applied, have remained non-existent or grossly inadequate. In contrast, citizens are riddled with stories of bold-faced corruption and misappropriation of government funds.
Nevertheless, the financial challenge facing government at all levels of the Federation is a reality since the crash in crude oil price and its sustained slump till date. Taxes (in whatever shade or hue) remain the only significant best alternative source of revenue to the government. As a result, socially responsible individual and corporate citizens must not hamstring government by refusing or neglecting or wilfully defaulting to pay due taxes on their income and transactions timeously.
Accordingly, how the tax system is positioned to perform from this year till 2019 will be critical to whether the current administration will be able to answer satisfactorily the following three development questions in relation to Nigeria:
• What has happened to unemployment?
• What has happened to inequality?
• What has happened to poverty?
The challenge for all revenue generating/recovery agencies of government therefore remains how to:
• increasingly drive operational efficiency and eliminate waste
• Increasingly simplify the compliance process and eliminate any extant hassle factors/layers of bureaucracy precluding ease of remittance of taxes
• expand the tax net to include perennial tax defaulters and fringe taxpayers or any other catchment
• resolve the twin burdens of multiple taxation and double taxation on individual and corporate taxpayers howsoever they manifest in the system or framework
• expand access to and usage of electronic platforms such as ITAS (for FIRS) and ASYCUDA (for NCS) and any other electronic platform in use by relevant government agencies.
For instance, in the case of ITAS by FIRS, one of the objectives is to automate and simplify tax compliance process through online submission of tax returns, processing of tax clearance certificates, validation of tax identification numbers, storage of taxpayers information etc. While taxpayers eagerly await the full implementation of ITAS, taxpayers expect that the platform would be upgraded to enhance or enable an automatic electronic credit system for withholding tax to eliminate the present frustration encountered in relation to credits entitlement without supporting certificates and resultant delay in utilisation and direct cashflow impact.
With the renewed commitment by the Federal Government to diversify the economy by growing the non-oil tax revenue in order to develop stable and sustainable revenue source to finance developmental projects, the tax system must be re-wired to be more flexible and adaptive to facilitate these aspirations. As Dick Armey said, “If we are to create tomorrow’s jobs, we cannot remain frozen in time in yesterday’s tax system”.