Payment of taxes by formal and informal sectors has rarely elicited controversy in Enugu State until the current administration reviewed the rates and bolstered enforcement to enhance revenue for state coffers. But the telling effects on businesses and residents are reeling, LAWRENCE NJOKU reports.

At every small gathering of residents of Enugu state, the issue of taxation now takes centre stage of discussions. While some disclose how they have been manoeuvring the officials, others lament their difficulties in meeting the obligation and as such have been irregular in their places of business. Truth is that past administrations had paid little attention to tax payments to run their government, therefore, evasion was common.

But Governor Peter Mbah has from onset declared his readiness to improve revenue earnings of the state. In fact, right from his campaigns to winning the election and swearing in last year, he talked about improving the state’s Gross Domestic Product (GDP).

While presenting his N521.5 billion budget for 2024 fiscal year, Mbah had stated that about 80 per cent of the budget would be funded from the Internally Generated Revenue (IGR) and therefore urged residents to pay their tax.

In order to ensure that the government achieved the objectives, revenue agents of various magnitudes that lined up the streets of the state were sacked in favour of an e-ticketing scheme for collection of consolidated taxes and levies.

Conveying the decision for the initiative to the residents in a memo last year, Chairman of the state Board of Internal Revenue Service, Ekene Nnamani, noted that the consolidation was in liaison with the Ministry of Trade, Investment and Industry, Local governments and the Internal Revenue Service.

He stated that henceforth, an “annual amount of N18,000 covering presumptive tax, renewal of Business premises and LGA levy for all street shops, artisans and other businesses in the informal sector shall be paid through-ticketing”.

Nnamani, however, added that the amount did not cover Enugu State Waste Management Authority (ESWAMA) sanitation bill, stressing that a separate bill shall be served towards its payment.

Those in the transport sector, like the commercial motorcycles, were billed N200 daily while the tricycle operators now pay N400 daily from N150. The Wheelbarrow and Truck pushers as well as those who do not have shops are to pay N200 daily.

Government also stated that going forward, it would introduce the Purchase (consumption) tax for all hotel services in the state, for a fee of five per cent. It stated that customers are to pay five per cent purchase tax on all services rendered by any hotel such as accommodation, hall, drinks, foods, laundry and other hotel service, while media operators would get the additional responsibility to pay 10 per cent of whatever advert they generated to the government. It also announced its intention to introduce community tax later in the year for the state’s rural dwellers.

To ensure that no tax is lost, in November last year, the government through the Board of Internal Revenue announced a five year tax audit exercise (2017 – 2022) for companies in the state. The exercise was billed to cover the PAYE, Withholding tax, purchase tax, land use charge and other fees due in the state in accordance with section 47 (4) and 48 (4) of Personnel Income Tax Act (PITA).

Late last month, the government had begun enforcement on the audit exercise it carried out with demands on companies for payments based on what it termed “best of judgment assessment”.

In some of the demand notices spotted by The Guardian, those found guilty by the audit exercise were given seven days “from date of receipt of this demand notice to pay”.

It also stated that each offending company had “right to object within 30 days from date of service of this notice”, adding that, “your objection should state precisely the grounds of objection in accordance with section 58 of PITA”

The manager in one of the eateries in Enugu urban, Geoffrey Ibe, who was indicted by the audit exercise and is billed to pay over N7 million for allegedly defaulting in withholding tax on director’s fees, PAYE, land use charge, purchase tax and non filing of return stated that “this new wave of tax demand on residents and businesses is disturbing and will affect businesses if not checked”.

A hotel operator in New Haven, had shown The Guardian a copy of the Consolidated Annual Demand notice issued to him for 2024, signed by the Chairman of State Revenue Service, asking him to pay over N700,000 as land use charge, Ministry of Trade, Investment and Industry tariff; Tourism board; Gaming Commission and state Structures for Signage and Advertisement.

It is not only in the hospitality sector. Only recently, a rights group, Civil Rights Realisation & Advancement Network (CRRAN), had petitioned the Chief Justice of Nigeria (CJN), Justice Olukayode Ariwoola, to call the Chief Judge of Enugu State, Justice Raymond Ozoemena to order, alleging he was attempting to limit access to justice in the state by demanding evidence of payment of tax clearance for all court processes to be filed in Enugu Court.

CRRAN President, Olu Omotayo, had stated that “whatever directive given by the Chief Judge cannot take away the right of audience of lawyers under the legal practitioners act”, and urged the CJN to direct the state Chief Judge to immediately withdraw the directive, which he noted “is not only illegal but also unlawful”.

Some businesses in the state were sealed by officials enforcing tax compliance. These were markets such as Afia nine; Timber market; Kenyetta; Main market and Ogige market in Nsukka among others. They had been shut on account of nonpayment of the taxes.

When officials of the State Internal Revenue Service sealed the Ogige market last Tuesday, the traders had alleged that it was due to their reluctance to pay N21,000 tax approved by the government against the N3000 they were paying annually before now. They had hinged on the high cost of living as well as heavy tax burden on them as responsible for the non-payment as they appealed to the government to review the order.

Perturbed by the complaints trailing the new tax order, a non-governmental organisation, Enugu State Tax Reform Team, recently appealed to the state government to review its newly introduced tax on the traders. They stressed that it has added to their hardship and burden.

Leader of the Tax Reform Team in the state, Virginia Obianyo, stated after visits to some markets in Ninth Mile, Ugwuoba, Agbani, Aninri, Oji River, and Udi among others, that the group would like to engage the government on the development.

While stressing that the traders were obliged to pay tax to the government, she added that the government should consider the ability of the traders to pay, explaining that a townhall meeting could have sufficed before enforcement and collection of the taxes.

“What we are saying is that asking everyone to pay the same amount means that the poor will be poorer and rich, richer. There should be proper assessment to know who is qualified to pay what. The essence of taxation is to address the inequality in the society and not to add to the burden of those who have not. The government wants tax because it wants to bring development to the state, which of course is good but let it be based on people’s ability to pay,” she said.

Obianyo had at another forum with market heads and revenue officers drawn from some local government councils in the state to mediate and harmonise the tax system in the state, insisting that multiple taxation in the state “is alarming and without considering the removal of fuel subsidy”.

At a one sensitisation called by the Civil Resource Documentation and Development Centre (CIRDOC) in collaboration with CISLAC Enugu State Amalgamated Traders Association Ninth branch appealed to the state government to review and reduce its taxes on the traders to ensure that it does not worsen hardship they are currently experiencing due to poor sales.

The traders through their Chairman, Peter Agu stated that they are not against the payment of taxes, explaining that their appeal was based on current economic realities that have affected sales.

“We were paying N5,200 a year for all these things. They have consolidated and now asked us to pay N21,000 flat, irrespective of what you have in the shop. They are telling us to engage in e-ticket and if you have three shops, you will pay for the three shops. We are not against the payment of tax but let it come with a human face,” he stated.

The Chairman of the Ugwuoba Cattle Market, Abubakar Yusuf, called on the government to not only curtail multiple taxation on the cattle suppliers but to equally reduce the tax imposed on cattle suppliers, stressing that the high taxation has caused suppliers to move to other southeastern markets.

“The complaints we heard from our suppliers is that there is multiple taxation from Obollafor to Ugwuoba. They are pleading that the multiple taxation should be taken away, that the burden is so much on them. While on the part of the buyers, we have competitors from other states and what they are paying is far less than what Enugu state government said we should pay. So, most of the suppliers are running to other states and are no longer offloading their cattle in Ugwuoba because of high taxes. So we are saying we are ready to pay tax but let the government reduce it,” he stated.

Estate Developers and Plaza Owners are also faced with land use charges, withholding tax among others, just as the government has reviewed upwards charges on land matters.

Chairman of the State Internal Revenue Service, Ekene Nnamani had denied that the government’s new taxation was burdensome, stressing that the government was mindful of the economic situation of the country in imposing its taxes and decided to consolidate the payment.

“There has never been a time we have imposed heavy taxes on the citizens because we are mindful of the economic situation of the country. What we are charging in the markets is N21,000 per year. It is modest and covers local government levies, business premises, personal income and what have you. The moment you pay, nobody can come to you from anywhere again to demand another payment. It can be paid on installment.

“Everybody has to contribute to the development of the state. When you waive taxes, you waive development. There is no way we can develop the state without those who will use these facilities paying. We will get to a point where you cannot access government facilities without evidence of tax payment. It is compulsory in any society,” he stated.

Nnamani stated that the government applied presumptive mode of taxation for the informal sector due to lack of records for assessment, adding however, that it should be appreciated by those concerned.

“Shops owners are paying N21,000 and nothing more in a year. Keke operators pay only N400 each day they do their business. It takes care of their union fees, MOT, Eswama, local government and once you pay, you can run from one end of the state to another without hindrance. It was not so before now. So the complaints are not necessarily based on developments the government is bringing to the state”, Nnamani had stated during an interview recently.”

A Tax Consultant, Dave Obigwe, however, told The Guardian that the fuss over the renewed vigour by government to collect taxes is because “Enugu residents are not used to paying tax”.

“Every society runs on tax paid by her citizens. It is different in Nigeria and other states here because the government has continued to fail in her responsibility. Any day the present government in Enugu fails in utilising what it is taxing people, nobody will pay again. That is the fact. As much as we advocate that people should pay, they are however expected to pay according to their ability at all times. So a proper record should be kept to enhance right assessment.” he noted.