Tax defaulters, responsibility and the law

In a complicated federation where fiscal responsibility, civic duty and even corporate citizenship have become part of complex challenges, a report the other day about the closure of premises of tax defaulting businesses in Ibadan, Oyo State capital, by the state government should be understood and not taken as a political witch-hunt.

According to reports, the affected organisations included those involved in oil, farming, book publishing, health-care, bakery, fast-food, public relations, flour-milling and brewing.

Despite various private and public notices and demands, the companies failed to pay the 2017 and 2018 Oyo State’s environmental development levy.

Payment of taxes and levies to a government is a core civic and legal responsibility of all persons (individual and corporate) living and operating within the jurisdiction of the government.

In the case of an individual, he has to be of the age of responsibility (18 years and above in Nigeria) for him to become liable for tax payment.

Payment of tax by persons qualified to do so is therefore not voluntary but compulsory.

Despite the peoples disappointment with governance at all levels, they should be reminded that tax revenue forms a substantial part of financial resources with which governments, all over the world, execute programmes in public interest.

Consequently, without tax revenue, governments will be starved of funds and will not be able to carry out various projects they are associated with.

As a matter of fact, without tax revenue, most governments will become bankrupt, with consequences such as failure of governance.

These are some of the reasons they default in tax payment is not just a critical but also a criminal matter.

In other words, persons who fail to or default in payment of due taxes to the government are unarguably regarded, in the eyes of the law, as offenders.

They are not just against the government but most importantly, the people and the common good.

The reasons are not farfetched: In not making tax payments, notwithstanding the various notices and demands from the government, the companies not only violated the state’s tax laws but also showed total disregard and disrespect to the government and the people.

This should be noted even by the most cynical of citizens.

Besides, tax defaulters contribute to governments’ inability to execute beneficial programmes that require substantial financial investments and settle their financial obligations when they fall due.

Thus, they cause governments to resort to huge borrowings, at very high costs, to cover revenue gaps.

It is also as a consequence of tax defaults that infrastructure that ought to support businesses and social welfare of the people are either not available or the available ones are decaying for lack of adequate maintenance.

And these situations have negative imperatives for ‘ease of doing business’ in countries’ economic growth, development and sustainability pursuits.

It is against the foregoing that tax payment should be encouraged and in the same vein, offenders should not be spared by law enforcement agents.

It is very unfortunate and unacceptable that often in this country, corporate citizens that should show good examples are the ones caught in the web of tax default.

Again, this is why the explanation of Bicci Alli, chairman, Oyo State Board of Internal Revenue (OYBIR) who stated that the action of the state government against the tax defaulting companies was not to disrupt business of corporate organisations should be understood.

According to the chairman, it is the responsibility of government to create an enabling environment for business to thrive.

The Oyo State government’s action should therefore be taken as an enforcement of the laws.

If the companies had reasons for undue delay in remitting taxes or they needed some explanations or negotiation for reduction in the rate, the proper thing they should have done was to formally take the issue up with the appropriate tax authorities or, as a last resort, approach the law courts for intervention.

As this newspaper has repeatedly noted, deliberate and wilful disobedience of the law is uncalled for.

Governments too should know that their disobedience of court orders is irresponsible.

The attitude of the corporate tax defaulters purely signifies lack of good corporate governance, which must not be allowed to contaminate other institutions.

After the shut-down approach as an effective weapon against tax default, Oyo State may decide to go further to prosecute the companies and their officials for tax offences.

If they are convicted, they will not only pay the tax but also the attendant penalties and costs.

It is at this stage that appropriate message would be sent to businesses and, of course, individuals.

However, the point should also be made to governments and leaders at all levels that there should be a concomitant responsibility on their part too, to use tax revenue for the common good.

They should know that their recklessness with public funds has consequences.

And part of such consequences can be complacency, citizens revolt and abdication of civic obligations.

While citizens are duty-bound to pay their fair share of taxes and levies, a government cannot afford to be fiscally irresponsible at this time in a world of openness, which demands transparency and accountability.