By Chris Egbuna
The changing dynamics of fiscal governance has revealed untapped wealth-creating opportunities among the states as they battle acute revenue shortage. Anambra State has blazed a trail for revenue generation through its unique Grassroots Tax Awareness Campaign introduced in 2018. The tax awareness initiative is unique and ushers a paradigm shift in curing critical revenue deficiencies. The uniqueness is in its community-based approach, which penetrates the grassroots and offers the people “ownership” of the initiative. The scheme’s acceptance hinges on displacing the hitherto crude approach to revenue collection: It has ‘sacked’ the ‘red-eyed government’ officials who go after revenue collection the way of antelope hunting.
Over the years, Anambra was notorious for its raw approach to revenue collection. Being more of a business and commercial environment, revenue collection was largely unconventional: In the urban areas, markets, roads and streets, fierce-looking revenue officials confronted residents and visitors demanding proof of payments of taxes and levies. At the busy Niger Bridgehead, Onitsha, revenue officials mounted roadblocks to demand tax and levies from motorists and travellers entering the state through Delta.
Often, the officials engaged in extortion, intimidation, physical assault and confiscating of wares. Motorists had their vehicles impounded for not carrying certain permits or showing evidence of payment of some levies. In some cases, the officials insisted on payment of the same levies that had been done in other local governments, even with proof. This unwholesome practice scares investors who are confronted with endless lists of licences, levies and permits. These include radio licence, mid-year paper, unified clearance, consolidated certificate and vehicle road tax. Some officials also use the exercise to settle political scores.
According to the government, many business activities, especially those in the non-formal sector, are not in the tax net. These include transporters, barbing shop operators, mechanics, vulcanizers, hairdressers, fashion designers, traders, commercial motorcycle operators (“Okada”), street hawkers, and other micro, small enterprises.
Outlining the challenges of taxation relating to the informal sector, the chairman/chief executive of AIRS, Dr. David Nzekwu, revealed that only 7,150 of the estimated 1.2 million people trading in the state show tax compliance via Direct Tax. Aside from ignorance and lack of adequate education, Nzekwu identified not keeping proper records by most businesses operating in the informal sector as the biggest challenge.
“Most of them cannot keep simple records of their business activities. They do not know that the proprietor is a separate entity from the business, and that he can only pay himself salaries from profits,” Nzekwu said.
Under the awareness campaign, the state has created an avenue for effective capturing of taxpayers in both formal and informal sectors via Anambra Social Service Identity Number (ANSSID). This is a unique identification number for every transaction with the state government. Findings showed that about 400,000 taxpayers were captured as of December 2020. Community revenue officers (CROs) have been charged to effectively relate with taxpayers across the 181 communities.
At each forum, experts explain, in the local dialect where necessary, the benefits of voluntary tax compliance and what the people stand to benefit. Prominent persons like traditional rulers, religious leaders, heads of trade and market associations and the organized labour are involved.
At a higher level, stakeholders in tax administration, civil societies and media engage in road shows, visitation and engagement of people across the 21 local government areas. The events are organized to intimate the people about complying with various tax requirements, especially the statutory filing of tax returns. The Anambra Revenue Stamps, ANSSID number, Withholding Tax, Capital Gain Tax, Pay-As-You-Earn (PAYE), and Direct Assessment are also discussed.
To add fillip to the GATAWAC drive, AIRS, in partnership with Chartered Institute of Taxation of Nigeria (CITN) and Federal Inland Revenue Service, earlier in the year, embarked on a one-week public enlightenment campaign, “Anambra 2020 Tax Awareness Week,” with the theme “Voluntary Compliance to Tax Payment.”
Speaking at the occasion, the president of CITN, Dame Gladys Simplice, explained that tax was the civic responsibility of every Nigerian to comply with, backed by law. She said, “Whatever we are enjoying today is provided by government. Have you asked yourself how the roads you’re driving on were constructed? The government was able to carry on those projects through tax.”
The ultimate objective of the grassroots awareness campaign is rapid economic development of the state. Mrs. Simplice, said. “We have been going to the states; we just returned from Anambra recently. Every state now understands that there is no more oil money.
“Oil money is drying up. There is increased awareness that oil money is no more there to solve our financial problems. We have to look inwards, and the states are doing this. Their internally generated revenue (IGR) is increasing tremendously. This is because they are becoming more creative and looking for alternative means of earning revenue to meet their growing needs.
“The beauty of it is that people are now talking about taxation and those in the micro, small and medium enterprise sector, the informal sector, are getting educated. The MSMEs are the engine of the economy in most developing countries and we need to encourage them to become formal by growing.
• Egbuna, developmental economist, writes from Nnewi