In a desperate move to generate additional revenues, the Federal Government is reported to be considering introducing more taxes, tariffs and levies next year. Consequently, it has asked Nigerians and companies to brace up for new tariffs and levies. The plan, it says, is part of amendments recommended in the draft 2021 Finance Bill currently before the National Assembly.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this recently at a public hearing on the bill organised by the House of Representatives Committee on Finance in Abuja.                                

President Muhammadu Buhari had last December signed into law the 2020 Finance Act. But the proposed new amendment, according to the Finance Minister, is a holistic reform that will cover wide range areas of domestic revenue mobilisation, tax administration, international taxation in financial sector and tax equity reforms. Though government says the overall aim is to improve public financial management, enhance transparency and accountability, the essence is to generate more revenues through taxation at all levels of government. According to some provisions of the draft bill, it seeks to amend the Capital Gains Tax Act with a five per cent tax imposed on shares’ disposal transactions where gains exceed N500 million in a financial year. It also seeks heavy tax on gaming, lottery and gambling companies within corporate tax net, as well as additional taxes on oil and gas companies’ dividends. The amendments will also see a significant increase in Company Income tax, Personal Income Tax, Stamp Duty, Value Added Tax (VAT), Insurance Police Trust Fund, Tertiary Education Act, and the Fiscal Responsibility Act. Currently, there are no tax provisions for these agencies.                            

But in the new proposed bill, the Federal Inland Revenue Service (FIRS) will be empowered to collect Nigeria Police Trust Fund levy and sanction non-compliant banks that fail to deliver quarterly returns and investigate tax evasion. Also, a 5-year imprisonment and N5 million on conviction await tax officials who fail to remit taxes, levies raised or received by them into government’s designated accounts without the approval of the National Assembly.                            

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While we are not opposed to taxes and levies as they constitute sources of government revenue, we are not in support of multiple, heavy and inequitable taxation as is the case in many states of the country. Heavy sanction on tax officials who fail to remit revenue collected into government treasury is a welcome idea. Nigerians have been overtaxed in recent years in form of tariffs and levies at all levels of government even when their purchasing power has declined significantly because of the downturn in the economy. We recognise the present challenges on revenue generation, which is partly due to low crude oil production and the inability of government to leverage on higher prices of crude oil in the international market. However, resorting to higher taxes on the people is not always the best option to generate additional revenues.                  

In difficult times such as this, we expect imaginative approach to exploring other sources of generating revenue outside taxes. Diversification of the economy remains a veritable means of revenue generation. There is need for government to find long-term solutions to revenue shortages rather than the present short-term, quick fix approach to generate revenue. Doing so, as the present administration has done, will be counter-productive. Government should be careful about some of its flip-flop policies that often lead to protests. This has been the case with the recent high tariffs on electricity and cost of prepaid meters. The proposed removal of fuel subsidy early next year is another case that could lead to nationwide protests as being mooted by the Nigeria Labour Congress (NLC).                                      

While taxation is inevitable, our tax system should have human face. Our income tax should be such that will exempt low-income earners. Failure to do that will impact negatively on small businesses. Any law that is anti-people is unacceptable. The welfare of the citizens is one of the primary responsibilities of government. Overtaxing the people and companies is a disincentive to investment. It encourages tax evasion and resort by high-networth individuals to ‘tax havens’ abroad. Many Nigerians feel that government at all levels have not shown transparency in the taxes collected through improved infrastructure  such as road network, education, healthcare and steady power supply. Government should let the people see what their taxes are being used for. Indeed, the planned increase in taxes and tariffs will hurt businesses and worsen the unemployment situation in the country.