•Nigerians cry out over multiple taxation, as recession bites harder
By Job Osazuwa
These days, not many Nigerians are happy. Millions are the people groaning over the taxes imposed on them by government, even as the current economic recession continues to traumatise the people.
Taxation by the state and federal government, many have noted, is perhaps government’s attempt to tackle the economic woes in the country, but most citizens contend that government is only imposing obnoxious taxes that will further impoverish them.
Nigerians who spoke with Daily Sun expressed disappointment and described the policy as satanic. They opined that the multiple taxation being imposed on individuals and businesses was another way of exploiting the common man.
On the increase in value added tax (VAT), many stakeholders have criticised the move, arguing that buyers of commodities will directly feel the negative impact, particularly as inflation has already eaten deep into people’s income.
On February 1, 2016, the implementation of 45 per cent increase in electricity tariff across the country began. Indisputably, the news unsettled many Nigerians and it took them months to come to terms with the hike.
Though the Nigerian Electricity Regulatory Commission (NERC) announced repeatedly that the increase in tariff would enhance service delivery and consumer satisfaction, many Nigerians insist they are yet to benefit from the promise.
Last week, chairman of the Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, announced in Abuja that, soon, Nigerians would have to show evidence of tax payment before obtaining international passports. The announcement expectedly triggered bitter reactions from people across the country.
Fowler said: “We did take a position, and l believe it would be implemented in the very near future, that before you get any service from the Immigration Department, renewal of passports, etc, you would have to show that you are a taxpayer. These things are normal all over the world, in an effort to serve Nigerians and Nigeria better.”
Two weeks ago, telecommunication operators sent messages to their subscribers that there would be an increase in data charges with effect from December 1, 2016. They said they were acting in accordance with Nigerian Communications Commission’s directive.
The move caused so much controversy that the directive was suspended days before the implementation was to begin after the Senate waded in.
Nigerians hit FG
A chartered accountant and former chairman, Institute of Chartered Accountants, Lagos Mainland District, Mr. Cyprian Nwuya, told the reporter that, under normal parameters, countries make use of taxes to stabilise the economy,but it was unfortunate that economic theories hardly work in Nigeria principally due to the country’s complex ways of doing things.
He said, “Tax rates, as currently in operation in the country, to me, are more than adequate for any responsible government to use for the good of the people.
“Introducing new taxes is not the solution to take us out of recession because the gene in every Nigerian tends more towards corruption than service to humanity. Our problem is neither in the rates nor in the number of taxes. The problem is that we are not sincere to ourselves. Our leaders choose to be wasteful when it comes to our common inheritance because of selfish interest.
“Nigeria is into recession, not because we are a poor nation or because we are not making enough revenue, but because our leaders decided to be wasteful by promoting corruption in all facets of life.
“If not for corruption and selfish interest, we are not supposed to be importing refined petroleum products today. Can you quantify the foreign exchange wasted through such imports? Take a critical analysis of the cost of governance in the country, is it what it should be, if we are a serious nation?”
However, Nwuya said he was in support of the the FIRS initiative to boost efforts towards widening the tax net, as opposed to increased tax rate.
His recommendation, as a way out of recession, was for policymakers to start seeing the negative economic implications of the actions of Nigerians in and outside government and tackle them with sincerity of purpose.
His words: “It is important to realise that whatever we do now will one way or the other affect our children and children’s children. It is never late to start doing the right things.”
Lending his voice to the debate, a Lagos-based forex expert, Mr. Ayoefe Sule, described the federal government’s new taxes as an insensitive step, because the country has not been fair to its citizens.
“I still don’t understand why government is always after the common man in the street. Devaluation of the naira has more or less reduced the real income of people. Things are very difficult now for Nigerians. Consequently, if the leaders increase VAT, it means people like us will have to spend more,” he said, even though he was not entirely against VAT increase, but, in his view, it was being implemented at the wrong time and it would no way take the country out of recession.
He noted that, “The Federal Government is confused; that is the only reason it can increase VAT at this trying time for citizens. When the people are struggling to feed due to the stark hardship and high cost of living in Nigeria, government should rather think and look into other areas to expand the tax base.
“There are many people across the country who are within the tax net but are not paying tax. Many people that should pay tax are not even captured. Certainly, at a time like this, these are the people that government should focus on. Let those who are not within the tax system be included, and that will automatically mean there should be better tax management but not VAT and other taxes increase.
“Nigerians who have been dutifully paying their taxes should be enjoying a tax holiday or tax reliefs by now. If companies enjoy this privilege too, it enables them to have more resources to stimulate the economy. Government should be more concerned now with how to boost local production and increase food supply to stimulate the economy.”
Sule warned that increasing VAT might end up discouraging Nigerians and companies from paying taxes. He said only about 20 per cent of companies in Nigeria pays VAT at the moment.
An economist, Godday Akpobi, told Daily Sun that more taxes was not the best way to address the situation, submitting that increasing tax during recession would worsen the situation and lead to depression.
His advice to the government was to reduce tax and encourage local production to boost the people’s’ purchasing power.
On his part, an economic analyst, Mr. Onoriode Francis, described the federal government’s plan to increase the cost of data as heartless, since it was access to the Internet that has kept most Nigerians happy, especially in these times when living has become more difficult.
He advised those in authority that this was not the time to add hardship to the already bad situation that has rendered many Nigerians helpless and hopeless.
He said: “Whenever (Nigerians) are bored, angry or frustrated, they fall back to the social media to console themselves by reading news and jokes, chatting with friends and so on.
“If they can no longer afford it, it means nothing is left for them, especially the youths. This can lead to depression and suicides. The youths might start dying of depression.”
The analyst hailed the Senate for directing NCC to suspend the proposed increment even as he pleaded with government at all levels to be sensitive to the plight of the people. He pointed out that it was no longer possible for workers who still collect N18,000 as minimum wage to cope with current economic realities.
“There has been increase in virtually everything, ranging from pump prices of petrol, bank charges, customs duties, increment of VAT as well as driver’s licence and vehicle number plate charges,” he said.
Francis also advised that government should bring more taxpayers into the VAT net. He added that, in the light of global trends, it had become imperative for the Nigerian government to harmonise the country’s VAT rate with what obtains within the ECOWAS region.
Managing director of Global Business Consultations, Lagos, Mr. Ayefele Orimogunje, said he was totally against tax increase. He lamented that the common man had suffered a lot in a country that was blessed with abundant natural resources.
“I don’t have any problem with paying taxes, as a responsible citizen, but what value will I get from government at the end of the day? That is the question. Quality of service has not improved in different areas, yet they ask us to pay more. It is only in this part of the world you pay for services that are not rendered,” he said.
Orimogunje stated that the government move was capable of posing a serious threat to many business owners: “How would an average citizen do business when every avenue to thrive is being threatened? I think the federal government should reconsider its stance on increasing every single tax. We have endured enough, we might begin to revolt when it becomes unbearable, and they are pushing us to that stage.”
Nigerian tax roll hits 13m
Accorcing to Fowler, state tax authorities have added 3,414,496 million new taxpayers to the national tax register in six months, bringing the total number of individual taxpayers in Nigeria to 13.4 million.
He explained that Kano State led the new taxpayer roll with about one million taxpayers (944,376), followed by Lagos with 320,000 new taxpayers. Plateau State is third with 296,910, while Kaduna added 235,812. Zamfara State is fifth on the new taxpayers’ table with 136,773 within the period.
But, Fowler, who is also the chairman of the Joint Tax Board, said in Abuja during the 136th meeting of the board that though the new 3.4 million roll of new taxpayers was good news, it was still a far cry from the tax to the gross domestic product ratio of 30 per cent, which is the average in most developed countries.