As member of the Joint Tax Board (JTB) saddled with the task of achieving the Federal Government’s revenue growth initiative, it was reported recently that the Federal Road Safety Corps (FRSC) arrested 1,750 violators of Road Tax laws across the country.
According to Corps Public Education Officer, Bisi Kazeem, the offenders, who comprised operators of motorcycles and tricycles without number plates, were nabbed in 18 states. He explained that the exercise was pursuant to the earlier statement by the FRSC and JTB to begin a clampdown on tricycles and motorcycles without number plates on October 2.
The FRSC Corps Marshal, Dr Boboye Oyeyemi, after months of sensitization, had said “ it is a criminal offence to ply the road without number plates”, saying whoever does so is avoiding paying road tax to the government.
His words: “It is criminal for you to be driving a vehicle, motorcycle or tricycle without a number plate. And it is tax evasion. Number plates, driver’s licence, all these things are under the Road Tax. If you don’t have number plate, that means you avoided paying tax. And everybody is complaining about the road conditions, everybody is complaining about traffic light, the road markings and so on. If you don’t pay your tax, there is no way government can do all those things.”
A Road Tax, according to Wikipedia, an online dictionary, is a tax which has to be paid on, or included with, a wheeled vehicle (for its owner to be able) to use it on a public road.
But in other climes, Quora.com says road tax has nothing to do with road issue.
“In fact, the correct term for road tax is vehicle tax. You pay vehicle tax because your cars and bikes emit greenhouse gases which pollute the atmosphere. Governments collect these taxes so that they can plant trees and take other measures to reduce the carbon footprints. It also discourages people from buying new vehicles by increasing the costs,” the online platform adds.
It explains: “So, if road tax is not taken for roads then who pays for the road construction. The answer is all of us. Governments use income taxes, value added taxes(VAT), and other service taxes and use a portion of these to fund the construction and maintenance of roads. I’ll give you two examples. Why do only cars and bikes pay the vehicle tax and not pedestrians, hand rickshaw or cycles? Do they not use the road or do they not contribute in wear & tear of it? They do but they don’t pollute the atmosphere. And secondly, do you think all cars and bikes pay the same tax? No. vehicle tax is based on useful life of the vehicle, its engine capacity and carbon emission per kg. If you’ve ever wondered why electric cars have low taxes compared to petrol cars this is the reason behind it.
‘‘In most countries, you only need to pay a lump sum vehicle tax while purchasing it. It covers your vehicle for 10 years. If your car or bike is still in use after 10 years, then you would have to pay extra tax every year. Almost all countries require you to dispose of your vehicle once it is 20 years old. Economics says Roads and highways are the backbone of any country and they cannot just rely on revenues from road tax. Road taxes were envisioned to limit the impact on environment but they don’t seem to be working. The world’s policymakers agreed at the Paris climate-change talks to try to limit greenhouse-gas emissions so global temperatures rise by no more than 2°C from pre-industrial levels of 19th century.
“Governments have tried to get drivers to go for greener vehicles. Some have raised the cost of driving by increasing taxes on petrol and diesel. Others have taxed the ownership of dirty cars by raising their annual registration fees while providing subsidies on purchase of electric cars. Road taxes would become less and less relevant as consumers adoption of electric vehicles increases.”
In its 2020 budget proposal, the Federal Government targets revenue of N8.3155 trillion, which forced the International Monetary Fund (IMF,) to warn that the revenue target in the budget is highly optimistic.
Also a tax expert, Mr Taiwo Oyedele,also noted that“ our thinking around taxation is completely upside down as a country. Nigeria does not seem to understand that you need to be prosperous so that you can pay tax. So, tax does not just fall from heaven. As a government, I should help you make money so that you can pay me tax. Its just common sense. Nigeria has a tax system that does not allow businesses to thrive, whether you are small or big,
“The reason Nigeria cannot make money from tax, and is not a curse, is that it continues to beat up the people at the bottom of the ladder. But they cannot give you what they don’t have. In societies where they think things logically, they focus on the top one per cent who are the rich and big companies and they will get the desired tax result.”
As for the tax burden on businesses in the country, Oyedele stated:
“We pay Company Income Tax (CIT) 30 per ceent, education tax, two per cent whatever is left, we pay withholding tax of 10 per cent. If you add it together, it is more that 40 pr cent already. If you now make a mistake of having a group and you say it’s a holding company, another 30%. Who does that?” he said.
Speaking further, he said: “When you start a business today, there is something called commencement rule. It is supposed to punish you during commencement, so that you pay tax twice. It does not make sense.”