For the
nation’s tax system to contribute meaningfully to the growth of the gross
domestic product (GDP), practitioners have stressed the need for government to
expand the tax base and strengthen intelligence framework through appropriate
synchronization between the Federal
Inland Revenue Services (FIRS) and the Corporate
Affairs Commission (CAC). These were
the submissions of experts that gathered at the KPMG’s Tax Breakfast Meeting held in Lagos.
Taxes are
what governments at all levels use in paying their workers’ salaries, support common
resource agencies like Police, Military and other paramilitary agencies as well
as use in providing infrastructure, such as roads, schools, hospitals, railway
and a host of many others.
But where a majority of the citizens continue to default, government is unable to fulfill these obligations, which compound economic woes especially in a recessed economy like Nigeria, where many states are unable to pay salaries for months, while existing infrastructure are dilapidated and begging for overhaul.
Indeed, the
stakeholders argued that if government deepened intelligence gathering, with
proper linkage between FIRS and CAC, it would bring more people into the
system, which would ultimately help achieve the 2017 budget of growth and
recovery. Besides, they added that government must maintain good governance
practice and become more accountable to boost compliance to tax obligations.
For instance, a Partner Tax, Regulations and People Services, KPMG, Adewale Ajayi, said what is expedient
at this time is to broaden the tax base with good synergy between FIRS and CAC
and not necessarily increasing it.
According to
him, many companies that registered with the CAC are not fulfilling their tax
mandate. Ajayi, who lamented the current tax to GDP ratio, put at three per
cent, explained that such collaboration would help provide the details of these
firms. Furthermore, he urged government to make tax management seamless in such
that when a company registers as a corporate body in Nigeria, it will
automatically have a tax number.
He said: “The current tax to GDP ratio is just about three per cent.
It does not compete favourably with the rest of Africa. The average for the
countries is about 14 percent, so we still have a long way to go. The problem
we have in Nigeria is that people are not oblige or they do not feel it is
necessary to pay taxes because they have provided roads, infrastructure, they
have provided light for themselves, so they are not seeing any bases to pay
tax. Government has to implement good governance to encourage people to come
forward and pay taxes willingly. For us to be able to increase longevity, first
thing is broadening the tax rate, again, there has to be good governance,
people will always pay tax when they see where the bulk of their money is
going.”
The
Executive Director, Finance, Standard Chartered Bank, Yemi Owolabi, stressed the need to improve tax education and show
dynamism in reporting tax disputes in Nigeria. She said: “There are
people that have carried out business for decades in Nigeria without filing any
returns. We need to make the tax environment competitive. Soaking the few
tax payers would not broaden the tax system.”
She added
that agency banking would help in the inclusion of the informal sector in
deepening the tax base. The Partner and Head Tax Regulatory and People Services
of the firm, Wole Obayomi, argued
that tax administration in Nigeria is in dire need of reform. According to
him, government must pursue vigorously a tax reform policy that would increase
tax contribution to GDP and make it more competitive when compared with other
emerging markets.
“There
must be a holistic value added tax reform in Nigeria. A taxpayer should not pay
more tax than required while the collector must not collect more than
stipulated. There is need to broaden the tax space in Nigeria,” he added. (Guardian)
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