The necessary step on taxation
This step is within the context of the Common Reporting Standard (CRS) programme agreed by several countries to enable them exchange information on the assets of high net-worth citizens and enforce tax compliance.
On the face of it, every effort of constituted authority to enforce just and fair taxation laws cannot be faulted.
The proviso, however, is that this must be done subject to the inviolability of the rights of citizens to privacy in their personal and business lives on the one hand and the bank-client business confidentiality on the other.
Furthermore, even as the banks are pressed into service to achieve the objective, Nigerians hope that the banks are themselves tax-compliant.
It is understandable that government, here and in many other jurisdictions, need to resort to extraordinary measures to compel people to pay tax at all, or to pay the appropriate amount. But let it be known that the fact that government has to resort to exceptional measures on tax speaks volume of the people’s attitude to what should be a given citizen’s obligation.
Hardly anyone, especially in this part of the world, wants to hand over hard-earned income to authorities that, in many cases are peopled by crooked politicians and wasteful public servants.
Nevertheless, it is most desirable to pay tax; it is a constitutional obligation, a civic responsibility and a moral duty. ‘Tax morality’ implies that, to the extent that a citizen enjoys, and expects more of, the social services provided by constituted authorities, he or she should pay something toward such services. Indeed, it is such payment that accords the right to complain if not satisfied.
In a functional representative democracy, paying tax is a crucial element that empowers the citizens to demand accountability from their representatives in government. The 1999 Constitution of Nigeria (as amended) stipulates in Section 24 (f) that it shall be the duty of every citizen to ‘declare his income honestly to appropriate and lawful agencies, and pay his tax promptly.’
But in return, government is obligated to fulfill the fundamental objectives and directive principles of state policy spelt out in Chapter II of the document.
Most noteworthy in this respect is Section 16 (2) (b) that ‘the state shall direct its policy towards ensuring that the material resources of the nation are harnessed and distributed as best as possible to serve the common good.’ So, taxation must come with not only representation but with service.
It is trite to say that government needs the citizen’s tax to fund its activities and development projects that, by all reasonable expectation, serve the common good. Everyone has a civic duty therefore to pay his tax. It is unpardonable that the very rich who make more out of the system, either by honest or by crooked means, are the tax defaulters and tax dodgers who employ various means, some legal, some not, to achieve their unpatriotic objective.
Besides, the very rich are well connected to often, in acts of corruption, negotiate down their tax liabilities. There is every reason to go after such persons as well as corporate bodies.
Corporate tax fraud in the forms of avoidance, underpayment, the underpricing and transferred pricing of products and services, and many other dishonest methods, denies governments of huge revenue. These must be aggressively pursued and stopped. It is clear from Federal Inland Revenue Service (FIRS) records that so much money is lost through these leakages.
FIRS’ chairman, Babatunde Fowler, said recently at an FIRS stakeholders’ meeting that in 2017, the tax agency generated N4 trillion into government coffers – N700 billion more than in the preceding year. In comparison, oil revenue was, according to him, N1.52 trillion in 2017 and N1.16 trillion in 2016. This is to say that tax revenue constituted about 54.8 per cent of the N7.3 trillion 2017 federal budget. This is commendable.
Finance Minister Kemi Adeosun, is reported to complain that Nigeria’s tax to gross domestic product ration is currently six per cent and government aims for 15 per cent. It is good to aim high but it is important to note that such fundamentals as enable efficient and effective tax payment in some other jurisdictions are lacking here in Nigeria.
Most notable of these is unemployment and disguised employment in the land. There are many Nigerians who simply cannot pay tax because they do not earn an income at all, or do not earn what can honestly amount to taxable income.
The multitude of unemployed citizens and those in ‘disguised unemployment’ who merely eke out a living from day to day belong in this class. Where the ideas on tax drive come from, employment is ever the highest concern on the mind of government because of its productivity and tax benefits. A man must be engaged in gainful, productive employment to be able to meet his tax obligation.
It is also easier to make people pay tax where there is visible evidence of judicious use of their money. It is regrettable to say first, that in matters of money, the people have a deep distrust of their governments. Secondly, too many citizens single-handedly provide just about every social service need – affordable housing, steady power, potable water, good roads and efficient and safe transportation system, even garbage disposal – which they should reasonably expect from responsible governments.
The money that should have been paid as tax to government is used to pay for these and more. On the other hand, many public officials steal mind-boggling sums from the public purse; and what they don’t steal they waste on lavish lifestyle and to the envy of long-suffering citizens too. These acts constitute a disincentive to the payment of tax.
Even as the tax authorities carry out their mandate, it is important to caution against overzealousness that leads to multiple taxes. This has been a recurrent complaint by persons and businesses.
The enthusiasm to rake in more money for the government should not lead to additional layers of tax that discourage the entrepreneurial spirit of Nigerians and others willing to self-employ.
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