Taxation is one of the major fiscal policies used by government at all levels to achieve economic stability. It is also expedient in the financing of capital expenditure. This is particularly true of the Federal Government. Thus, various taxes are levied upon the income, wealth or gain of individuals, businesses and families by the government for the benefit of the general public. Tax is, therefore, a financial charge or other levy imposed upon the individual or a corporate body, by government, such that failure to pay is punishable by law.
We believe that the country’s complex tax structure, which is often exploited by some states and local governments, has become a disincentive to business growth and profitability. We also believe that the relevant tax laws need urgent review or outright repeal
Taxation is, therefore, not a voluntary payment or donation but an enforced contribution exacted, pursuant to legislative authority. In modern taxation system, taxes paid are used for myriads of functions such as expenditure on public order, protection of lives and property, and, economic infrastructure, such as roads, public works, social engineering and the operation of the government itself.
The taxes collected by the government emanate from varying sources, ranging from personal income tax, company income tax, capital gain tax, property tax, education and value added tax, among others. Governments at the federal, state and local levels, in attempts to raise revenue and enhance the economic development of the country, often subject adult individuals and firms to double and multiple taxation, which they are compulsorily made to pay, irrespective of the sector they represent. Defaulters are, in tow, made to face the wrath of the law.
A survey carried out by the Manufacturers Association of Nigeria and the Centre for International Private Enterprise identified multiple taxation as the bane of business growth in the country. Multiple taxation also has negative effects on private sector growth and on businesses in the country.
Whichever way it is looked at, double or multiple taxation is evil and illegal. Such collections stifle the business environment. Illegal collection of sundry levies and taxes by local councils across the states, too, fall within this category and are condemnable. They are also major drawbacks to sustainable economic growth, as the burdens which multiple taxation places on companies are unbearable, just as it contributes to inflation and makes it difficult for companies across the country to run their operations profitably.
There is no doubt that, pressed by the increasing need for rapid development in the states in the face of inadequate revenue, many state and local governments have resorted to illegal or ‘extra-legal’ multiple taxation to shore up their revenue base and, in the process, endanger business operations within the states and the local governments.
We believe that Nigeria’s complex tax structure, which is often exploited by some states and local governments, has become a disincentive to business growth and profitability. We also believe that the relevant tax laws need urgent review or outright repeal. In the eyes of the international community, the dangers of double and multiple taxation are grave and Nigeria must not be seen to be drawing back the gains it made recently in the ease of doing business index.
However, stopping double and multiple taxation requires more than words. A concrete action is urgently needed. This must start with a sound tax policy administration, which must form an integral part of good economic management at the three levels of governance in the country.
The Federal Government wants to ensure that more people pay and that companies pay their taxes, too. Unfortunately, the multiple taxation scenario is scaring companies and businessmen away from complying with the new government’s tax approach. The government must, therefore, mandate the Joint Tax Board and the relevant authorities at the Federal and state levels to take immediate steps to stop double and multiple taxation in the country, especially because of its unsavoury consequences on the economy. The Board must also harmonise all the taxes and levies that individuals and businesses should pay across the country, once and
for all.
The JTB and the relevant authorities must come out with a comprehensive tax reform that will streamline all tax regimes so that the country will be able to move closer to a single tax system. Failure to do this will hamper government’s efforts to grow the economy and make the business environment unattractive.
Nigeria’s tax system must be internationally competitive for foreign investors to be willing to invest in the economy. And, as an emerging economy and Africa’s largest economy, Nigeria must use its tax regime to attract investors and take advantage of the financial leverages that come with it. But, for this to take place, the Federal Government must eliminate all forms of double and multiple taxation in the
country.
Since any nation’s tax system determines, to a great extent, the level of business interest and cash flow into the economy, necessary steps must be put in place to stop double and multiple taxation in Nigeria. Unfortunately, too, it is mainly salaried workers and large corporate organisations that bear the tax burden in the country. Self-employed Nigerians hardly pay tax, whether personal or corporate. This should not be so and it must be looked into. With a fair tax regime and public education, such self-employed people, the Small and Medium Scale Enterprises and those in the informal sector of the economy, will be willing to pay their taxes.
