THE BANE OF MULTIPLE TAXATION
There is urgent need for a comprehensive tax reform
All relevant statistics point to the fact that the number of taxpayers in Nigeria, relative to the size of the economy, is one of the lowest in the world. Yet, in a country where government is alive to its responsibility by providing the basic needs for its citizens and maintaining the existing infrastructure, taxes are obligatory levies. Indeed, the socio-political and economic development of any country depends on the amount of revenue that is generated for the provision of infrastructure. And one way to generate such needed revenue is through a well-structured tax system. But that is not the case in Nigeria where citizens and corporate bodies are made to pay all kinds of levies without commensurate return in governance.
Before his election in 2015, President Muhammadu Buhari had promised to tackle multiple taxation. Regrettably, seven years in the saddle, the president is still lamenting that the nation’s current multiple and overlapping tax system is inefficient and creates uncertainty and instability. “Multiplicity of tax administration is as undesirable as multiplicity of taxes; it creates uncertainty and instability; and above all, it is inefficient,” said the president who last week expressed concerns that the current tax system is characterised by fragmented administration, multiple and sometimes, overlapping taxes. “In most tax-efficient nations, tax administrative processes and practices are harmonised within a single system.”
At a time when the business environment is toxic and organisations are gasping for breath, addressing the issue of multiple taxation has not become rather urgent. On many occasions in recent years, the improved tax haul is a product of a multiple tax systems which are executed at the local, state, and federal levels directly by government officials or by proxy through contractors. From the telecommunications, manufacturing, services, and even the informal sectors of the economy, the issue of multiple taxation reverberates. Yet, a situation where businesses and individuals pay taxes to different agencies and layers of government under different guises over the same revenue item is a serious disincentive to ease of doing business which the current administration has championed.
What is required at this time is synergy between and among tax authorities at all levels. The Joint Tax Board (JTB) must urgently rise to the occasion and tame this monster. The federal tax reform initiatives need to resonate at the sub-national level with a view to checking abuses and overburdening of taxpayers. While the passage of Consolidated State Revenue Codes by states to address multiplicity of taxes is welcome, implementation is also key. The proliferation of private contractors/consultants for same revenue items must be checked just as weak collaboration between state and local governments on joint collection requires urgent attention.
For sure, we stand for improving the revenue generating capacity of government to undertake socially desirable activities that will translate to economic growth in real output and per capita basis. Tax revenues are essential for governments at all levels to maintain fiscal sustainability given the boom-and-bust cycles the Nigerian economy experiences due to the volatility of crude oil prices. But while the federal government and the 36 states are planning to grow the tax base, it is also important for the authorities to understand the danger of multiple taxation to the economy. The preoccupation should be to create the enabling environment that helps entrepreneurs to expand their activities for wealth and employment prospects for the teeming population.
What is most required, as the country struggles to reposition the economy, is a comprehensive tax reform policy and a serious campaign to bring more Nigerians into the tax net. While taxes are designed to generate revenue to help the government, multiple taxation kills or stunt businesses which provide a boost to the economy.
