TAX AS A PREREQUISITE FOR NATIONAL DEVELOPMENT

AYUB O. MOHAMMED argues that tax is a necessary obligation

Anywhere in the world, tax plays a vital role in revenue generation for the government. It is an avenue through which the government at all tiers employ to generate fund for carrying out intended projects as well as other relative plans. This method of legally obtaining monies from the people has over the years become an integral aspect in the funding of governmental activities for the benefit of their subjects.

Developed and developing countries across the globe have propounded channels through which tax collection will be taken from the populace – e.g. the United States of America generates its revenue from contributions of individual taxpayers, small businesses, and corporations. An additional source of their revenue generation consists of excise tax, estate tax, and other fees.

Basically, there are three aspects of a solid tax system. These are the policies, the laws governing it and the system of administering these laws. The policies set out the principles, guidelines and objectives to be accomplished. On the other hand, the governing legislations states the liability of the tax payer, the rate to pay, the base and penalties for defaulters while the administration of tax is the establishment of a good tax system and its implementation through the activities of the authorities obliged to access, collect and account for the tax revenue.

Regardless, tax has come across various criticisms. Do you know why? This is due to lack of populace enlightenment and its inexhaustible meaning. Tax role-play has been in existence before contemporary minds leaving rooms for diverse views and debates. However, I will juxtapose definitions, purpose and importance of tax as a national discuss.

Foremost, tax is a compulsory contribution to state revenue, levied by the government on workers or taxable persons or added to the cost of goods, services, and transactions. That is, it is an amount of money an individual or individual person is required to pay to the government in accordance to their income or value of property. In return, it is used by the government to execute social amenities or infrastructure.

In Nigeria, the administration and collection of tax has its roots from our colonial masters. Although some communities in the country had their ways of levying tax on its members before the involvement of Britain i.e. Ishakole was commonly used amongst the Yorubas, Jangali was a form of tax imposed on cattle herders in the North while Hut tax was levied on each household in the Eastern part of the country.

Upon the visit of the Brits, some laws were put in place to regulate the administration of tax in the country e.g. the First Income Tax Law was introduced by the British government, Lord Lugard. Although the law consolidated some Nigeria traditional tax laws such as the Land Revenue Proclamation in the North but extended its ambit to the Southern region in 1917.

In recent times, there have been enactments of laws overseeing the collection of tax in the country e.g. Personal Income Tax Act (2004), Companies Income Tax Act (2004), Petroleum Profit Tax Act (2004), Federal Inland Revenue Service Act, amongst others. They were introduced to cater for the inadequacies of previous tax laws, and have ever since been active and operative.

Secondly, Black’s Law Dictionary referred to tax as a charge; usually monetary imposed by the government on persons, entities, transactions or property to yield public revenue. Also, it is all governmental impositions on the person, property, privileges, occupations and enjoyment of the people that includes duties, imports and excises. Certainly, the main attribute of tax is that, it is the duty of all taxable persons to pay it. That is, once a person or company becomes a taxable person, it is mandatory on such individual to pay tax.

However, a question was raised in the case of AL-MASEER LAW FIRM v. FIRS (2019) LPELR-48628 (CA) that, are law firms liable to pay Value Added Tax? The law was settled on this ground that it is irrelevant whether a law firm is in the business of production or consumption of consumable goods as explained in section 12 of Value Added Tax Act. The court upheld that what is in issue and essential is the rendering of professional expertise. As such, law firms or any other relative entities are not exempted from contributing to the pocket of the federal government.

In addition, government revenues also come from customs duties on foreign imports and exports, leases of government-owned lands and buildings, sale of natural resources amongst others. The objective for the collection of tax from taxable persons by tax officials is aimed to improving the livelihood of the common man. Default in paying will amount to an offence and subsequently attract necessary penalties as prescribed by the law.

Summarily, the diverse views conveyed in respect to tax are that, it is the payment of a certain amount put in place by the government on its people to generate funds for the execution of public activities. Simply, the nexus between all opinions on tax is that it is a contribution backed by law, imposed by an authority over its people and such payment is compulsory by all taxable persons i.e. individuals or persons at law.

 Mohammed, OLAMIDEAYYUB@GMAIL.COM