The Civil Society Legislative Advocacy Centre (CISLAC) has called on Nigeria’s three tiers of government to be transparent and accountable in the administration of taxes in the country.
Auwal Ibrahim Musa (Rafsanjani), executive director of the group, said this at the just concluded media workshop on improving tax transparency and equity in Nigeria, within the framework of “Strengthening Taxation in Africa for Transparency and Equity”.
Nigeria has a complex tax system including tax expenditure that has evolved over the years. As the nation seeks to diversify its economy away from oil dependence, taxation becomes a pivotal tool both for revenue generation and for stimulating growth in targeted sectors.
“We need to make sure that taxes are used for the benefit of Nigerians and we also need to block the leakages we have. Sometimes we hear all sorts of taxes being given to companies that didn’t actually deserve it. The idea is when you give them a tax holiday they are supposed to give back as corporate social responsibility. We did not see that happening. Sometimes companies do not want to pay taxes. They do tax evasion and connive with some unpatriotic people to undermine the collection of the tax, he told BusinessDay immediately after the workshop.
He said it is only when the government is able to collect appropriate taxation that it can be used for development. “If some government officials are conniving to undermine the collection of the revenue, Nigerians will not be able to see infrastructural development,” he said.
According to him, it is not fair that double taxation is imposed on market women and other poor Nigerians, while the multinational companies and the big companies in Nigeria are left without collecting taxes from them.
“You are over-taxing the local people who are selling tomatoes and akara and so on. I think it is important that the government focuses attention on where they are supposed to collect revenue,” the executive director said.
In his presentation on ‘highlights on tax expenditure in Nigeria’, Michael Falade, a facilitator from Africa Centre for Tax and Governance, said the 4 percent Tax Expenditure (TE) to GDP ratio is significantly high, hence the need for the government to consider reviewing existing structures and governance of TE.
He described the concept of TE as provisions of tax law, regulation, or practices that reduce or postpone revenue for a comparatively narrow population of taxpayers relative to a benchmark tax.
In other words, it is the government’s estimated revenue loss that results from giving tax concessions or preferences to a particular class of taxpayer or activity.
Some of the challenges to TE as identified by Falade include insufficient knowledge base for TE, inconsistency in policy objectives regarding TE, loopholes in tax laws, abuse in the process of granting incentives, weaknesses in the tax administration of incentives, and non-compliance of taxpayers regarding incentives.
“When the identified gaps are bridged, the much-needed changes in tax expenditure management in Nigeria will be achieved and tax can become a veritable tool for national development,” he said.
Other facilitators are Munachi Ugochukwu, from CISLAC, Chika Okoh, International Budget Partnership (IBP), Timothy Usman, and Transparency International (TI)