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Tag: Taxes

  • Pay your taxes regularly to stop external borrowings, Adeosun tells Nigerians

    The Minister of Finance, Mrs. Kemi Adeosun has allayed the fears of Nigerians over the incessant borrowings of the incumbent administration.

    Adeosun noted that if Nigerians truly want the nation to stop borrowing, they must all be ready to pay their taxes regularly.

    The minister spoke on Sunday at a joint press conference with the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, at the conclusion of 2017 International Monetary Fund (IMF)/World Bank Group Annual Meetings in Washington D.C,

    She explained that with Nigeria’s source of revenue dropping by nearly 85 per cent, the country had no option but to borrow. The option before the country was to either cut public services massively, which should have led to massive job losses, or borrow in the short-term, until it begins to generate sufficient revenues, she said.

    “We felt that laying-off thousands of persons was not the best way to stimulate growth. Also, when we came into office, about 27 states could not pay salary. If we had allowed that situation to persist, we would have been in depression by now. So, we took the view as a government that the best thing to do was to stimulate growth and spend our way out of trouble, get the state governments to pay salaries, making sure that the federal government pays and invests in capital infrastructure,” Mrs Adeosun said.

    Emefiele said the apex bank was trying to encourage Nigerians in Diaspora to keep remitting funds home, and also invest in the country, as they do not have any other place they can call home but Nigeria. Nigerians in Diaspora remit $21 billion annually to the local economy.

    “We will put in place policies that will continue to encourage them. We are working on how we can actually link credit bureau arrangement to the foreign borrowing arrangement so that once there is a link between Nigeria and the foreign credit system, it will be easy for them to even borrow from Nigeria,” he promised.

    The CBN boss said the apex bank was also planning to ensure that Nigerians in Diaspora get some form of attachments to the credit system that they have abroad, either in the United States or United Kingdom. That, he said, will make it easy for them to access credit and begin to build their businesses, so that when they retire, they retire back into Nigeria, and they do not retire in Diaspora.

    Mrs Adeosun said that once growth was restored, the country would begin to systematically reduce its dependence on borrowing. “Now, we are talking about tax and what we are saying is that people should be aware of their responsibilities to their nation. The solution to borrowing in Nigeria is that we must pay taxes. If you pay the taxes properly, there is no need to borrow. Of course, there is the responsibility on the part of government to be more responsible and efficient. We are really focusing on this. We are trying to find ways to cut cost. Fundamentally, we must invest. We don’t have the power we need, we don’t have the roads yet and there is a lot of money required to fund these projects,” the minister said.

    Continuing, she said that reducing Nigeria’s tax to Gross Domestic Product (GDP) ration from six per cent to 10 per cent would significantly reduce the amount the country needs to borrow and that would have a wider effect on the economy and bring down interest rate.

    She added that such a move would also create some head room for the private sector to borrow, because they are being crowded out.

    On state borrowing, the minister said state governments’ get borrowing consent from the ministry, which performs Debt Sustainability Analysis and if the repayment is more than 40 per cent of their revenue, such request to borrow is turned down.

    “So, many people are talking of how many loans we are approving; they don’t talk about how many loans we are turning down. Many do not go through and we are constantly monitoring state governments to ensure that the debts that they take on are sustainable. The problem with some of the states that have debt problems are legacy loans that were there before they came in. But since we came in, we have been very strict, trying to make sure states do not borrow more than they can service,” Mrs Adeosun said.

    According to the minister, Nigeria’s debt to GDP ratio is one of the lowest. “We are at 19 per cent, but most advanced countries have over 100 per cent. I am not saying we need to move to 100 per cent, but I am saying we need to tolerate a little more debt in the short-term to deliver the rail, the roads and power so as to generate economic activities, jobs, revenue, which would be used to pay back the debts. But I assure you that this government is very prudent around debt. We don’t borrow recklessly and we have no intention of bequeathing unserviceable debts on Nigerians,” she assured.

    The minister said the Voluntary Asset and Income Declaration Scheme (VAIDS) had so far got positive response from Nigerians. “I had discussions with some high net-worth individuals asking me to speak to the state governors to allow them time to pay. They needed to pay to the state governments. I have discussed with the governors that anyone that comes to them voluntarily for tax payment, should be given time to pay. We don’t want a situation where people willing to pay their taxes are stifling economic activities. We have told the governors, if someone comes willingly, quickly allow them plan to pay,” she said.

    Mrs Adeosun said revenues were needed to provide public services and the burden of taxation must be borne by those whose income allows them to bear it.

    “So, those with higher income should bear greater part of the burden. The problem with Nigeria is that most of our taxpayers are at the lower level. The man on the streets passing traffic, his tax is deducted at source. Why will we not allow billionaires to proportionately pay their taxes? I think we need a mindset change on taxation in Nigeria. So far, we are encouraged by the response of those companies and individuals to this tax amnesty,” she added.

    In her view, the tax amnesty policy is on track. “We’re on track. We expect that at the end of the timeline, everybody will rush and we will raise significant money. We have every reason to believe that this tax mobilisation effort will work and hopefully bring long-term money,” she said.

    “We are trying to do is create enough headroom to invest in capital projects that the country desperately needs. I do not think there is any Nigerian that will say we do not need to invest in power, do the roads, and that will not want us to fix 17 million housing deficits and build rails. These projects will generate economic activities and jobs. We do not need to continue hobbling as a poor nation. We are middle income country now. Nigeria, Angola, and South Africa are middle income countries. We do it jointly and efficiently, but the key thing really is revenue,” the minister said.

     

  • Informal sector calls for fairer, equitable taxes

    Informal sector calls for fairer, equitable taxes

    Members of the informal Sector have called for a just, fairer and equitable tax for their members. They demanded that there should be even spread of social facilities and other services to justify the payment of taxes. They have also asked for greater engagement and consultation by government on tax issues while charging tax officials to be more humane and eschew undue harassment of their members in the process of collection.

    At a one-day workshop with the theme “Enhancing A Fair Equitable And Transparent Tax Regime In The Informal Sector”, organised in Lagos by Community Life Project (CLP) with support from United States Agency for International Development (USAID), they also called for more citizen enlightenment by government on tax issues.

    They also complain that the taxes are arbitrary and called for transparency and openness on the process of assessment and collection through the use of e-payment platforms. They asked for the abolition of all sorts of cash payments in order to check the antics of many officials who prefer to deal under the table.

    “We have paid taxes and even won an award but we have not seen the impact of the taxes that we dutifully pay, there are no facilities at the Mechanic Village”, said Comrade Segun Apaoka of the National Automobile Technicians Association (NATA). “The charges are arbitrary, some agencies come to harass us with exorbitant fines and taxes”, he said.

    Apaoka was particularly piqued on the shifting of goal post on how rates change arbitrarily from year to year. He could not understand why rates that were N5000 in 2015 and N10,000 in 2016 had suddenly climbed to N100,000 in 2017. “Government officials should regularly discuss and consult with us instead of just forcing arbitrary charges and rates down our throats”, he said.

    Mr Kunle Ajayi, a member of the Federation of Informal Workers of Nigeria (FIWON) said the market women and men are at the mercy of their leaders, the “iyaolojas and babaolojas” who daily milk them by imposing all sorts of nebulous charges. All these payments are usually not a reflection of the quality of services”.

    Another troubling issue is the myriads of artisans who are operating outside any organised associationswho they claim are always causing problems for their operations. The informal Sector workers want government to regulate and make membership of their different associations mandatory in order to ward off these “quacks who evade taxes and levies and do damage to our businesses”.

    “Most of the artisans who do not belong to associations are the ones causing problem for us”, Apaoka revealed. Mr Michael Onyealu, vice president, Nigerian Association of Cosmotologistswho disclosed that “there’s a proliferation of associations in Lagos state” noted the urgent need to merge them. “Let’s merge them so that we can have some order”, he said.

    “The government wants leaders of the Informal Sector associations to partner with them on collection of taxes. Everything you want to do in Lagos, you come to the artisans but you say membership of tourassociations is not by force. We want them to regulate quacks on the streets. What penalties are you meting out to those who are not organised”, Mrs Comfort Akinkawo queried.

    Dr Francis Nchuchuwe, Associate Professor, and Head, Department of Public Administration, Lagos State University (LASU) was not particularly happy that the government has usurped the powers of the local governments in the collection of tenement rates and radio license fees demanding to know who should actually collect radio license fees that are now collected as part of the vehicle license fees.

    Mr Charles Abani, head of Civil Society USAID Project said it was clear from the responses of the participants that not all collected revenue are getting to the coffers of government. He counsel for all rates to be merged into one bill rather than multiple collections which cause frictions.

    Mr Lanre Lawal who represented Mr Owolabi Kamson, director, Informal Sector & Special Duties, Lagos State Internal Revenue Service (LIRS) called on citizens to dutifully pay their taxes so that government can have enough resources to provide quality services to the people.

    Enumerating the gains of the government in the area of roads, education, health care, security and other social infrastructure, he said, “government will be hamstrung in providing all these quality services if the citizens do not pay their taxes”. On the issue of provision of facilities at the mechanic village he said, “We are agents of government, we are a revenue generating agency, we do not determine the locationof any infrastructure”.

    Responding to the changing rates from what they were in 2015, 2016 and 2017, Lawal said, it was a reflection of the rising cost of providing services. He however drew the ire of participants when he said, “the government is not expected to consult artisans when they are formulating policies”.

    It was the view of Dr Olayinka Akanle of the department of Sociology, University of Ilorin that “this talk down attitude and lack of consultation is the reason for the failure of many government policies”.

    On the conversion of tenement rates to land use charge, Lawal said, “before the abolition of tenement rates, you know what the LG chairmen and councillors were doing . The receipt of the tenement rate in the past was issued on pieces of paper which made them difficult to trace. With land use charge receipt is verifiable”.

    Other highlights of the workshop was the discussion of the summary of “Report of Baseline Study on Informal Sector Taxation Practices in Lagos State conducted by CPL in May this year which showed that the Informal Sector is not averse to paying taxes but wanted it to be fair and equitable.

    Akanle who presented the report said two LGAs, Mushin and Kosofe were selected for pre-test while four others, Ikeja, Ikorodu, Isolo and Oshodi were selected for the main survey. Majority of the respondents are of the opinion that “taxes and rates/tariffs are constantly changing and unpredictable making it difficult for payers to make payment plans”.

    The only slight exception was in ikeja where only 50 per cent of the respondents said that “taxes are constantly changing and uncertain as government officials change rates/tariffs/taxes unilaterally without any sufficient recourse to informal sector actors.

    The report also found out that the “enforcers are abusive and aggressive” while the rates wereperceived as being “arbitrary”. Some of the respondents say “payment default is a survival strategy so that they can bargain and deal below the table”. Most respondents however were in favour of greater transparency and accountability in order to promote public confidence in the payment of taxes.

    Mrs Ngozi Iwerre, executive director of CLP said the engagement between the state government and LG officials and members of the Informal Sector was productive and expressed the hope that it will impact on future policies on taxation. “We hope this will improve the process of taxation and encourage more people to pay since the aim is to make our country better”, she said.

  • Beggars will start paying taxes in Nigeria – Adeosun

    …as FG hires asset tracers to go after 150 money bags in Nigeria

    The Federal Government has said there will be no hiding place for tax evaders in the country as even the beggars will now start paying taxes from their ‘income’.

    The government has also engaged the services of asset tracing-companies to investigate the tax payment status of 150 firms/individuals.

    This was revealed on Thursday in Lagos by the Minister of Finance, Mrs. Kemi Adeosun.

    Adeosun explained that investigators would rely on information derived from Bank Verification Number (BVN), records of property ownership, records of foreign exchange allocation, and records of company ownership from the Corporate Affairs Commission (CAC), among others, to ascertain the income status of the companies/individuals vis-a-vis their lifestyle.

    The minister, who delivered a lecture at PWC’s Business School, with the theme: “Voluntary Assets and Income Declaration Scheme (VAIDS) Interactive Session for Executives and Business Owners” said: “We are using some firms (I will not mention their names) to trace assets internationally.

    “We are working alongside projects we have locally, like the Bank Verification Number (BVN), records of property ownership, records of property allocation, records of company ownership from the Corporate Affairs Commission (CAC), among others. It is from these projects that we look at how much tax such companies or individuals should be paying”.

    She said findings from these statistics would be computed, and compared with how much tax the person/company is paying to know if the right taxes are being paid or not.

    Adeosun said: ”The investigators’ findings will enable us compare the income and how much tax the company/person is really paying, and that gives us lots of information. But we encourage people to come up and pay their taxes willingly.”

    She added: “You can register a high-end car. It tells me something about your income. So we look at your tax returns. If you registered Mercedes E-Class and you are paying N100,000 tax, then something is wrong. Those are red flags. We now have the capacity to assess people accurately.”

    The minister said no one would be left out in the campaign to enlarge the tax net adding that the response being received so far showed that people were embracing the tax policy..

    She said some beggars were earning millions, and the government would even look at their lifestyles and tax them, adding that “even proceeds from begging are taxable. You are supposed to pay taxes even if your means of income is begging”.

    To Mrs Adeosun, tax is a matter of law and Nigerians should continue to pay. “We are trying to build an economy where we have oil and other things. It is going to be oil plus and wider economy,” she said.

    Asked whether the funds from taxes will be judiciously used, she replied: “Why I think the resources will be used judiciously is because when people pay taxes, they get involved. When people do not pay taxes, when you call for budget meetings, they will not come. But when they pay their taxes, if the government says these are the projects we want to execute on the budget, people will show up because they have contributed to the tax revenues.”

    In her view, such contributions improve the democratic process. “As our tax revenues go up, governance will improve. We have many projects we want to execute and I think if we have the funds, they will be executed. I think we are seeing improved budget performance. That will lead to getting the roads done, and improve the condition of our schools. Progressively, what we should look out for are improvements in the standard of living, and lifestyles of Nigerians as we get more tax compliant.”

    The minister said government set a preliminary tax target of $1 billion annually, but her belief is that the target can be surpassed. “I think we can get more, and let’s see how it goes. For me it is not about how much money we recover it is about getting more people to pay their right taxes continuously. How much we recover from taxes is not as important as getting people into the tax net and paying the right taxes,” she added.

    The minister also disclosed that the people who are paying taxes are mainly those whose taxes are being deducted from source. Also, the people who seem to be evading taxes are either on their own business, or high net-worth individuals.

    “Ideally, they are supposed to be the biggest tax payers. What is happening now is that the lower earning people are carrying the huge burden, which is really unfair. So, we need to reverse that. Everybody has to pay their fair share, according to their level of income,” she said.

    Mrs Adeosun spoke of tax as a means of income distribution, adding that taxes should be taken from the rich, to support the poor.

    Explaining how it works, she said: “If somebody has a property. We have no problem with that. The only thing the tax man asks you is where did you get the money to buy the property? If you bought it for N20 million, that’s no problem, but the income you used to buy that property would have been subjected to tax. If you show us your tax slip then no problem.”

    “But what we are finding out is that there are someone people with a property of N20 million, but when you look for the tax returns, they paid only N15,000 annually for the last seven years. So, how did they fund that house? What that means is that the person has other incomes, which was not declared to the taxman because for you to own that house, it is either the money was stolen, or it was inherited. If it was stolen, another agency will deal with that, because it is not for us.”

    “In that case, you will tell us, from whom you inherited it, and such information can be confirmed. From your income, you couldn’t have earned that. So, we want you to now declare those incomes. We want to correct people, whose lifestyle is not commensurate with their income. It may be house, it may be private jet, and so on.”

    To Mrs. Adeosun, it is regrettable that while most developing countries have tax to Gross Domestic Product ratios above 20 per cent, Nigeria still records a global low of six per cent.

    She said the Federal Ministry of Finance, in a bid to address this, set up the Voluntary Assets and Income Declaration Scheme (VAIDS) in collaboration with the 36 states. The scheme was launched by the Acting President Prof. Yemi Osinbajo.

    The main objective of VAIDS is to increase the number of taxpayers in the tax net and raise revenue for government. Specifically, it is expected to increase Nigeria’s tax to GDP ratio from six per cent to between 10 per cent and 15 per cent, broaden the national tax base, curb tax evasion and discourage illicit financial flows.

    Besides, it is expected to improve good governance, guarantee a better quality of life, encourage robust national planning and increase the size of the formal economy.

    Mrs. Adeosun stated that at six per cent, Nigeria’s tax compliance rate was low whilst most developed nations were at 30 to 32 per cent. “Prosperous nations have high levels of tax compliance whilst poor nations have low rates. Nigeria aspires to be a prosperous nation, so this problem must be solved,” she said.

    The scheme, which began on July 1, will last nine months and will be implemented by the Federal Inland Revenue Service (FIRS) in collaboration with all 36 State Internal Revenue Services and the FCT IRS.

    Taxpayers who make full and honest declarations will enjoy a waiver of interest and penalty, immunity from prosecution, confidentiality of information supplied, exemption from tax audits for the periods covered by the disclosure and flexible payment of tax due. Taxpayers who fail to participate in the scheme will be investigated and if found culpable will face trial.

    LIRS Executive Chairman Ayo Subair said: “We have seen the positive impact taxpayers’ money can make at the state level in terms of social services, administration of government and infrastructure development. So we are fully supportive of this initiative and we are ready to assist as many taxpayers who would like to take advantage of the Scheme to remediate their tax affairs,”

    According to Taiwo Oyedele, Head of Tax at PwC Nigeria, “paying taxes is not particularly easy anywhere in the world for anyone who has expended time, energy and other resources to earn the income”. “However, it is necessary for there to be an organised society for the benefit of all.”

    In his welcome address at the session, Uyi Akpata, Country Senior Partner, PwC Nigeria said: “This session and indeed the renewed interest and policy direction on taxation by this administration is a positive development for the transformation of our economy. At PwC, we have consistently made the point that reliance on oil as the main source of government revenue is not sustainable and that other forms of revenue generation, such as taxation, must be explored for Nigeria to build a truly viable economy and reach all of its potential. On taxation, we have over time advocated various initiatives to broaden the tax base, reform the tax laws, and improve the ease of paying taxes so we are happy that some of these ideas are beginning to take life.”

     

  • Prompt payment of taxes will fast-track economic healing – Expert

    An Abuja-based insurance broker, Mr Angus Uzoamaka, has said that payment of tax by Nigerians and companies are necessary for the country’s bail out from recession.

    Uzoamaka said this in an interview with newsmen while commenting on ways of resuscitating the ailing economy in Anuja on Wednesday.

    He said that the attitude of paying tax must be cultivated by Nigerians for not only economic stability but wealth creation.

    ‘’Evasion of tax has been the major blow on Nigeria’s economy; it has degenerated to a level that nobody wants to pay tax again.

    ‘’Yet everyone is expecting much from government. Greater economies of the world do not play with tax because it is the basis for stronger economy,’’ he said.

    Uzoamaka, who urged governments at all levels to engender policies aimed at ensuring strict and adequate taxation regime, said it was roadmap toward a prosperous Nigeria.

    He explained that infrastructural development could not be realisable without a collective responsibility of the citizens to pay tax.

    The broker noted that corruption had been the bane of administrative sublime in the country, saying that it was time to completely eliminate it from the tax regime.

    According to him, most people don’t pay tax because of suspicions of corruption on the part of the managers of the ‘’tax payers’ money’’.

    Uzoamaka called for total support of Nigerians for the APC- led Federal Government, which he said. could not do much without the people’s support.

    He, however, described governance as a symbiotic engagement which required the cooperation of the governed for a success.