Why Nigerians Are Averse to Payment of Tax


A lot of Nigerians are averse towards payment of any form of taxes because they feel governments at all levels are not accountable.

This accounts for the high level of tax evasion in the country, according to a note by Lagos-based CSL Stockbrokers Limited.
In fact, they disclosed that a few small business owners they engaged in recent times were apathetic toward taxes payments.

According to them, the reasoning of the small business operators was that it “would be pointless to pay taxes to an allegedly corrupt government that has proven itself incompetent in terms of providing critical infrastructure and basic amenities.”
The Minister of Finance, Mrs. Kemi Adeosun recently held a 30-minute interactive media chat, during which she expressed concerns about the number of tax evasion cases among wealthy individuals.

“What we found out was that there are about 14 million tax payers out of about 70 million individuals that are economically active…the tax burden is not being shared fairly, it’s being carried by those who are least able to afford it. Whereas high net worth individuals have been able to evade taxes,” she had said.

Nigeria’s tax system has been described by experts as one with various forms of loopholes. As such, it is not inconceivable that the rate of tax underpayment by the upper class may be significant.

Interestingly, Adeosun had pointed out in May that 214 individuals pay taxes above N20 million annually. This implies that, assuming an average personal income tax rate of 24 per cent as effective rate, only 214 Nigerians earn at least N83 million annually – an understatement indeed.

Although Adeosun’s message was that her ministry is now increasingly taking a hard line approach to tax evaders, CSL Stockbrokers’ analysts pointed out that there was worryingly little said about tax avoidances and collection inefficiencies surrounding micro, small and medium enterprises.

“Economic activities in Nigeria are largely informal, with transactions mostly cash-based. In this environment, accurately measuring taxable income thus becomes difficult.
“On top of this, the average Nigerian is likely to be more averse towards any form of taxes, given that the government has not been seen to show any level of accountability and seriousness in the management of funds,” CSL Stockbrokers added.

The Executive Chairman of the Federal Inland Revenue Services (FIRS), Mr. Babatunde Fowler recently called on Nigerians to fulfil their obligation to the country by paying their taxes, saying without taxes, Nigeria cannot develop.

Speaking on Arise News Network, a THISDAY sister company, he said when Nigerians go abroad, they pay taxes for consumables, adding that “in foreign countries, they pay what is required as tax at the point of departure, and the government of that country claims their VAT, so let’s do the same here too.

Fowler reiterated that the current Voluntary Assets and Income Declaration Scheme (VAIDS) by acting President YemiOsibanjowas not designed to put pressure on Nigeria.
He said the current federal government tax drive presents Nigerians with the window of opportunity to right the wrong in the area of tax payment.
“This country requires those taxes to develop too. Nobody will develop Nigeria except we start developing it”.

Fowler noted that the nation was harping on taxation now because government in the past did not see any need for it because of the discovery of oil in commercial quantities and the income it had generated, but since the oil price had crashed, there was an urgent need for the citizens to pay taxes.

On the newly introduced Voluntary Asset Income Declaration Scheme (VAIDS), the FIRS boss said it offers opportunities for all adults; be it in private business or corporate entities, to come forward and declare the amount of profit they had earned and the assets they have acquired and pay the commensurate taxes.
According to him, the initiative will free individuals or entities from paying penalties, or face prosecution, making them good citizens.