- Stakeholders seek harmonisation of VAT, consumption tax
Lagos State Governor, Akinwunmi Ambode, thursday disclosed that Lagos might not depend on federal allocations any longer now that the state had abolished cash payment in tax remittance in the state.
Ambode explained the decision of the state to adopt automation tax system, which he said, was due to the high level of under-payment and non-remittance of what is due to the state from the stakeholders.
He expressed disappointment at the scale of tax under-payment and non-remittance at a stakeholders’ meeting held at the State House, Abuja yesterday to sensitise owners of hotels, restaurants, bars and event centres.
At the meeting, he lamented that hotels, eateries and restaurants in the state have not been remitting consumption tax collected into the state government coffers duly, thereby causing revenue loss for the state government.
But he said automation of the system was introduced to address the high level of under-payment and non-remittance of what is due to government, which according to him, would be a win-win situation for all parties.
He explained the rationale behind the automation of tax system, noting that the objective “is to rely less on federal funding and more on self-funding. The automation of processes and leveraging on technology are key to the development of any country and that is what the fiscalisation project has come to address.
Specifically, the governor, who was represented by the Deputy Governor, Mrs. Oluranti Adebule at the stakeholders’ meeting, assured that the new tax payment system would block revenue leakages in the state.
He explained that Nigeria “has moved from its current position on ease of doing business index from 169 to 145, which is encouraging. This is partly attributable to the reforms and processes put in place by the state.”
He added that the electronic invoicing system was part of the reforms “to improve on the index and enhance revenue; block revenue leakages and end the cases of tax under-payment and non-remittance in the state.”
He said his administration had consciously invested in infrastructure since he assumed office in 2015 and that more funds were required to enable the state government actualise the objective of providing adequate infrastructure and services for residents.
The governor explained that the burden of providing public goods necessitated the need “to embrace the fiscalisation of the consumption tax regime.”
He said despite harsh economy, the 2017 budget of the State performed at 82 per cent with N503.7billion total generated revenue representing 78 per cent performance, while total recurrent expenditure stood at N281.33billion representing 72 per cent and N387.60billion capital expenditure representing 76 per cent performance.
He said though a lot was achieved in that regard last year but that to enable the state government achieve the target for 2018, the commitment of all residents and business owners was necessary especially in payment of their taxes.
Ambode said it was important for all stakeholders “to play their part in scaling up taxation being one of the ways government is able to fund its activities and implement projects and policies for the overall benefit of the people.
“As progressive partners in the development of our dear state, we solicit for your co-operation and support at actualising this noble initiative.
“All hoteliers, event centre proprietors, restaurant and bar owners must allow the integration of their systems along with the Lagos State Internal Revenue Service (LIRS) server to facilitate the monitoring of consumption tax transactions and remittance of same to the state.
“We must be alive to our responsibilities by paying taxes due in order to ensure the development of our dear state,” the governor explained.
However, at the meeting, stakeholders demanded that the state government should immediately harmonise the Value Added Tax (VAT) and the consumption tax, noting that collection of both “is double taxation.”
Some of the associations that spoke at the meeting, Lagos Hoteliers Association and Association of Fast Food Confectioners of Nigeria, AFFCON, stressed that harmonisation of both taxes would reduce burden on consumers.
Speaking on behalf of the stakeholders, President of hoteliers in Lagos, Prince Adekunle Akilo, said: “The law should be fair to the stakeholders. We believe that after paying 5 per cent of VAT, you are asking us to pay another 5 percent consumption tax. It is double taxation. It is apparently complicating and duplication of the law.
“It is good that you want to collect consumption tax but the state should have liaised with the federal government to exclude Lagos from states paying VAT. With this, the state will only collect consumption tax and pay the federal government certain per cent from it.”