Promoting Equity in Taxation

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Ugo Aliogo examines the need to mobilise non-state actors to promote social equity in the taxation process

Experts have argued that lack of coordination of tax justice efforts in the formal and informal sectors of the economy has led to reduced revenue generation for the country.

The experts explained that the current regime seems to be widening the inequality gap and stressed the non-adherence by tax administrators to the national tax policy.

Speaking at a two-day capacity building workshop for civil society organisation (CSOs), the need to mobilise non-state actors and related groups to enhance capacity in taxation was brought to the fore.

The workshop which was organised by Niger Delta Budget Monitoring Group, (NDEBUMOG), with the support from OXFAM, observed that the Nigerian tax system was too complex and unwieldy, thereby leading to abuse and the reduction of optimal benefits to both tax payers and the government.

The resolution at the end of the workshop was to promote social equity, and try to connect stakeholders with effective delivery because there is a connection between task and budget.

The workshop focused on improving capacity of participants on taxation, revenues tracking, fair taxation, public finance expenditure monitoring, expenditure evaluation and influencing.

The workshop, which was part of NDEBUMOG’s Financing For Development (FFD) project under OXFAM’s strategic partnership programme’s Consolidated (MEAL) work plan brought together participants from 16 States, such as Abia, Imo, Enugu, Lagos, Delta, Akwa Ibom, Anambra, Ebonyi, Cross River, Bayelsa, Edo, Ondo, Ogun, Ekiti, Oyo and Rivers States.

The Chief Executive Officer, NDEBUMOG, Dr. George Hill-Anthony, said the forum was aimed at mobilising non-state actors and related groups to engender capacity in taxation, adding that it would help citizens’ awareness and social equity in terms of how taxation should be pursued by the government and relevant stakeholders.

He also noted that in the area of taxation, there was oppressive and suffocative taxes which he noted put people under pressure, and violates their rights. He said in most cases the tax revenues don’t go to government, but political kingpins and local champions, while assuring that the public that the workshop would help raise awareness build the capacity of stakeholders, “to understand which task applies for what whether federal, State or Local government levels.”

Hill-Anthony explained that at the end of the workshop, there would be a resolution to promote social equity, and try to connect stakeholders with effective service delivery, “because there is a connection between task and budget.”

“Because if you pay your task you know that government owns you an obligation. What we are also trying to do is notify the citizenry and make them responsive on their social obligations of paying their taxes to the government, so it is a two-sided approach. In taxation, there are things such as waivers, tax holidays, VAIDS and others, some of these things are appropriated or are considered for the rich,” he noted.

The NDEBUMOG CEO argued that the main essence of promoting social equity in the tax justice process is to arrive at a justice point both for the collector and the payer,

According to him, “For us as non-state actors, we may not be able to pinpoint where we are as a nation. We are not satisfied with the level of tax justice in the country because we see where artisans are harnessed. There are communities today where youths appropriate themselves with the power to collect levies and they state how much traders will pay daily. The revenue goes to their community heads or chiefs.

“We are trying to see how we will get a collaboration with the collectors and payers, whereby if there is a human right violation that has to do with taxation, you were to run to.

“So these are connectors we are trying to establish and galvanize the citizenry through awareness creation about their social rights and physical freedom. Physical freedom is that you are not supposed to be suffocated because of anything that has to do with the physicality of government whether budget or tax. It is supposed to be social contract, social obligation where you know as a citizen you are supposed to pay your tax. When you pay your tax, you should not be harassed.”

In his lecture entitled: ‘Connecting the Informal Tax Economic Sector to the Formal,’the Programme Officer, Public Private Sector Transparency and Accountability Officer, Oxfam International, Mr. Henry Ushie, noted that over time, Oxfam had been able to setup 16 tax justice system and governance platforms with the steering committee based in Abuja comprising of Action Aid and Civic Soicety Legislative Advocacy Centre (CISLAC) Oxfam, Christian Aid and other coalitions.

He explained that within 2016, Oxfam had worked in the informal sector, in strengthening the sectorial system within that sector, while ensuring that local people or people working in the local economy are not overburdened by tax and the issue around double taxation “and illicit tax collectors and the use of consultants to collect taxes are no longer in existence.”
Ushie argued that within 2016-2019, it was discovered that people don’t comply with tax payment because they are not getting services for the taxes they have been paying, therefore he noted that Oxfam is trying to see how it can work with local communities and local government.

He stated that the focus of Oxfam’s collaboration with local communities and local communities is aimed at seeing how the local governments can provide basic social amenities for the people at that level.

He added that Oxfam has been able to record some successes as well, noting that in some communities in Akwa Ibom State, some Local Government Chairmen have come to sign some MOUs with the platform in what is known as the tax to service agreement.
According to him, “In some communities in Akwa Ibom State, some Local Government Chairmen have come to sign some MOU with the platform in what is known as the tax to service agreement.

“The agreement has it that for every tax collected, 20% over a period of time is returned in terms of services back to those communities and market in form of drainage systems, latrine and other basic services that they need at community level and that has really improved tax collection at level. It has also improved tax compliance. It has also cut out some middle people who are collecting taxes into their pocket at that level as well. It has been win-win thing for the communities and the government as well.

“For us at Oxfam, we have played that convening role for this local partners and organisations, because we don’t want be seen as the one doing the field work. So we have tried to empower local organisations to carry out that work at their level. This has brought more legitimacy to work with them. Also, more legitimacy for the partners to go the communities.

“The communities have also seen Oxfam as that convening trust and that has brought good remarkable outcomes for us. What we have also tried to do today, is to see how we can also reposition the platforms to have better outcomes and scale, with outcome and scale, we are reviewing what we have done in the past, considering the models that we have used to work at this level.

“We also want to introduce new framework, we also have three frameworks that we are introducing to the platform within these two days, we have the fair tax monitor, and commitment to reducing inequality. So we have a couple of framework we are introducing to the communities and platform as well; we have the fair tax monitor index research that will be introduced to the community as well and will be launched sometimes in May or June.

“We also have the public finance road map which will also strengthen our public finance systems in our space. These three frameworks will help strengthen the work that the platforms are doing and expose them to certain indicators which will whether the work they are doing is the right direction or not. It will also build their capacity in terms of exposing them to this knowledge.

“Also help in linking what they are doing from the formal sector to the formal sector as well because over time, they have worked on the informal sector and that work has been remarkable, we also want to take it much higher it much higher to see how we can help them work in the formal sector, this is why we are bringing these frameworks together to help guide work as well. So we will also be learning from them as well to see what they think about it and what they have been learning from it.”

Measuring Compliance
Continuing, Ushie explained that efforts to ensure compliance in the tax justice system has been in action since 2016, adding that the focus is to see how to make tax fair in the informal sector, “so we are trying to consolidate on what we have been doing for the past three years.”

He added that the work on tax justice compliance would continue until December 2020, while expressing confidence that the platforms would begin to come up to that level where they can actually work with the informal or formal sector.
“We intend to see how we can actually help maybe at the State level, how we can up the game in terms of tax compliance in order for government to have more for service delivery because government at the state level complain that they don’t have money for service delivery.

“So the focus will be how do we up their game as well to see how they can work with relevant institutions to see how to strengthen their system for fair taxation and improve service delivery at their level, so that’s is the point we want to get to, up our game from six to 10 per cent.”

In his lecture entitled: ‘Connecting the Tax Justice Platforms to the Global Campaign Against Inequality and Fair Tax Monitor,’ the Civil Society Legislative Advocacy Centre (CISLAC) Programme Officer, Chinedu Bassey, noted that one major issue that stands out in the tax justice campaign is the issues around the practices, and how the processes of collecting taxes is undermining the human rights of the people.

“You don’t have to beat someone up to pay taxes; you have lock up people’s shops for them to pay tax collection processes should adhere to human dignity and respect,” he said.

He explained that another major challenge which also has strong basis on the practices was the use of consultancy, adding that it was against the law and that is what is done in most States.

He noted that in measuring tax collection processes at the national level, there are changes on a progressive level, stating that before now, the processes of paying was too hectic, “and you were you to be given those tax assessment, it would take you days to read it, but they have reduced everything to a page on the website.”

According to him, “All you need to do is to key in the amount you, then computation will be done for you and tell you are due to pay. The process is simpler and the interface is friendlier and awareness is very broad now.

“At the State level, selectively some States are ahead of others, some are totally backward, to the extent that the relationship between the government authorities that collects taxes and the people doesn’t exist.

“In some States, there is progress and some other States have started including the people in dialogue to ask questions and give feedbacks on what is happening. There is the issue of discretion on what is provided by the law. States take advantage of the loophole in the law to go and make their own laws, instead of abiding by what has been provided. The state has a list of 21 taxes they are supposed to collect.”