Property Tax Evasion: A Drawback to Government Revenue

In this short piece, ESV Stephen Edremoda, a registered Estate Surveyor and Valuer and a Staff of Delta State Government, lends his professional voice on the need to develop policies that will reduce the incidence of property tax evasion. He argued that property tax evasion is a drawback to government revenue generation.

To wilfully fail to pay or under pay taxes to the constituted government authorities at all levels is called tax evasion in a very simple economics definition. Property tax evasion can then be said to be the evasion of property tax liabilities by the managers of properties or the property owners. When tax liabilities are not discharged as at when due to the constituted government authorities, it is called tax evasion, and it is not only illegal but punishable by law. Property tax, otherwise known as real estate tax, is a tax that must be paid by a property owned by an individual or other legal entities like corporate organizations, religious houses among others. All over the World, property taxes are based on the value of the property, including land and the rate is determined by the government tax collecting agencies.

In the face of the dwindling government revenues at all levels as accessioned by the harsh economic realities, taxation becomes a veritable source of government revenue. The era of oil boom in most oil producing nations of the World is over and with the constant fluctuation in exchange rate in the foreign exchange market, taxation is becoming a reliable source of government revenue across the developed and developing economies of the World.

Unfortunately, in Nigeria and other developing economies of the World, tax evasion has become a norm among property owners and managers, thereby starving the government of the needed revenue for economic growth and development. Tax evasion has a very negative impact on the government revenue generation otherwise known as fiscal effects of tax evasion taxation. When taxes are evaded without appropriate penalties, it becomes a norm and the government coffer is starved of revenue. In advanced economies of the World, tax evasion is a serious crime that comes with a corresponding penalty on the comic damage of evading tax. For a business organization in any sector of the economy, failure to meet tax obligations is an economic crime.

Property taxes come in different versions, depending on the law governing the operating business environment. In Nigeria for example, the land use charge by the Lagos State Government is a case in point, it is a ground rent paid annually by property owners. By the Land use Decree of 1978, all lands in Nigeria belong to the government, and is the only government that can legally allocate lands to individuals and corporate bodies in line with the existing laws.

For the government at all levels to maximise the gains of property taxes, policies that will close tax evasion loopholes should be formulated and implemented to the latter. Advocacy programmes and media parleys aimed at informing the general public should be in place. For evaders of property taxes, the necessary legal framework should be in place for adequate punishment that will serve a deterrent to others.

ESV Stephen O. Edremoda, a registered Estate Surveyor and Valuer works with the Delta State Government. He sends in this piece from Asaba, Delta State.

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