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CHALLENGE OF MULTIPLE TAXATION
There is urgent need for a review of the existing tax regime
Despite the chest-beating by the Federal Inland Revenue Service (FIRS) that it had stopped multiple taxation in the country, critical stakeholders in the economy still experience the challenge. In a survey recently conducted by the News Agency of Nigeria (NAN), many traders and transporters in the Southeast reportedly expressed worry over incessant collection of taxes and levies, especially by touts and market unions in the zone. But this is a national malaise that is not restricted to markets. These taxes and levies by government agencies at the federal, states and local levels have become a problem for private sector operators, and they discourage investment.
For years, the Manufacturers Association of Nigeria (MAN) has been raising the alarm over the issue of double and/ or multiple taxations in the country. “Manufacturers are still overburdened with numerous demands from various tiers of government in form of taxes, levies, fees, permits, etc. In addition, companies in the sector are confronted daily with multiple regulations and excessive drive for revenue generation by government agencies,” former Chairman of MAN, Rivers/Bayelsa branch, Senator Adawari Michael Pepple said recently.
Essentially, multiple taxation occurs when the same income or products and services are subjected to more than one tax. Today, many of the states and local governments, under the pretext that the numerous levies they impose on corporate bodies and individuals do not yield the anticipated quantum of resources they need, have introduced the concept of Internally Generated Revenue (IGR) as another key tax component. While the levy of taxes are key sources of funds to enable government to meet its day-to-day expenditure, including the provision of social services, the tax system can also be used to direct the course of the economy. In fact, in most countries, it is a very potent weapon for economic regulation. That is not what obtains in Nigeria.
Under the current fiscal regime being operated, the federal government collects import and excise duties; it charges manufacturers capital gains taxes, and in addition oil companies pay Petroleum Profit Tax, Petroleum Education Tax, and Petroleum Equalisation Tax. At the federal level also, there is National Environmental Standards Regulatory and Enforcement Agency (NESREA) and while the Federal Environmental Protection Agency (FEPA) may now be defunct, some officials still collect FEPA, and NESREA levies. This is aside the fact that states also collect environmental levy.
Lagos State is a classic example of where residents go through the practical experience of the burden of multiple taxes as different forms of levies are replicated at the local government level. Thus, an individual who pays personal income tax through Pay As You Earn (PAYE), also has to pay other disguised taxes. There is property tax; tenement rate; land tax; parking levies. In fact, the licensing office, and the Ministry of Transport (MOT) charge different fees for almost the same services. But beyond the issue of multiplicity of taxes is the collection methods in practically all the 36 states and the Federal Capital Territory (FCT), Abuja. Very often, touts and all manner of street urchins are employed in the collection of these questionable taxes.
It is our considered opinion that there is an urgent need for a holistic review of the existing tax regime in the country. We need to bring more Nigerians under the tax net, while we must find a way to encourage job creation, especially at the micro level. For businesses, we are not advocating a tax-free regime on all goods or services. Far from that. Indeed, luxury goods and exquisite properties by the wealthy should attract heavy taxes. What we advocate is that government, at all levels, should make deliberate effort to minimise or indeed eliminate incidences of multiple taxation.