LGAs To Lose Right To Collect Taxes

Following the implementation of the new Personal Income Tax Act (2011), passed and signed into  law by the National Assembly and President Goodluck Jonathan respectively in June last year, local governments (LGs) would henceforth lose the right to collect taxes and levies.

Also, by the implementation of the new law, the President, his Vice, governors and their deputies would henceforth start paying taxes.

The Chairman of the Joint Tax Board and Federal Inland Revenue Service, Mrs Ifueko Omoigui-Okauru, made this known yesterday in Abuja, at a press conference on the new tax law.

She explained that going by the recommendations made while reviewing the tax law, which was first passed into law in 1993, State governments would now be responsible for the collection of levies, on behalf of the LGs, in order to eradicate issues of multiple taxation in the country.
According to her, “In the spirit of multiple taxation, one of the clear recommendations was that the LGs should have absolutely no taxing powers and if any revenue should be generated, be it by levies or the likes, it should be done on behalf of the LGs by the States.

“We are still working on that aspect of the recommendation by advising that State governments  come up with a revenue code whereby they collect levies on behalf of their local governments and  afterwards give the local governments their own share of the revenue.”

She continued, “With the new provision, the President, Vice President, Governors and Deputy Governors of States will now pay tax on all their income as is done by every other tax payer”.

Omoigui-Okauru explained that the new tax law was informed by the need to ensure a simplified and equitable tax administration in the country.  She said there was need to ensure efficient and effective tax system with clear definition of jurisdiction between the three tiers of government (federal, state and the local governments).

The new tax rates and new income tax table provide closer bands and lower income tax rates leading to reduction in tax payable by low and middle income earners.

The chairman stated that one of the major reasons for the Amendment Act was to bring the income tax up to date with existing realities of the Nigerian economy especially in relation to how the Act impacts low and middle income earners.

“ These amongst others are the major changes in the law. With it, government has demonstrated that it has a listening ear and has reduced the overall burden on low and middle income earners, while recouping these from high net worth individuals, who will be expected to bear a higher burden given their level of earning”,  she said.