Taxation remains a challenge in Nigeria, why do you think this is so, and what can be done to address it?
Taxation is as much a challenge as other sources of national income. Taxation is a governance issue and it will be fixed once the governance template is fixed in our country. This will require re-arrangement of priorities and upping the accountability ante. Particularly, there is need to invest in tax institutions, tax education and tax policy research. If we are able to do these, taxation will assume its rightful place in the nation’s growth agenda.
Stakeholders have consistently called for the removal of some taxes such as the NITDA and the ETF, among others, what is your take on this?
The call for the removal of the designated taxes you mentioned may need to be interrogated further. My take on this is that we need to review this further by doing an impact analysis. There was a need for these laws when they were enacted. If it should be reviewed, a gap analysis needs to be done and probing questions asked: Are they achieving the purpose(s) for which they were enacted? Have we tackled the issue of transparency and accountability, which are essential ingredients to build trust in the system? Answers to these questions will determine the direction to go.
With the future looking bleak for oil do you think Nigeria is ready for taxation as a major revenue source?
Nigeria has been ready for taxation from independence. The real challenge with Nigeria has to do with responsible governance, effective administration and optimal implementation of policy. Without being simplistic, a critical investment in the tax system will give more benefits than the cost involved.
What immediate and future challenges do you see from the VAT fracas between the federal government and states?
Many experts have spoken on the remote and immediate effects of this “VAT fracas”, as you called it, between the federal government and the states. I hope we will not end up having the ‘cobra effect’, which technically means we may have intended and unintended consequences of our actions and we, therefore, need to manage this issue, in terms of the fallout. As an Institute, our position aligns with the provisions of our constitution. However, if we do not rein in our emotion, we may win the battle and lose the war.
With no end yet in sight on the VAT fracas, what are the legal implications for companies who do not file VAT returns by the 21st of September?
As an Institute and based on the ruling by the Court of Appeal, we have advised our members to maintain the status quo and keep filing VAT returns with the Federal Inland Revenue Service pending the outcome of the appeal process.
If the final outcome of the legal tussle is in favour of States to collect VAT, how much of an imbalance would this cause especially for States who don’t generate enough IGR?
I will not want to speculate. Even at this level of the ongoing litigation, we have issues that borders on legal and administrative clarification, guidance, interpretation of the law, regulatory compliance challenges, among others. I will rather defer my comment until the final outcome rather than dwell in the realm of speculation, assumptions and suppositions.
Also, do you foresee that this would mean different States implementing different tax rates?
I will defer the issue of trying to foresee for now but will rather want to be guided by the Constitution and what makes business sense when we are through with the legal challenge.
Some stakeholders have called for another upward review of tax rates. What is your take on it?
If we are to engage in this debate, there are so many variables that have to be considered, including a critical review of our strategic environment. The productive base of the country is a significant factor to consider in the decision-making process. This may lead us to the chicken and the egg argument but whether now or later, sustainable development and growth must be anchored on tangibles. We need to craft a sustainable home-grown cooperative model to start getting our people out of ‘poverty avenue’, otherwise, we will only be theorising development rather than actually developing.
How can small businesses be encouraged to pay taxes and remain sustainable?
It all goes back to just three things: responsible governance, effective accountability, and strategic communication. An integration of these three will go a long way in encouraging compliance.