Not many people are disposed to willful payment of taxes. Only a very few subscribe to the idea of taxation as a means of enabling government to raise revenue for financing state projects, especially in Nigeria. As a matter of fact, more people are averse to the idea as if it was a loss to their incomes.
Lack of public confidence, official corruption, embezzlement, infrastructure deficit, rising public debt in the face of abundance and a host of other reasons are often cited by those who argue that a country like Nigeria – rich in countless natural and human resources – should neither have nothing to do with taxation for revenue nor increased rate of taxes. Those who belong to that clique have tenable points after all. But is that enough?
Nigeria is one of the countries with the lowest tax to Gross Domestic Product in Africa. From the nation’s 7.5 percent Value Added Tax to N50 stamp duty, company income tax and personal income tax, Nigeria’s tax system is still the cheapest among its pears.
Why many reasons abound to discourage tax payment, there are more reasons and benefits for payment of taxation for all tiers of government to function and deliver on dividends of democracy to the citizenry.
Imagine the record N10.1 trillion that was generated from taxation as revenue for the entire nation by the Federal Inland Revenue Service (FIRS) in the year-end 2022. That was the highest revenue from a government owned enterprise in history. That money was disbursed to the three tiers of government for settlement of their various obligations, including payment of salaries, provision of infrastructure and more.
Imagine the N722.677 billion that was disbursed by the Federation Account Allocation Committee (FAAC) as revenue from February, 2023. Over 80 percent of that February revenue was brought in from tax collection.
If that is not enough, remember real time value of the N625 billion that was generated from VAT alone in the third quarter of 2022 and how many roads, bridges, schools and other infrastructural provisions that would be provided by the application of that amount and its spiral effect on job creation. The list is endless.
Taxation is a contribution citizens make towards national development. Taxes paid by citizens is their obligation under the social contract where they contribute to the government to provide social amenities, welfare services, infrastructure, etc to the citizens
The fact is that government cannot provide these resources if citizens do not pay their own share of the taxes. Citizens have an obligation to thus fund these services. It is through these taxes that government is able to fund road construction, bridges (Loko – Oweto Bridge; second Niger Bridge etc) provide medical care (Primary Health Care Centres across the country), build schools and equip them with the necessary infrastructure (TETFUND has disbursed over 2 trillion Naira to several tertiary institutions in Nigeria—it is no gainsaying that a majority of the infrastructure in our tertiary institutions today were built through TETFUND interventions.
TETFUND is a tax, being 2.5 percent of the assessable profit of companies operating in Nigeria), etc. Citizens must recognise that they are responsible for the building of their country’s civilisation through the taxes they pay.
There are various types of taxes in Nigeria, including: The Company’s Income Tax; Tertiary Education Tax; Personal Income Tax; Value Added Tax; etc. The FIRS is the agency of the federal government charged with the responsibility and powers to assess, collect, account and enforce payment of taxes accruable to the government of the federation.
To encourage compliance to tax policies, FIRS chairman, Mohammad Nami had appealed to the federal, state and local governments to rightly apply the revenues being generate by the revenue agency to critical sectors impact on the generality of the people. “We appeal to the three tiers of government to continue to apply the little revenues we generate judiciously to encourage taxpayers to pay more,” he stated.
No matter the augment against taxation, there is every need for patriotism on the part of the citizenry and corporate organisations with specific regard to tax payment; transparency and accountability on the part of public office holders.
Governments need sustainable sources of funding for social programmes and public investments to foster economic growth and development. Those programmes as provision of health, education, infrastructure and other services are important to achieve the common goal of a prosperous, functional and orderly society. And that is largely possible through funding from taxation.
According to World Bank, taxation not only pays for public goods and services; it is also a key ingredient in the social contract between citizens and the economy. How taxes are raised and spent can determine a government’s very legitimacy. Holding governments accountable encourages the effective administration of tax revenues and, more widely, good public financial management.
Tax is the most common and important government intervention to redistribute income among the population. It is an attempt to share the burden of economic growth through a progressive taxation system. The tax burden on the upper income groups is higher, and the burden is lower for lower income groups.
There are many benefits of paying taxes. They help in the development and maintenance of infrastructure, like roads, and they can even help to create or maintain the institutions needed for the rule of law and the functioning of the democratic process.
In one of its reports on taxation, CREDITMANTRI said taxes are the government’s revenue for financing public spending, including building roads, school buildings, and hospitals, and for funding local government services, including police and fire departments, parks and playgrounds, and public libraries.
Taxes fund public infrastructure and services. For example, in India, the country spends the highest proportion of its GDP on public infrastructure and services, as compared to other emerging economies. With a year-on-year rise in capex of more than 35% and a targeted infrastructure investment of more than Rs 10 lakh crore in Budget 2022-23, the Union government has reaffirmed its commitment to utilize infrastructure as a force multiplier for long-term economic growth.
The government uses the tax amount collected and provides its citizens with all basic facilities and services to lead a good life. Here are some of the benefits of paying taxes.
A significant chunk of the collected taxes is spent on improving healthcare in the country. Over the years, the quality of service provided by government hospitals has improved by leaps and bounds, and it has only happened because of taxpayers paying tax.
Paying your taxes is considered a civic duty, although doing so is also a requirement of the law. If you do not pay your taxes, the government agency that oversees taxes — the internal revenue service — will require you to pay your taxes or else face penalties, such as fines or going to jail.
It is expected that Nigerians and companies operating in the country would see tax payment as a civic duty and compliance to tax laws for government to be able to generate revenue to fund public obligations.
