By Chinelo Chikelu. |
Multidisciplinary and finance expert, Professor Michael Ikupolati has said Nigeria needs an enforcement infrastructure with the political will to implement the Finance Act 2020, if the act is to achieve its intended purposes.
Ikupolati made this known at a virtual session titled The Finance Act: What was, What is and What is Expected organized by the National Association of Seadogs NAS, Pyrates Confraternity Sahara Deck Abuja, to educate the public on the major changes introduced by the Act.
Speaking at the event Ikupolati noted that while it is part of government’s effort to diversify the economy via taxation, one of the intentions of the act is to ensure the benefit of average Nigerian and to support the growth of over 43,000 small scale businesses in the country.
Hence, despite the increment of taxes from 5 per cent to 7 per cent across board, the expansion of excise tax on goods, in addition to the introduction of stamp duty on electronic transactions and purchases, the act, he said is a laudable innovation that will impact the Nigerian economy positively.
Ikupolati, however, noted that the act can be impeded by corruption, bottleneck, policy misrepresentation and policy malfunctioning if not effectively implemented.
‘‘A policy is as good as the level of implementation. The effectiveness of the Finance Act depends on the implementation of the policy. We need an enforcement structure that has the political will to implement the act and a system of ensuring that sanctions listed in the document is meted out on those who fail to comply or breach the act.’’
Noting that Nigerians will not contest the payment of tax, their social duty to the nation, if the dividends of their compliance are seen in functional public infrastructure as good roads, good public health system and better standard of living, he advised government’s proper utilization of taxes to address inadequate public infrastructure. He also recommended that First Inland Revenue Service (FIRS), find ways to provide soft landing for taxpayers to persuade rather than force them to pay.
He further urged that tax administration be improved and digitally driven to make payment process easier.
‘‘We need to have a holistic approach to such issues, until this is done the purpose of the act will not be achieved,’’ he cautioned.
For associations as NAS, Ikupolati recommended the establishment of committees to review the impact of the act on the group and its individual members and find means to navigate the act.
Individuals, private and public workers, and small-scale business owners he added, can benefit from the act’s provisions such as tax holiday and tax self-assessment, self-filing and individual contesting of tax charges.
‘‘If your turnover as an SME in a year is less than 25 million you will not pay tax. This is a good thing because they can gain from such a provision. It also provides for the ease of doing business, and the use of holiday tax which exempts new businesses from paying tax for five years. It also aims to promote fiscal equity to ensure you pay tax according to your earnings. The more you earn, the more tax you pay. The act explains how people can ascertain what taxes to pay, self-file their taxes and can object and make appeal against a tax charge if they believe it’s unfair.’’
‘’The benefit of paying tax for Nigerians is for both theirs and the country’s development. I believe the Finance Act 2020 makes provision for this but only its implementation will ensure Nigerians benefits,’’ he concluded.
Area Mate 8, NAS Supervising Officer Northern Region, Mr Onyebuchi Okudo, commending Ikupolati’s orientation of the public on the form and expectations of the act said the association will facilitate continuous discuss on the document as its being implemented.
The Finance Act 2020 came into force on January 13, 2020, the day President Buhari assented to it. However, the Value Added Tax (VAT) rate supposedly commenced on February 1, 2020.