Poor practice of federalism, oil boom era created room for the rich to evade taxes—Experts
Contrary to the recent pronouncement by the Minister of Finance, Mrs. Kemi Adeosun that there may be no hiding place for Nigerian billionaires, trillionaires , entrepreneurs evading payment of tax in the country, experts have picked holes, saying evasion of taxes will continue even in larger scales.
The Minister who revealed during a colloquium to mark the 65th birthday anniversary of the National Leader of the All Progressives Congress, (APC), Asiwaju Bola Tinubu said government is about coming up with a new tax regime that will end long years of economic sabotage via tax evasion in the country .
In a telephone interview, a Lagos based tax consultant and former staff of old Western Nigeria tax institution, Dr. Adebayo Adeniji said “The issue of compelling rich Nigerians to begin to pay taxes as and when due is a tall order because the current stricture of the country does not encourage that”.
“You are aware that it will be difficult to define the type of government Nigeria is running. Whereas the law books say federalism, real live situation compels every student of economics to agree that it is unitary system. This is number one challenge.
Continuing, he said a situation whereby a section or region of the country will not allow sales of beer and related alcohols and turn around to take part in sharing proceeds of Value Added tax (VAT) paid by breweries is a misnomer.
Again, “earlier impression created by past leaders especially during the oil boom rubbished every thought of reinforcing strong culture because previous government made Nigerians to understand that proceeds from oil is enough to run the country”.
“Now any effort to erase that impression will be punctured by the cases of fraud involving top government in appropriating government funds.
In her views, Mrs. Uju Uyanamdu, a banker said “I think it’s only in Lagos that the payment of taxes have become effective because of sustained reforms driven by former Governor Bola Ahmed Tinubu when the Federal Government cut off allocations for local government for a long period of time. Today, the state has stood on that pivot to further advance the reforms in tax system”.
“Now, before the federal government will convince every region to key into tax culture, it has to effect a visible balance in the distribution of tax largesse.
“Now tell me, is it possible for the federal government to convince an average Igboman or woman to tax which will be used to provide infrastructure including roads, rails and others when currently, approved and ongoing new rail schemes are not found in their region, the South East.
“You can see that there is a new rail scheme from Lagos to Calabar, Lagos to Ibadan, kano to Kaduna and from no town to another town in the South East, so how can the federal government convince an Igbo billionaire to pay taxes?
Uyamadu averred that “It is only when government starts equitable distribution of resources that the entire Nigerians will be convinced to pay their taxes”.
She also hinted that “The best way to handle or reform tax system will be to empower states to generate all taxes and pay a certain percentage to the centre which is the best definition of true federalism”.
However, the Minister of Finance, whose first economic recovery policy, the whistle blower scheme has gained reputation said one of the strategies the current administration of President Muhammdu Buhari intends to use in boosting the country’s revenue is through tax mobilization.
In her submission, Adeosun recalled that “It is a pity that Nigeria has one of the lowest tax regime ratio globally at six percent. The only country that is lower than us is Oman. We have so many wealthy entrepreneurs, who have managed to develop habit of not paying tax, we need to correct that.”
Just like Mrs. Uyamadu noted, the Minister equally gave instance with the administration of Asiwaju Bola Tinubu who introduced new tax regime in Lagos which was driven by the visibility and equitable distribution of the proceeds across the states.
Adeosun argued that the idea worked in Lagos because “when we see the infrastructure, I don’t think anyone will blame him for his action”.
“I take this opportunity to reach out to the millionaires, billionaires and trillionaires that you will hear from me soon. It is shame that we are one of the largest owners of crude oil, but we cannot enjoy the revenue from it. Oil has proven that it would be an unreliable source of revenue. The price is unstable.”
She was quick to agree that “The economic template we copied from you (Lagos) is now being implemented for economic recovery of the country and we are not ashamed to say it. The impact of that template is that many of the states are now copying it especially in the area of IGR.”
