Tasks before the new FIRS boss (2)

A well laid-out and concise appeal process should be put in place to enable taxpayers who believe the FIRS has not assessed them fairly to be able to dispute the assessment by filing an objection. Strict guidelines and timelines for filing an objection should be established. An appeal officer should be able to make a decision independent of audit. He or she should be able to confirm, vary or vacate an audit. The appeal process should be the taxpayers’ last resort with FIRS before appealing further to the court. In the event that an appeal is successful, a repayment of cost from FIRS may be sought. An efficient and reliable appeal programme will ensure that the taxpayer sees the agency as humane.

Establish informant and enforcement programmes

The FIRS should create an informant lead programme. This programme will allow citizens to report individuals or businesses who may be evading taxes or other tax-related offences. This programme can shore up the generated revenue in a system where taxation system is still very porous. A special enforcement programme should also be established.   This programme allows FIRS officers to specifically conduct audit and civil enforcement actions on individuals known or suspected to be earning income from illegal activities.

Streamlining of taxes

The taxes payable by companies under the existing legislation are cumbersome, lengthy and confusing. There is an urgent need for these to be streamlined. For instance, I do not see why a company will pay both the education tax and technology tax in addition to company’s income tax. The FIRS can make a case for the income tax to be increased slightly eliminating these taxes while the relevant portions of the education and technology taxes are remitted to the appropriate authorities. That way the FIRS only acts as a collector.

Eliminate duplication of taxes

There’s need to erase the multiplicity of taxes from the local government to the federal level. The items listed to be collected by the local government are absurd and funny. The list also included religious place establishment permit. That will explain the proliferation and loose regulation of religious organizations in our society. Multiplicity of taxes makes investment climate harsh as investors are not sure the extent of what they are required to pay. It makes planning and investment decision difficult.

The FIRS should also begin to move towards a process whereby it collects all taxes on behalf of the state government. It makes more business sense when one agency does this. The practice in most advanced economies is that the national agency collects on behalf of the states and remits accordingly. This will be a big step in the elimination of multiple taxes paid by companies.

Regulation of charitable organizations

I am not a fan of taxing charitable organizations but I am in support of its total regulation. Charitable organizations (churches, mosques, NGOs) are exempted from taxes hence their affairs should be open to the public. The FIRS should as a matter of urgency set the guidelines for the registration of charitable organizations. As a matter of fact the registration and approval of charitable organizations should move from the Corporate Affairs Commission and the local council to the FIRS as practiced in saner climes.

The FIRS should set guidelines for registration of charitable organizations. These guidelines should include the definition of what qualifies as a charity as well as the constitution of an arm’s length board. Boards constituted by people who are not at arm’s length are prone to fraud and corruption. More so, mandatory annual filing should be introduced. All registered charities must also be registered with a unique identification number.

In the UK, the Charity Commission oversees the charities; on the commission’s website you will be able to see every registered charity in the UK including the churches and mosques. Their annual returns are also displayed, including their financial details and board members. The Charity Directorate under the Canada Revenue Agency oversees charities in Canada. On the CRA’s website one can easily search and find any registered charity in Canada, their financial information as well as other details. Churches and mosques owned by Nigerians adhere to these guidelines in diaspora and I see no reason why they should not do same in Nigeria. The import of this is that once you are exempted from taxes then you should be open to the public. In Nigeria, charities are abused and are treated as private companies. Some charities even maintain one account with the founder. That’s corruption. Charities are for the good of the society and not to make money and that’s why they are exempted from taxes.

Promotion and support for small business

This may not be a taxation issue but if increased revenue generation is important to the agency, then it should take this seriously. Here is why it matters. In the US small businesses represent more than 99.7 percent of all employers, over 50 percent of all working population work in a small business, while small business pays 44.3 percent of the total US payroll.

At the start of 2014 in the UK, small businesses accounted for 47.8 percent of all private sector employment; they also employed 15.2 million people with a combined turnover of £1.6 trillion, while in Canada 98 percent of businesses have 1-99 employees, 55 percent have fewer than five employees. Small businesses account for 77 percent of all private jobs created in Canada.

The statistics speaks for itself. The FIRS should initiate ways to collaborate with states, LGs, NGOs and financial institutions on ways to increase support for entrepreneurs. The Nigerian entrepreneur is in need of support. The FIRS should realize that when the number of businesses increases, so will the number of employees and ultimately, this will increase revenue generated from taxes.

Eliminate crude collection of taxes

Tax officers from the local council to the federal level continue to use crude methods to collect taxes. They collect fees, taxes and levies through intimidation and harassment of taxpayers. Some even take it further by mounting roadblocks, selling stickers, using motor park touts and employing the services of untrained and illegal agents. This must be stopped.

Fowler has his job cut out for him. The FIRS is a reflection of Nigeria’s inefficiency, policy summersaults and bureaucratic hold-ups. The above may not be easily achieved as some of them require advocating to and lobbying other arms of government to make them realistic.

The FIRS knows that compliance is a two-way street. Indeed it has been observed that transparency, accountability and good governance are critical factors in ensuring voluntary tax compliance. Fowler must encourage and start building an ideal tax system that strikes a balance between domestic economic growth and global competitiveness.

Olajide Olutuyi