It is often said that the crisis of Nigeria’s tax revenue profile is rising in a fearsome crescendo, and to avoid the ‘tipping point with dire consequences’ there has to be a turning point. This is frightening and derives from the direct comparisons between Nigeria and some other countries as propagated by government and some analysts. There is only one significant similarity between Nigeria and other countries- they are all countries populated by humans. The economic, social-political and other fundamentals are different. It is, therefore, a disservice to carry out direct comparisons as a basis for policy formulation and execution. Nonetheless, the government desirous to raise enough funds for its activities is now set to fight tax evaders through the Voluntary Asset and Income Declaration Scheme (VAIDS). The scheme, which took off on July 1, 2017, covers individuals resident in Nigeria and organizations operating in Nigeria.
This is a worthy initiate as it is expected to lead to an expansion in the country’s tax bracket; bringing in an estimated one billion US dollars in tax revenue. Who would not support such a scheme in a country with a huge budget deficit waiting to be financed! I believe people and organizations should pay their taxes as and when due and in the correct amount too. The scheme should be supported by all and sundry as only about 14million persons are registered taxpayers in a working population of not less than 80 million people. We are not lacking in tax laws in Nigeria, yet tax evasion is a pleasant pastime. But to what extent have we investigated and identified the reasons people and organizations evade taxes? What role do some ethically insane tax officials play in aiding and abetting tax evasion in Nigeria? Is the government laying more emphasis on direct taxes which can easily be evaded? If the government would concentrate more on indirect taxes and increase Value Added Tax rate, for instance, and reduce income tax rate, would tax compliance not be enhanced? These are issues on which we need informed decisions and actions.
The conflict between taxpayers generally and the government is not one of inability to pay taxes as at when due but one of an inability of tax revenue to be accounted for by the government. It has been argued that governments in most cases are corrupt because citizens don’t pay their taxes correctly and therefore, have no moral courage to hold the government accountable. Citizens are, therefore, responsible for the inability of the government to serve creditably.
Whatever the situation, the VAIDS is just a month to go and by the close of March 2018, it will be ‘lights out’ for tax evaders or so it should be as the government would close the curtains and suffocate anyone who defiles to comply. That means any taxpayer who does not voluntarily comply with the Scheme shall be investigated and if found guilty cause to make good all tax liabilities including interest thereon.
It is not a secret that most government officials in Nigeria are much more financially ‘healthier’ than many tax evaders; not out of dint of hard work but by merely balancing a personal budget at the expense of the masses. They have defecated corruption in their various areas of operations. It is, therefore, interesting and curious that the government has a critical mass of ‘impeccable tax and judicial officials; and tax compliant Nigerians’ who will be prosecuting defiant and non-compliant tax defaulters. The initiative looked promising right from inception but hasthe Government properly and proactively implemented it? What level of success has the Community Tax Liaison Officers achieved in terms of sensitization for taxpayers and the general public? I believe the scheme did not need any expensive sensitization for taxpayers and the general public to succeed.
The process couldhave been auto-piloted by ensuring that those in positions of authority take the lead in showing worthy examples for others to follow. Were political officer holders; the military; the police; the para-military personnel, Chief Executive Officers of organizations and staffers of FIRSto take the lead; others will follow as a matter of course. Their influence has continued to wane; and until they show good examples, asking taxpayers to voluntarily declare assets and income for the purpose of taxation may be a street battle.
In any case, I perceive in my heart that the product of the VAIDS crusade would be reasonable at the end of the day. However, is the government ready to dedicate the proceeds to just and equitable causes and be accountable? One year from now, can it be seen what infrastructural and other issues the tax revenue was used to address? What new lessons will some tax officials learn from the scheme in terms of abhorring cutting corners and defrauding individuals and government of revenues? The scheme should be everything other than a new paradigm for fraud. Come March 30, 2018, would it be lights out for tax evaders and their accomplices? You can hazard a guess.
Francis Iyoha
