Experts say Nigeria has the capacity to double its current $440 billion economy by ensuring that taxes become fiscal and development tools rather than just revenue generating instruments.
One major advantage of this strategy is that it will bring more people into the tax net, increase company output and economic productivity while raising employment levels, say experts.
“What we are seeing now is that the taxation is not being used as a fiscal tool but rather as a revenue generating tool. It’s not being used to direct development but it’s used by government to buffer its own revenue, which is not very good,” said Akin Alawore, deputy president of the Nigerian-British Chamber of Commerce (NBCC), said at the seminar organised by the Construction Group of the NBCC entitled, ‘Navigating Tax Issues In Real Estate Transactions’ in Lagos.
“What has been noticed is that you can tax a business to death. Taxes can either increase or decrease consumption .Allow people to have cash in their wallets to be able to buy. If they are able to buy, manufacturers will produce. If they produce, then the economy will begin to bounce back while jobs will be created,” said Alawore.
Nigeria is currently mired in recession, fuelled by low oil revenue. The country is in need of tax revenue for a rebound but experts in the real estate sector say there is a need to reduce tax rate to encourage players to pay land charges and register properties, which will in turn raise more revenue for the government.
According to Olateju Semorin, former president of the Chartered Institute of Taxation of Nigeria (CITN), collection of property tax was not one of the taxes the Federal Inland Revenue Service (FIRS) was assigned to collect by the law of the National Assembly, but added that Section 30 of Companies Income Tax (2004) empowered the FIRS to have access on turnover.
“The FIRS says that what they are doing is that there are some companies the Lagos State has allocated some commercial properties to. They have properties all over and they have never registered with the FIRS and have not paid any tax. The FIRS wants to get these kinds of companies into the tax net. They are basing it on turnover tax by applying Section 30 because Section 30 is not based on property but turnover tax,” Semorin said.
ODINAKA ANUDU & ANGEL JAMES
