CITN will ensure Nigeria meets tax-to-GDP ratio of 18% – Agbeluyi

Samuel Olushola Agbeluyi, President, Chartered Institute of Taxation of Nigeria (CITN) speaks on the impact of the federal government’s tax reforms and the need for government to utilize tax fund appropriately to engender public trust to spur more voluntary payment of tax. He spoke with John Osadolor, on the sidelines of the annual retreat of the Women in Taxation (SWIT) held in Abuja.

How has your journey as CITN President been since you took over?

In June 2023, during our Annual General Meeting, I took on the role of CITN President. This coincided with a change in the Nigerian government with Bola Tinubu succeeding Muhammadu Buhari as the 16th President of Nigeria.

President Tinubu, in his inaugural speech at the swearing in ceremony, highlighted the need to streamline taxes. Eliminating tax multiplicity is crucial for Nigeria’s success, and we are committed to achieving that.

How is the government addressing the issue of multiple taxes, and what progress has been made in this regard?

The government has taken decisive steps to tackle the problem of multiple taxes. Firstly, President Tinubu has recognized the issue and established a committee, led by the capable Taiwo Oyedele, to address it. This committee has been actively working on solutions. In fact, specific deliverables were outlined for the first three months, six months, and one year of their mandate, and the first three-month deliverables have already been submitted to the government for review.

A significant development in this effort was the recent circular issued by Zacch Adedeji, the Chairman of the Federal Inland Revenue Service (FIRS), approximately three weeks ago. This circular effectively exempts companies from paying interest and penalties on their tax liabilities, suspending such charges until the end of the year. This action represents a substantial relief for businesses burdened by multiple taxes and demonstrates a tangible step toward alleviating this issue.

For taxpayers, this means that if you have a tax liability, the exorbitant interest rates of around 21 percent and penalties at about 9 percent have been temporarily waived. This is a substantial financial relief for businesses and individuals alike. People can now take advantage of this opportunity to settle their outstanding tax liabilities by the end of the year, thanks to the recommendations of the committee, which the government has promptly started implementing.

Our primary goal at CITN is to significantly boost Nigeria’s tax-to-GDP ratio, moving it from 10.8% to 18%. This is a challenge set by the President, and we’re fully committed to meeting it.

With the government pushing for higher taxes while citizens express concerns over the insufficient impact of existing tax revenues, what do you believe is the key to resolving this dilemma?

This situation is akin to the classic “chicken and egg” scenario. Citizens hesitate to pay more taxes until they see tangible improvements in infrastructure and services, yet the government often relies on these taxes to fund such developments. The alternative, which involves borrowing, comes with the burden of interest payments, making it a less desirable option compared to financing through tax revenues.

Therefore, a more practical approach would be for citizens to fulfill their tax obligations first. This initial step, however, should not be the end of their involvement. It’s crucial for citizens to actively engage with the government, holding it accountable for the efficient and transparent use of their tax contributions.

In a thriving democracy, the responsibility of the government to judiciously utilize tax revenue becomes more pronounced. This is essential for Nigeria’s progress, considering the substantial infrastructural deficits that need addressing. The government’s effective use of tax revenues can significantly improve living standards, lower production costs for factories, stimulate further investments, and ultimately lead to greater prosperity.

Nigeria has immense potential, and getting taxation right is pivotal. If we can effectively manage our tax system, ensuring that it’s fair, transparent, and leads to visible improvements, Nigeria is poised for a significant upward trajectory. This is not just about collecting taxes; it’s about fostering a sense of collective responsibility and partnership between the government and its citizens.

There is an assertion that a lot of Nigerians don’t like to pay tax. Tell us the role CITN is playing to help create enlightenment on their need to pay tax?

I don’t want to agree with that assertion that Nigerians don’t like to pay tax and if anything, nobody ordinarily wants to pay tax globally. There is a saying that nobody pays tax with a smile on their face. The question could be, why are Nigerians not willing to pay their tax?

The reasons are not far fetched, the attitude of the leaders must change. If you put yourself forward to be a governor, president or a lawmaker, it is because you want to serve the people. It’s all about service, it’s not about you. The leaders should pay less attention to themselves and more attention to the populace. That is the spirit of service. Once this is done, Nigerians are good people and law abiding people. Once they can see the evidence of what the leaders are doing with our money, they will pay tax.

Are there steps taken by CITN to help create the awareness of the need to pay tax?

I will start with the just concluded Society of Women in Taxation (SWIT) annual retreat. The essence of the programme is to build the capacity of leaders at this level amongst the women. You can’t do advocacy without knowledge, you must have the knowledge before you can do advocacy. And taxation is so dynamic that you need to keep updating your knowledge of it from time to time.

The Institute will continue to do a lot of advocacy and tell the government, whatever you collect, you can use it in such a way that citizens can relate with it. For instance, in universities, can you improve the standard of hostels? How do you explain professors collecting N450, 000 per month and not having accommodation on the campuses?

How do you intend to develop when you are not paying attention to the educational system? That means we need to spend money in these areas. But CITN will continue to do her part, we will keep on bringing out the point and doing advocacy. The essence is to tell the taxpayers, if your tax obligation is N100 naira, pay N100 don’t pay N50. And for the government on the other hand, if the person’s tax is N100, don’t make him N120. Once we have this respect for each other and professionalism at display, the system will be sanitized and Nigeria will move forward.

How do we bring more people into the tax net?

I think the government has started something but it needs to do more. The government has all the power. They have the instrument to do a lot. I think the government is not taking the steps they need to take because of the moral burden otherwise, it does not take more than six months to bring everybody to the banking system. You can make it in such a way that people will not spend outside the banking sector. I think Charles Soludo as CBN Governor started that, when he began the cashless policy. One of the fall out of the cashless policy, is to migrate everybody to the banking sector. Once you do that, people have BVN and technology will tell you what each spends.

Other means of getting people is through our mobile phones. If you are spending N30,000 making calls in a month and the minimum wage is N30,000, then you cannot be spending all the N30, 000 you earn on phone calls alone. We call that expenditure profiling. People can be profiled in such a way that we know where you belong. And if there is a mistake in the process of profiling, then you bring the facts forward and there will be reconciliation

One of the objectives of CITN is to set standards for those who want to practice the tax profession, to what extent are you ensuring that these standards are complied with?

It will interest you to know that we have over 28,000 members across the country. That is to tell you that CITN is one of the biggest professional institutes in the country. Just last week, we had an induction with about 1,050 people. This is to tell you we have the members properly trained across the country. But because of the nature of taxation, it’s not just that I am qualified, and I am a fellow, what you know keeps on changing. I expect this government to come up with a Finance Act, anytime from now.

That means some of the dynamics and laws will change. Some of the things we know in 2023 by way of practice will change in 2024. The institute is aware of that, so we have what we call the Mandatory Professional Training Programme whereby we train our members from time to time, telling them new things, not just in Nigeria. We have a lot of faculties where we look at international tax, indirect tax, personal tax and company tax. So CITN is ready, I just pray that the government is ready.

How are you supporting the Society of Women in Taxation in Nigeria to attain their goals and objectives?

The Society of Women in Taxation (SWIT) is an arm of the Chartered Institute of Taxation of Nigeria that we are so proud of. While speaking to the women at the retreat I spoke about the valuable role that women play in any society. So any society that wants to move forward, needs to first of all appreciate the place of women because they have been wonderfully made. Women can take up several tasks at the same time.

So, this is not the set of people you put aside. If we actually want to get to our full potential, then we need to recognize them. But in CITN, we have started doing that. We are sensitive to their needs and in CITN, we don’t need to lower the standard for the women to do well. If anything, they could surpass the capacity of the men. Even in our management team, we have the registrar who is a man, and the next four sets of directors working under him are women.

How do you cope as a practicing lawyer and President of CITN?

The good thing about professional institutes, especially the Chartered Institute of Taxation of Nigeria is that you don’t become the president overnight. You would have gone through the system and tutelage, and you will see how your leaders have done it. I am the sixteenth President, meaning I have 15 people that have gone ahead of me and I have studied them and I can tell you that they are great people who can hold their own anywhere in the world. I have been privileged to understudy these people. So, I know how to juggle my job as a practicing lawyer and the role as CITN President and being a family man as well. And nothing suffers.

As the President of CITN, what do you aim to achieve that would mark a significant milestone for the organization?

Our primary goal at CITN is to significantly boost Nigeria’s tax-to-GDP ratio, moving it from 10.8% to 18%. This is a challenge set by the President, and we’re fully committed to meeting it. We’re focusing on comprehensive training, not just for our members but also for taxpayers, because understanding leads to compliance. Our belief is that with the right knowledge, people will be more willing to contribute their fair share.

Partnering with the government is key in achieving this 18% target, which we’re confident we can even exceed. By eliminating wasteful expenditures and fraudulent practices, and ensuring focused and honest leadership, we believe Nigerians are capable of surpassing expectations. Achieving this would not only be a significant milestone for CITN but also a personal point of pride for me as its President.

How will these new tax reforms affect the average Nigerian?

There’s a common misconception about the committee’s role in tax reforms. The President’s directive was clear: don’t tax poverty and help businesses thrive. The goal isn’t to increase taxes; rather, it’s to streamline and reduce the current overload of over sixty different taxes. By consolidating them into a more manageable number, like nine or ten, we can bring clarity and efficiency.

The real issue here is the elimination of confusing taxes that don’t even benefit the government, as non-state actors often end up with the revenue. The focus should be on empowering official bodies like the Federal Inland Revenue Service and state revenue services to effectively collect taxes, cutting out these non-state collectors.

Progress is evident – for instance, VAT filings can now be done from home, showcasing the advancements in digital tax administration in states like Lagos. However, the government must address the issue of various Ministries, Departments, and Agencies (MDAs) imposing unofficial levies, which particularly hamper the growth of small businesses.

I’m hopeful that with strong political will, these reforms can be successfully implemented. If done right, Nigeria could exceed the President’s target of an 18% tax-to-GDP ratio, significantly boosting our economy.