Survey shows how businesses face 75 different taxes in Rivers

…As SMEs groan due to paltry profits

A study has revealed how businesses in Rivers State face 75 identified taxes and levies, apart from unidentified ones collected by shadowy authorities and figures including security agencies and communities.

The study was carried out by the Stakeholder Democracy Network (SDN) and it was unveiled to non-state actors and media on Thursday, September 12, 2024, at the Visa Karena Hotel in the GRA 2.

The highest number of taxes (37) are listed to be collected by state authorities, local councils (23) and federal agencies (15).

The report was presented by Alexander Sewell, research and policy manager at SDN. The collected often use consultants and agents for the collection, but the study indicated that some of the collectors have been accused of not being clearly identified.

The massive and multiple taxes are said to have had big impacts on SMEs, big businesses, urban businesses, young people and women are mostly affected.

Young people and women are said to be the most taxed people. The report added that multiple taxation affects all businesses in Rivers State, with two-thirds of businesses reporting that they pay these taxes. “However, young people and women are disproportionately impacted.”

In the SDN survey, businesses run by individuals below 35 years are more likely to be forced into paying multiple taxes and they constitute 64% of payers compared to 55% paid by older traders.

Similarly, female-owned businesses are slightly more likely to pay multiple taxes to the tune of 67% than male owned ones at 64%. Young people spend 31% of their income on taxes compared to those over 36 years of age who constitute 16% versus 7% of the sample population.

Unregistered businesses are more vulnerable to extortion and revenue collection.

There is report of a preponderance of fake permits which cause high prices and reduce profitability in businesses. “There is also disruption of economic life.

“Transport sector is worst hit because 83% have complained of high rates and taxes. There shutdown and seizures of items.”

Read also: FG, states begin harmonisation of taxes

Major causes:

On causes of the multiple taxation menace, some participants blamed it on failure of top contestants in governorship elections to attend governorship debate where the business community presents questions for answers especially on taxation policy.

There is also refusal to address press conferences to be examined by the press and NGOs, and use of local muscle men for election purposes and turning round to compensate them with revenue collection, thus emboldening them and making them uncontrollable.

The report showed how multiple taxes block SME progress saying it is a killer of businesses. It piles up expectations that are not ever fulfilled. “It creates jungle situation and people think twice to set up businesses in Rivers State, and other problems.

They say different groups bring different demand notices such as sanitation buckets, instead of yearly demands that comprise everything. “LGA boys invade the traders while many boys come for different things. SMEs report little gains with plenty payments. There is usually nobody to run to that will take action, and that the monies collected mostly go into private pockets.

“Some even use police as cover during the raids.”

Read also: Here are 10 sectors that paid most taxes in Q2

The transport operations have their own complaints which show they pay up to N800,000 per annum through daily payments ranging from national union payments, state, LGA, park fees, chairman’s fees, etc.

Many have asked to know what the state government done so far but they are said to have often sacked the consultants, and have attempted digitization, with promises of tax harmonization.

The research also examined why the tax crisis has persisted, saying it is due to lack of tax harmonization exercise. Some of the participants said list of correct taxes exist but LGAs still persist in collecting what they wanted.

Another said governments are broke and are afraid of reducing tax incomes.

The report and the participants revealed what traders said they expect, with harmonization on top. Others want the state to reconcile with federal authorities on who collects what tax. They say the Rivers State Internal Revenue Service (RIRS) should establish a unit for complaints and reconciliation.

They also talked about the need to improve the digital tax system called Rivtamis and that more awareness campaign and tax education. The issue of gender implication also came up, with some activists pointing at several hindrances to women and the youth.

On the way forward, some participants suggested that the losses and possible gains be put forward to government so they can what they are missing by not reforming taxation. There is need for harmonisation, they said.

“Let there be monitoring team on how taxes are collected. Enhanced tax payers education. Look into the need to set up tax complaints unit in LGA. Then organize a big conference on taxation.”