The informal business sector seems the worst-hit in the Rivers endless political crisis that began in 2012 to this day.
Now, a survey has revealed what everybody seemed to know all this while: that there are 75 identifiable taxes imposed on businesses and other taxpayers in the state. These taxes are different from unidentified other ones collected by shadowy authorities and persons 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 collectors 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 64percent of payers compared to 55percent paid by older traders.
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The problem:
The problem is that traders and artisans are under heavy bondage from different tax and revenue collectors. Each time groups rise to send delegations, it is about the formal sector led by groups such as the City Chamber, the Manufacturers Association of Nigeria (MAN), the Rivers Entrepreneurs and Investors Forum (REIF), etc. The numerous operators in the informal sector seem not to have any voice to speak to them because they cannot have the opportunity to pay courtesy calls to the different governors that have ruled the state. For this reason, formal taxes get government attention and reforms, but the taxes paid by the informal sector seem ignored.
The major reason is that those taxes are collected by local ‘strongmen’ and others who have informal connections with those in power. The strongmen seem to be settled with tax kingdoms.
What businesses want
Some governors in the past had shown some keenness to reform the informal tax sector. The problem they seemed to have was that each time they wanted to do this, they would be advised about upcoming elections, and how such provocation could cost them at the polls.
Chibuike Rotimi Amaechi showed so much interest in harmonising informal taxes through the then Executive Chairman of the Rivers State Internal Revenue Service (RIRS), Onene Osila Oshoko. Soon, the 2012 political storm gathered and took a new turn for the worse. Amaechi began to fight for survival and seemed to forget the matter with informal tax reforms.
Amaechi had gone far in tax reforms by making the RIRS to become autonomous so that it would no longer be a parastatal in the Ministry of Finance. The Service was also to be paid not less than five per cent of whatever it collected the previous year. They were to be free to pay their kind of salaries and to use unique processes to get information about tax values of high net worth individuals just like it is done in the US.
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In the Nyesom Wike era, digitisation of tax operations began. The RIRS chairman then began comprehensive informal tax reforms that targeted a voluntary tax compliance system. The chairman, ThankGod Adoage Norteh, got all informal and semi-formal sectors to a series of consultations and meetings where they worked out their members, payment capacities, etc.
All al this was presented to the government for approval so that all persons and businesses would come into the tax net.
By this, all taxes from local to state governments would be collected only by the RIRS electronically and shared with owners.
Suddenly, this noble program went silent. Norteh’s tenure ended, the RIRS seemed to return under the Ministry of Finance and under tight control of political power.
Traders and informal taxpayers told SDN they want Governor Fubara to dig out the Norteh Report and implement it or at least finetune and update it and act. By this, everybody would come into the tax net. The biggest benefit, they said, would be that every business person would know what tax to pay, who to pay to, and evidence of capture due to digitisation.
Now, SDN has come up with a tax reform document that shows what taxpayers want. Governor Fubara can also add this to the one by the RIRS years ago and come up with an informal tax reform exercise, but many fear that such an exercise can only wait for stability to return to the LGA system which is under police seal.
Final word: Tax reform cannot take place in Rivers State until local councils return to stability and the state returns to administrative cohesion.
