Business
By Anthony Isibor
FOLLOWING President Bola Tinubu’s commitment to address the issue of multiple taxation, the Nigerian Communication Commission, NCC, has called on all stakeholders to adhere strictly to the principles of flexibility, neutrality, certainty and simplicity, effectiveness and fairness, efficiency at all times.
This is even as President Tinubu has signed a number of Executive Orders to curb arbitrary taxes in the country by ensuring that all tiers of government align, as closely as possible, to these fundamental principles of taxation.
The Commission made this known at a Regional Stakeholders Workshop on Multiple Taxation and Regulations on Monday, September 11, 2023 with the theme: Multiple Taxation: An Impediment to Economic Development.
Adeleke Adewolu, Executive Commissioner, Stakeholder Management, NCC, explained that although taxation, in and of itself, is a veritable tool for economic development, the paradox of multiple taxation is that it does not lead to an increment in government revenue, rather it makes otherwise profitable businesses, unprofitable, negatively impacts the ease of doing business, shrinks the tax base, incentivizes tax evasion and complicate tax compliance.
He defined multiple taxation as the imposition of the same or similar taxes on the same income base, transaction or person by one or more levels of Government, in one or more jurisdictions.
He noted that while a level of multiplicity is expected in federal system of governance, the levying of a particular tax on the same person/entity, in respect of the same liability by more than one State or Local Government Council should be avoided.
This is also as the World Bank has termed multiple taxation ‘nuisance taxes’ that has continued to prove to be the bane of economic development in many countries.
The World Bank further notes that taxing a specific tax base will lead to increasing revenues up to a specific point, after which the overall tax revenue will decline because companies go out of business, or evasion increases significantly.
Realnews recalls that the National Tax Policy 2017 emphasizes the need to eradicate multiple taxation at all tiers of government. Specifically, the policy states that taxes similar to those being collected by a level of government should not be introduced by the same or another level of government. The Federal, State and Local Governments shall ensure collaboration in harmonizing and eliminating multiple taxation.
Adewolu added that in addition to these challenges, the economic burden of multiple taxation is further exacerbated by the administrative burden of complying with these taxes. It further makes Nigeria an undesirable ground for breeding healthy business and competitive practices. The effect of this is that, business enterprises in Nigeria struggle to compete with their counterparts abroad. These incidents weaken our economic foundations, devalue the symbol of economic strength, which is our currency – the Naira and contracts our gross domestic product.
To further buttress the importance of bringing an end to this economic epidemic, the President, Buhari administration had also inaugurated the Committee on Fiscal Policy, Tax Reforms, which is geared towards harmonizing taxes will provide an avenue to further engage various stakeholders in order to identify their pain points and critical concerns bothering tax and fiscal policies.
It is expected that this would facilitate a conducive environment for conducive for local and foreign investment into the country.
Adewolu also wondered how a fiscal tool for economic development like taxation can become inimical to economic development and called for the correction of some misconception about taxation, particularly the misguided notion of taxation as a penal tool on thriving business enterprise.
According to him, taxation is the backbone for public finance. It provides guaranteed and sustainable sources of funding for social programmes and public investments, it also serves as a tool curated by the government to effectively and efficiently distribute our commonwealth. It is thus evident that taxation is critical for making growth sustainable and equitable.
“Thus, taxation by design is an instrument for economic development and it is important to acknowledge and support the initiative of all tiers of Government in using taxation as an instrument for socio-economic development.
“However, supporting the tax initiatives by the various tiers of Government includes indicating where a category of taxes have become cancerous to economic development. These type of taxes typically manifest themselves in the form of multiple taxation and by design, they reverse growth, stifle innovation and discourage investment. In parabolic terms, they are the scarecrows mounted by government to disincentivise development,” he said.
The workshop was therefore an avenue to rethink the approach towards taxation by adhering to its founding principles bellow:
Neutrality: Taxation should seek to be neutral and equitable between forms of business activities. A neutral tax will contribute to efficiency by ensuring that optimal allocation of the means of production is achieved.
Efficiency: Compliance costs to business and administration costs for governments should be minimised as far as possible.
Certainty and simplicity: Tax rules should be clear and simple to understand, so that taxpayers know where they stand. A simple tax system makes it easier for individuals and businesses to understand their obligations and entitlements. As a result, businesses are more likely to make optimal decisions and respond to intended policy choices.
Effectiveness and fairness: Taxation should produce the right amount of tax at the right time, while avoiding both double taxation and unintentional non-taxation. In addition, the potential for evasion and avoidance should be minimised.
Flexibility: Taxation systems should be flexible and dynamic enough to ensure they keep pace with technological and commercial developments. It is important that a tax system is dynamic and flexible enough to meet the current revenue needs of governments, while adapting to changing needs on an ongoing basis.
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-September. 12, 2023 @ 15:49 GMT |
Tags: Adeleke Adewolu Anthony Isibor NCC President Bola Tinubu World Bank
