Nigeria’s debt escalates due to tax evasion

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Tax experts are clamouring for stricter
punishment on defaulters, claiming that the Nigeria’s external debt is
partly responsible to tax evasion.
 
The experts made the call against the
shocking revelation of the Federal Inland Revenue (FIRS) that close to
7,000 billionaires have defaulted from paying tax.
 
The FIRS said it would soon go after the
bank accounts of the defaulting taxpayers who are raking in billions in
Nigeria and are not paying taxes.
 
The experts also called for a probe of tax record of politicians who are spending millions of naira to collect nomination forms.
 
“These categories of Nigerians have
deprived the country of huge sums of money needed to build roads,
hospitals, schools and so forth.
 
“Most developed and developing economies
rely on tax for infrastructural development,’’ Prof. Sheriffdeen Tella, a
Senior Economist at the Olabisi Onabanjo University, Ago, Iwoye said.
 
“There is need for stricter punishment on tax evaders in the country.
 
“Tax evaders are sent to jail in other climes,’’ Tella said.
 
The economist insisted that the FIRS
should probe into the tax record of politicians who are spending
millions of naira to collect forms for their party primaries.
 
Mr Seyi Alade, Director, Legal Services,
Lagos State Internal Revenue Service (LIRS) also attributed incessant
tax evasion in Nigeria to non-prioritisation of taxation by the Federal
Government.
 
Alade said that the federal government does not prioritise the issue of tax which can be use to develop infrastructure.
 
Alade pointed out that for more than 
6,772 billionaire accounts to have evaded tax means less revenue to the government to fund critical infrastructure.
 
According him, such huge tax evasion were
partly responsible for the level of the country’s external debt,
because government is borrowing more to take care of the infrastructure
gap.
 
“Taxation is a tool for economic
management and development and should support sustainable growth and
infrastructural development at all times.
 
“Payment of taxes is a civic
responsibility of all legible tax payers and evasion of taxes is
tantamount to depriving the economy of its sustainable means of economic
development.
 
“Tax evasion is a major bane in the tax system and it is also a criminal offence and should be strongly decried.
 
“Of course it will lead to tangible economic loss more so as revenue from oil is no longer stable,’’ Alade said.
 
Mrs Oso Afolake, Assistant Director,
Chartered Institute of Taxation of Nigeria (CITN), advised the federal
government to streamline the taxation system for more revenue
generation.
 
Afolake blamed the rampant tax evasion in the country to weak taxation system, which she said was fixable by the government.
 
She called for more stringent application
of the nation’s tax statute by tax authorities against tax defaulters
and also against entities that have statutory duties to remit taxes.
 
According to her, for multinational like MTN and many others operating in Nigeria to 
evade tax, means lots of economic loss on the country.
 
She said that it would impact on the economy negatively; making tax to GDP ratio to remain low.
 
“Tax evasion results to reduction in
revenue obtainable from taxes and this will deprive government the
required resource to perform its statutory duties.
 
“Our government usually doesn’t give priority to the issue of tax, may be because of the resources at their disposal.
 
“It behooves on the government to
restructure the tax system such that every legible taxpayer will be
compelled to pay tax as at when due,’’ Afolake said.
 
The president, International Centre for
Tax Research and Development, Mrs Morenike Babington-Ashaye, urged
government to lay emphasis on building Nigerians’ attitude towards
voluntary compliance to tax law through processes and
procedures.
 
Babington-Ashaye also argued that using the banks to go after defaulting taxpayers was not legitimate process.
 
“Actually, I don’t believe the FIRS should be going beyond the law.
 
“The process by the FIRS is turning to be a military system.
 
“The only way they can do that is if they go through the judiciary process by taken the defaulting taxpayers to court.
 
“Then, the court makes a judgement that they pay penalty and interest.
 
She insisted that taking tax defaulters
to court was a modern way of making sure that the law takes its course
rather than taking the back door.
 
Babington-Ashaye, also a founding member of the Chartered Institute of Taxation of Nigeria (CITN), 
described the FIRS’s process of asking the banks to seize money as ‘going to the back door’.
 
This, the president said might lead to customers 
not saving their money in the banks, thereby reducing their resources for operation.
 
“It will also encourage some individuals and companies to be transacting businesses in another companies ‘names.
 
“So, the process is not legitimate.
 
“In the first instance the banks are not
direct agents and do not have any judiciary position between the inland
revenue and the taxpayers’’ she said.
 
Babington-Ashaye, also the former
Chairman, Ogun State Internal Revenue Service, said process is not
modern and therefore, not expected of any civilised revenue office.
 
She wondered why the revenue would want to turn against the procedures in the industry’s Practice Act.
 
Besides, the accountant noted that the 
assessment of the service might to be final and conclusive because of some certain reasons.
 
“The only time the bank can be asked to collect money is when the court has judgement to do so.
 
“The FIRS can now call on the banks to assist it in collecting.
 
“Even when the FIRS is asking the banks to collect on it behalf, they can’t do that behind the account owners.
 
“This is because the customers and the
banks have separate contracts. No customer will ask his bank to throw
away his money to a third party.
 
“So the tax payers can also sue the banks because they are 
keep money and not transacting business with a third party against customers’ interest.
 
“So, at the end of the day the bank loses big,’’ said Babington-Ashaye also a former Ogun State Commissioner for Finance.
 
Mr Taiwo Oyedele, Tax Leader, PwC West Africa, argued that the development should not be looked with sentiments.
 
Oyedele described the process as an
unconventional tax collection measures, saying that carrying out the
order had to be with caution.
 
He said executing such order should be in
accordance with the law to avoid negative impacts on businesses and
easy of paying taxes.
 
Oyedele advised that tax payers to pay attention to their tax affairs and discharge their tax obligations as and when due.
 
Another tax expert, Mr Kunle Quadri, said
paying taxes was one of the most responsible duty, for individuals and
firms, because it is a tool for redistribution of wealth.
 
Quadri, a former president, West Africa
Institute of Taxation, said that paying of taxes at all levels was one
of the most responsible deeds, and also sacrosanct to ensure that
government meet it obligation.
 
“We needs to pay our taxes as it is one
of the most patriotic deeds and enables government to meet its own part
of the bargain to the electorate.
 
“As it is the most reliable means of funds accrued to the government.
 
He noted that reorganisation was needed in the tax agencies to ensure that they become more effective.
 
“Granting them more financial autonomy will enable them incorporate more people in the tax bracket.
 
“Autonomy will give room for new training and retraining of officials to be abreast with new trends considering 
how dynamic the society is.’’
 
He said that tax agencies must begin to implement it laws to ensure that firms must comply and be responsible.
 
“Appropriate sanctions should be meted to airing firms to enable them confirm with the laws of the land.
 

“As executing this will enable the society become better over time, 
he said.