An ex-while president of Chartered Institute of Taxation of Nigeria (CITN) Mrs Adebimpe Balogun has disagreed with the move by the Federal Government to increase Value Added Tax (VAT) from five per cent to ten.
Speaking at the eighth Wole Soyinka’s Centre Media Lecture Series, with the theme: “Tax Education, National Development and the Seminal Role of the Media”, Balogun said that the present economic situation in the country does not support such move.
According to her, rather than increasing taxes payable by Nigerians as being mulled by the Federal Government, government at all levels should broaden their tax base by bringing more people in the formal and informal sectors into the tax net.
Balogun charged the state governments to look inward and develop other products that could generate additional internally generated revenue that would help them cope well with the economic recession rather than depend solely on the monthly federal allocations.
Dynamic tax reform She further called on the law makers and other highly placed government officials who earn heavy salaries to lead by example by paying taxes commensurate to what they earn. While noting that lawmakers were not exempted, she called for a more sustainable and dynamic tax reform system.
According to her, “Anybody that is thinking of increasing the VAT rate, is a suicidal attempt for our economy. Right now, people are suffering over the inability to pay for many fees, ranging from the schools, rents, etc.
“This is not the time to start asking tax payers for higher rate. But rather it is the time to expand the tax base and the tax net, to capture those who are not in the tax net at the moment. We have a misconception about who are the informal sector stakeholders. The informal sector are not just the traders, or the ‘Balogun, Ojo market traders’, but rather those who do portfolio contracts and collect the juicy contracts from the government and are not charged adequately. The question I have for the Federal Inland Revenue Services (FIRS) is; to what extent are they using our withholding tax system to capture these people? This is because the Federal Government agencies that give out these contracts are obliged to withhold taxes. And so, how much of that do we leverage to be able to attract taxes from those informal sectors and not collecting much taxes from employees, though I am not saying that employees should not be taxed.”
“It is time to develop other products of our economy. The natural resources range from agriculture, tourism and entertainment industry. They should be improved upon as they employ quite a number of persons. Dubai for instance survives on tourism. Let us look inward, as well as other areas where we can actually improve their productivity and not just taxes. Also there is need to invest on exports and creating an attractive environment, as massive revenues are generated from export.”
She identified Ogun, Anambra and Borno States as states with increased IGR, saying that they have done significantly well in developing other sources of revenue. For instance, she said that Ogun State increased its IGR by 49.42 percent from N17.57 billion in 2014 to N34.65 billion in 2015, while Anambra achieved 29.32 percent increase from N10.45 billion in 2014 to N14.79 billion in 2015. Borno State on the other hand, increased its IGR by 21.8 percent from N2.766 billion in 2014 to N3.53 billion in 2015.
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