A recent report by the Federal Internal Revenue Service (FIRS) and the Joint Tax Board (JTB) revealed that only 40 super-rich Nigerians pay correct taxes on their incomes. The report, apart from being incomplete, merely revealed the extent to which governments of Nigeria (both federal and the states), the FIRS and the JTB have failed Nigerians over the years.
All the former heads of the FIRS and the JTB woefully failed the nation by allowing the entrenchment of an inequitable tax administration system under which only workers earning the minimum and sub-minimum wages working for organised public and private sectors, are compelled to pay taxes. Others operating in the informal sector and the so-called super-rich get away with economic crimes and thus deprive the nation of valuable statutory income.
Tax & policemen
Although the report did not indicate what level of annual income classifies a person as being “super-rich”, the fact remains that states and the Federal government have ignored all the signs of affluence which in other countries would send the tax authorities after certain individuals. A lot of people live in luxury in Nigeria without paying fair taxes for it.
When a luxury mansion springs up anywhere in Nigeria, the tax authorities should have been involved right from the start. Approvals should only have been granted after proof of tax payment up to date. Furthermore, the building authorities should have had a standing relationship with the tax authorities as result of which it would be impossible to establish private or commercial estates without clearing all previous taxes due.
Sources of information about hidden wealth include banks deposits, the Nigerian Stock Exchange, auto licensing offices and the reports issued by the Economic and Financial Crimes Commission (EFCC).
The work of the tax-collecting agencies and the EFCC are different. While the taxing authorities should get the rich to pay more, the anti-crime agencies are to go after those who acquired their wealth through crime or corruption for possible forfeiture if found guilty. In most cases, offenders on both grounds get away scot free.
The announcement that the tax authorities will soon go after defaulters is flagrant evidence that our law enforcement agencies bark more than they bite. The public should have been told how many they have already invited for questioning. That is the way professional tax authorities work elsewhere.
Lack of a sensible strategy for taxation is one of the reasons the revenue base of the nation is so poor because it depends mostly on oil rents. We must stop paying lip service to diversification of the economy, by ensuring that those who live above certain prescribed levels of comfort must be made to part with generous taxes to make life more meaningful for the poor and develop our infrastructural base.