- Tax burden more bearable when equitably spread among citizens
Necessity has aroused the inventive spirit at the Federal Inland Revenue Service (FIRS). This should be commended. A new claim by the federal tax authorities that the enumeration of the taxable population has hit a record 45 million will certainly be received as more desirable by those opposed to the kite of possible increment in Value Added Tax (VAT) earlier flown.
Collaborating with relevant government agencies like Nigeria Inter-Bank Settlement System (NIBSS), Nigeria Identity Management Commission (NIMC), Corporate Affairs Commission (CAC) and Federal Road Safety Commission (FRSC), the FIRS now has in its database information to enable it bring into the tax net millions more individuals and corporate citizens.
This followed a resolve by the tax authorities to pursue with more vigour the Tax Identification Number (TIN) exercise this year.
This outcome is consistent with our earlier advocacy that, given the harsh economic climate people are facing in the country today, widening the tax net to ensure more people pay to boost revenue is far more humane and socially minded than the option of raising VAT, though more convenient. Raising VAT only means adding to the burden of existing taxpayers. Afterall, one of the oft-stated qualities of good taxation policy is equity.
Of course, there is no gainsaying the fact that taxation remains the most sustainable tool to mobilise funds as against the nation’s present overdependence on oil, moreso considering the volatility of the price of the commodity in the international market. In any case, on account of the less than bullish trend in the commodity prices generally, growth forecast for mineral-dependent countries for the financial year is understandably only marginal, if not a gaping zero.
Indeed, while a national conversation has over the years been animated by the call to wean the nation off oil dependency, the postulation certainly assumes more stridency today with government at all levels beset with existential challenges requiring funds.
At N8.9 trillion, it is obvious the 2019 approved budget is ambitious indeed. Coming when the minimum wage has been raised to N30,000 even when many states still had difficulty paying the existing N18,000, there is no doubt that a lot of fiscal ingenuity will be required in such states in the times ahead to find the cash to meet rising expenditure.
So, the imperative of tapping more revenue from the non-sector on a sustainable basis (as guaranteed by an enhanced TIN) cannot be overstated in order to mobilise resources to fund growth and development.
However, there is no denying that there is a growing number today who question the basis of taxation simply because they think that the state is failing in its own primary obligation to secure life and property, much less provide amenities or renew existing ones now in a state of virtual decrepitude. Much as such arguments are legitimate, it needs be stated regardless that that cannot be a sufficient grounds to evade payment of tax. In such situation, we are confronted with the proverbial chicken and egg scenario. To enjoy egg requires having the chicken in perfect health as well.
Enumerating more taxpayers through the new TIN initiative would then seem a logical sequence to the bouquet of administrative and operational reforms already mounted by the management of FIRS through automation, to block leakages in the system as well as cut costs.
There are empirical proof to show that the deployment of technology and other innovative steps like VAIDS (voluntary assets and income declaration system) has paid off. It is reflected in the significant rise in the national tax revenue at a time the national economy was supposed to be contracting because of the after-effect of the recession inherited from the Jonathan administration in 2015. We have seen a quantum leap in national tax revenue from N3.3 trillion in 2016 to N4 trillion in 2017 and N5.3 trillion in 2018. VAIDS was, in itself, a creative incentive to ensure more people come forward to regularise the titles of their assets. In its first year of implementation, more than N17 billion was netted by the FIRS.
Overall, part of the promise by FIRS is that the enhanced TIN database will help address and minimise common complaint against the incidence of duplication, opaqueness, arbitrariness and inconvenience in tax administration in the country. But there are also growing complaints from the public, particularly those classified as “rich”, against tax officials resorting to unorthodox means to impose arbitrary tax fines on them. Bank records are obtained behind them and the tax officials then apply the best of judgment principle to impose taxes on the individual or corporate citizen.
Of course, this raises ethical issues. We hope FIRS is mindful of such complaints and will ensure that tax assessment does not turn to the intimidation of citizens.