TAXATION AS CATALYST FOR DELTA RENAISSANCE
The ‘’Delta beyond Oil’’ policy thrust was conceptualised by the Executive Governor of Delta State, Dr. Emmanuel Eweta Uduaghan to reduce total dependance on oil revenue and to replace it with what the citizenry can do regarding governance and sustainable State-building, poverty alleviation through micro credit programme, sustainability as well as development through improved tax compliance.
One of the most pressing issues in the country today particularly the Niger Delta States is the dependence on oil revenue recurring from the Federation Account and indebtedness to Banks or Capital Market, where BONDs are obtained for States development.
Little or no efforts is made to focus on boosting tax revenues through broad-based taxation by States of the Niger Delta but experience has shown that this will lead to more predictable revenue collection and meet the developmental agenda of the region.
Since 2009, Delta State has been leading the way in the "Beyond Oil" concept which has vastly gained ground in the State as an alternative to oil receipts and taxation has been central to the developmental agenda of the State.
Resource mobilisation is the financial bedrock on which sustainable, long-term development is built. The raising of tax revenues is arguably the most central activity of any state. Revenue from taxation is what sustains the existence of the state and provides the necessary financial resources for social and economic infrastructure.
Taxation is the administrative heart of government and it provides the funds to supply public goods and implement effective regulation. Hence the newly reappointed Chairman of the Delta State Board of Internal Revenue, Hon Joel-Onowakpo Thomas had involved experienced Tax Professionals and accountants in the administration of taxes in the state.
The remarkable increase in the state’s Internally Generated Revenue from N1.2 billion when the Board was inaugurated in July 2009 to N5.7 billion recorded by January this year is evidence that when we build relationships with all stakeholders and contribute to the efficiency of the tax collection system, taxation could actually be a catalysts for the State's renaissance otherwise known as the " The Delta Beyond Oil" project.
“Before 2009 the dependence on oil in the state was 90 per cent and what that meant was that if for instance there was a drop or a frustration in the oil price, it will affect everything in the state including the payment of salaries”, Onowakpo said.
In the past two years, Onowakpo had been collaborating professionals tax collectors in the state under the auspices of the Tax Audit Monitoring Agency (TAMA), to improve on the state IGR and expand on DBIR tax net.
It is incumbent on tax professionals to take responsibility for developing a healthy relationship between their clients and revenue administrations, and for providing the necessary technical guidance and support for the creation of a satisfactory tax compliance culture.
Onowakpo, initiated the TAMA which comprises of bodies/groups of tested professionals, tax practitioners and accountants, skilled in tax management and administration in May 2011 to monitor, audit and investigate companies operating in Delta state to enable the attainment of the actual tax due (i.e PAYE & WHT) and payable to the State Government.
The Tax Professionals largely employed moral-suasion to convince its various clients on reasons why they should willingly comply with the tax laws in the state rather than being compelled to do so.
Having created the conducive environment for operation, members of TAMA had been liaising with their clients to ensure that full disclosure of all employees, adequate/actual PAYE deductions, full disclosure of all contractors’ details and adequate/actual deductions of WHT.
TAMA also liaises between its clients and DBIR at the instance of its clients and thus enhance tax compliance by providing relevant DBIR tax details to enable the creation of a better and robust tax template for their use, expansion of tax net: sourcing of clients to increase DBIR tax clientele base and creation of client education/awareness to help them embrace DBIR.
The understanding that exists among the Board, Tax Professionals and the clients has further helped in ensuring full disclosure of all expatriate employees, provision of actual expatriate quota and monthly immigration returns, provision of expatriate deletion where applicable and prompt remittance of monthly PAYE and WHT to the bank.
Collection of DBIR receipts from their local Tax offices and provision of copies of monthly PAYE and WHT receipts to TAMA for record purpose has also become routine. At the end of each calendar year, TAMA also promptly carries out an end of year Tax Audit of its clients.
This strong and organised relationship between DBIR, TAMA and the tax-paying corporate organizations and individuals has further enhanced an efficient tax system in the state as virtually all clients promptly comply with Tax audit request.
Currently,TAMA has successfully Tax-audited all its clients for all previous years before their appointment, while some for the 2011 financial year and 2012 financial year are already completed. Because of the collaboration between the tax professionals and the tax board, tax compliance has increased as most clients have paid up all their tax liabilities to DBIR.
The Tax Professionals at a recently held meeting in Warri had said that besides putting the collection of taxes on the path of sanity, the State Government through DBIR has succeeded in creating employment for young tax consultants in the state who are now working as employees under the consultancy.
But in order to sustain the tempo, there is the need to create further tax awareness and enlightenment of the informal sector to further get more tax paying public into the tax net of the state.
Addressing some World Bank officials recently, Onowakpo said that DBIR had deployed the TAMA to go through the books of the different companies in a cordial atmosphere with their officials, and come up with the relevant taxes to be paid, based on the laws of the land.
‘’In the past, multiple notices were issued in respect of taxes but the new partnership between the board and the companies is meant to address such matters. The agency is committed to ensuring efficient tax generation that would lead to increased for the state"
He said that the measures were already yielding appreciable results with the increase in the State's IGR from N1.2billion to N5.7billion within July 2009 to January, this year. This was achieved by the Board in relation with the tax consultants by blocking all the leakages in the tax system .
Prior to this, the factors which had hindered the timely achievement of a well organised system of taxation in the State, which included multiplicity of taxes before July 2009, were inadequate use of technology in tax collection and a defective tax dispute resolution process.
Among several other reasons adduced for the cumbersome nature of tax administration in the state which stimulate Onowakpo into restructuring the system were lack of transparency and accounting, collection of taxes by touts and lack of tax awareness. ##
Written by Joe Ogbodu