THE PROBLEM OF MULTIPLE TAXATION
The report of the committee set up by the Joint Tax Board (JTB) to proffer solutions to the problem of multiple taxation in the country has some useful suggestions that can re-invigorate business operations in the economy, if they are adopted and faithfully implemented.
One aspect of the report is the recommendation of a joint effort between the Federal and State Governments to curb the problem.
Chairman of the JTB who is also chairman of the Federal Inland Revenue Service (FIRS), Mrs. Ifueko Omoigui, noted that multiple taxation is 'evil and illegal'. She explained that the practice, which stifles the business environment, is as bad as other reported cases of illegal collection of sundry levies and taxes by local councils across the states.
As stated by the JTB, multiple taxation of business operations in Nigeria has unsavory consequences. The committee identified the problem as one of the major drawbacks to sustainable economic growth. It further averred that the burden it places on companies is choking, as it makes it difficult for them to run their operations profitably. It also contributes to inflation.
There is no doubt that pressed by many needs and inadequate revenue to tackle them, many state governments and local councils have resorted to extra-legal multiple taxation to shore up their revenue base.
However, stopping multiple taxation requires more than words. Concrete action is urgently needed. This must start with a sound tax policy administration, which must form an integral part of good economic management.
There should be comprehensive tax reform that will streamline our tax regime in such a way that Nigeria will be able to move closer to a single tax system. Failure to do this will hamper government efforts to grow the economy and make the business environment attractive.
Currently, our complex tax structure, which is often exploited by some states and local governments, has become a disincentive to business growth and profitability. The relevant tax laws are in urgent need of review or outright repeal. For Nigeria, in the eyes of the international community, the danger of multiple taxation is grave.
For our country to secure a place as a financial services centre, it must strive, and indeed, achieve an internationally competitive tax system. Also, as an emerging financial market in Africa, Nigeria will be in a good position to attract investors and take advantage of the financial leverages that come with them. But for this to take place, all forms of double taxation must be eliminated in the country.
Since any nation's tax system determines to a great extent the level of business interest and cash flow into the economy, necessary steps must be put in place to stop multiple taxation in Nigeria. Sadly too, it is mainly salaried workers and large corporate organisations that bear the tax burden in the country. Self-employed Nigerians hardly pay tax, whether personal or corporate. This should not be so.
The use of revenue collectors by some state governments also eats deep into the finances of the states concerned. The merits of this practice need to be properly assessed. Altogether, all hands must be on deck in the current effort to end multiple taxation in the country.