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From Isaac Anumihe, Abuja
The Nigerian Economic Summit Group (NESG) has said that 74.4 per cent of households recognise the government’s right to collect taxes, although trust in tax authorities remains relatively low, with a score of 2.01 out of four points.
In a survey conducted by NESG,
which covered 18,000 households and 9,097 businesses across the 36 states and the Federal Capital Territory (FCT), it discovered that 67.2 per cent of households had encountered informal levies imposed by non-government groups or individuals at least once.
It equally showed that 13.9 per cent of businesses had been asked to pay charges they considered illegal, raising concerns about the burden of multiple payments on households and businesses.
According to the survey, the findings which were presented in Abuja during a plenary session at the 32nd Nigerian Economic Summit (NES#32), examined how government could rebuild public trust, ensure fairness and encourage voluntary tax compliance.
The session, titled: “Rethinking the Tax Contract: Building Trust, Fairness and Compliance”, brought together government officials, civil society representatives and technology experts to discuss how the tax system could better serve both the government and taxpayers.
The survey also revealed a gap in tax knowledge between households and businesses. While 40 per cent of households had a moderate understanding of tax laws, 80 per cent of businesses said they were aware of the laws.
The survey also identified concerns about unequal tax burdens, differences in the use of digital tax services and limited access to channels for reporting complaints as other problems requiring attention.
The NESG said improving tax compliance would require more than forcing people to pay. It called for simpler procedures, better communication, fair administration and clear evidence that tax revenue was being used to improve people’s lives.
Speaking at the session, the Executive Secretary of the Joint Revenue Board, Olusegun Adesokan, said ongoing reforms were aimed at building a tax system based on fairness, equal treatment, accountability and transparency.
He said that the government was working to harmonise taxes collected by state and local authorities to reduce the difficulties businesses and individuals face when dealing with multiple levies.
He revealed that 20 states have adopted the proposed harmonised tax framework, while the legislation was being reviewed in another 17 states.
Adesokan also pointed to the introduction of uniform presumptive tax regulations by the Minister of Finance, saying that the rules were designed to ensure more consistent treatment of taxpayers across the country.
He remarked that presumptive taxation generally provides a simplified way of calculating tax for businesses, particularly small operators who may not have complete financial records.
Adesokan reiterated that improving the independence of state revenue authorities was another important part of the reform process.
Of the 37 subnational tax authorities assessed, Adesokan said 15 were fully autonomous, 15 were partly autonomous, while seven had no autonomy.
He explained that greater independence would enable revenue agencies to employ qualified workers and improve their ability to collect taxes professionally.
The Country Director of BudgIT, Vahyala Kwaga, said that rebuilding public confidence would also depend on whether governments could show that the money collected was improving public services.
Kwaga argued that governments should not judge their performance only by whether they met revenue and spending targets. They should also examine whether their spending had made a difference to the lives of citizens. “Far too often, budgets appear to be target setting exercises,” he said.
He said taxpayers would have greater confidence in the system if they could see improvements in hospitals, schools, roads and other public facilities funded by government revenue.
According to him, governments must explain how money collected from citizens is spent and allow members of the public to contribute to decisions on tax policies and public spending.
Kwaga also called for accessible complaint channels, including tax ombudsmen at the state level, to help taxpayers resolve disputes with revenue authorities.
He said public participation should go beyond collecting opinions, with governments showing how citizens’ complaints and suggestions influenced their decisions.
He further argued that people on lower incomes should not be denied access to good public services simply because they contribute less tax than wealthier citizens.
Kwaga called for a fair system of taxation and public spending that takes account of differences in people’s incomes and needs.
The Country Director of the International Budget Partnership, Yinka Babalola, explained that the challenge was not necessarily that Nigerians opposed taxation, but that many questioned how taxes were collected and whether everyone was treated equally.
“Nigerians accept the principle of taxation, but they’re not very sure that the practice is actually being carried out the way they would expect,” he said, while urging tax authorities to publish annual reports showing tax waivers, incentives and other benefits granted to individuals and businesses.
He also called for greater openness about whether large companies and wealthy individuals were meeting their tax obligations.
For him, showing that powerful individuals and major businesses were paying their fair share would help address public concerns that some taxpayers were treated more favourably than others.
Babalola said the government also needed to tackle illegal and informal levies, warning that their continued existence could weaken acceptance of the tax reforms.
He called for stronger mechanisms to settle tax disputes and adequate funding for the tax ombudsman’s office to ensure that taxpayers could obtain help when they believed they had been treated unfairly.
He said such services should be available across the states so that citizens would not be left without an effective way to challenge decisions by tax authorities.
