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The average Lagosian sees taxes as government wickedness on the people, can you shed light on the importance of tax towards development Particularly in Lagos state.
The first thing we should be talking about is what tax payments is all about. Though there are lot of misconceptions out there due to Lack of education and enlightenment on the public. Now to the point, tax payments is a source of revenue to the state, and no state or country can survive without taxes. The only two countries I know where taxes are not collected are United Arab Emirates and Bermuda. So tax collection is very important for any country or state, so Lagos state is not exempted on the importance of tax and its usefulness. Taxation is about revenue, no state can survive without revenue. Taxes are collected in different ways. At the state level, it’s collected from individual, organizations and residents within that state. I find it difficult to understand why people see taxes as a sort of wickedness on the part of government. I also find it strange when people run away from this civil duty. We use taxes for the day-to -day running of the state and provision of essential services like; roads, hospitals, schools ,water etc for the residents of the state or country. And we have different types of taxes; Pay As You Earn (PAYE), Direct Assessment, Withholding and others which are collectible by local authorities. Taxes are used for providing security, roads construction and other infrastructure. If you look at the Lagos state, a lot of development is going on. The Iyanukpaja -Oshodi BRT Lane was just launched with additional 500 new buses. All these and more couldn’t have been possible without means of generating revenue and the major source is-taxes. So for those who see taxes as wicked act from the government, they lack knowledge about what tax is all about and what it’s used for. You know what you don’t know much about, you can’t say more about. But there is this salient issues about government / the governed relationship, which is lack of trust. People finds it difficult to trust the government. So people are wary of what they do especially when it comes to obligations from the citizens, people would ask, “if I pay my tax, will the government use it appropriately? But t when people see what the government is doing, it boost their trust in government. You can see how Lagos was able to manage the situation during the global pandemic because they have something to fall back at. Lagos is one of the few states that does not entirely depend on the federal government for revenue to survive. People should ask themselves, “how is government carrying out all these mega projects like; hospitals, public schools, roads repairs and maintenance, etc. Let me tell you, what the Lagos state government receives from the federal is meagre compared to what is being done, so a whole lots comes from tax payers. so tax is a duty and responsibility for every responsible citizen.
You are the director of personal income tax, is PIT the only tax collectible by the state; if no, what other means, who is eligible to pay tax?
Personal income tax is in one the lanes from which the he state collects revenue. PIT are taxes and levies deducted from salaries and wages of every employee by corporate agents of an organization that is resident in Lagos. It goes beyond salaries and wages, other sources of government revenue are; rental, commission, contracts among others, which must be declared. we also have taxes from business registration, taxes paid by all registered businesses in the state. Also capital gain tax paid by every individual and from every assets disposed. We also have stamp duty paid on every executed instruments like deed of assignments, others are collectible by the local government, withholding taxes on rent, commissions, consultancy, royalties, constructions and many more. For individual tax rent, it goes to the state while corporate goes to the federal account.
What percentage of the Lagos inland revenue services’ total collection does PIT account for?
Before the review of the budget, the total collection of PIT when compared to others… We have Relationship Management Unit (RMU) which is the bigger arm and that is where we have large tax office, the RMU collection is about 65 percent while PIT collects about 18 percent. We have other contributors such as tax audit, new growth area , they all contribute to tax generation in Lagos state.
What is the compliance level of PIT in Lagos?
Well, for PAYE, the compliance level is very high because we have corporate organizations as agents and it’s paid by every employee in the state. So every employer deducts taxes from individual salary and it is remitted on monthly basis. Howbeit, we have the Direct Assessment, payable by individuals under unstructured organizations like MSMEs, so the compliance level for Direct Assessment is on the average. But we still have a lot of work to do. I think those who see tax payments as wickedness fall in this category, that gap. The question is “why would I not pay tax? But we see roads been repaired and other works in progress round the state, so it behooves on me to say, out of what I earn monthly, I should pay my tax as a responsible citizen since the state is providing the necessary facilities that would aid my business. We have a lot of people under Direct Assessment who are not in compliance with the tax payment but we are doing a whole lot of campaigns and Publicities reaching out to them, we are striving to align everything we do, most of our works are yet in silos, that’s, we are taking everything bid by bid, but we are getting there- we are getting to a point where with a press of a button we can be able to get any information about every taxable person. We are building an interconnectivity structures that would enable us to do our task seamlessly though it’s taxing but we are not sleeping.
What measures are you taking to ensure compliance with those who are found wanting in tax payment
As I said earlier, we are building structures linking every relevant persons and corporates bodies together by enumeration to make sure we capture as much people as possible bringing them into the tax net. We can’t do it alone. Also, we are doing enlightenment programs to encourage people to see reasons with the government on the need to do the needful- paying taxes.
How do you track people with multiple sources of income but declare just one source?
Honestly, it still boils down to interconnectivity and profiling. we are working with various agencies in the state, various ministries like the ministry of Land & Physical planning, Motor and Vehicle Administration (MVA) and others with whom we are able to profile and get some salient information on some individuals and corporates who fail to declare all sources of income. For instance, we are able to identify status of people and properties the they own in the state. So people who have other sources of income but declare just one source are identified through their FORM A, through this information on “FORM A” people fill, we have been able to track and uncover some malpractices people indulge in order to invade tax payment. In addition, through this medium, we have been able to track a number of people who sits as directors in different organizations, and as a director, you earn some income, so we check the records (withholding tax payments audit) and once we find out you have earned some income from different sources of organizations, but under-declared your taxes or any other sharp practise, we ask you to come and file/declare your other sources of income while we do the computation and the person pays all outstanding taxes. Yes the person have to pay, because you have earned the income, the evidences are there, so long as you have been captured, we prorate the whole thing (the percentage of withholding taxes) to get the amount that’ you have collected and recompute the amount you have collected and you pay what is due (tax liability).
Now if what your company remitted to you is N2, 000,000, all we need to do is to prorate that amount and we recompute the amount that it would be that you have collected, so if you have collected N2m as a withholding tax uncommission, that means you must have collected close to N15m as income, but it’s not a cast in stone, you have paid N2m, so no matter what you collect, ours is to collect income on the global amount that you have collected according to the tax rate, we have various tax rates as laid down by Personal Income Tax Act (PITA), we calculate it and calculate the tax dues / Tax liability, now if withholding tax that you have paid on that directorship is N2m, that N2m becomes the tax credit which would now be deducted from the amount that you have paid from that income.
How can PIT be paid?
Every CBN licensed commercial bank is allowed to collect tax and as agents of the state. They have the mandate of the state to collect taxes. Now on E- tax, individuals and corporate can from the comfort of their homes make payments, while employees taxes are deducted by their organizations and paid online, all they have to do is to attach the schedule of all the staff and submit, once that is done, the amount paid goes to the individual -that is on PAYE. On individual, they can go to LIRS platform and make payments on their own, the online payments system has about 23 banks that collect taxes, some banks even use their POS. We have multiple channels but the easiest one is going online to do it from the comfort of your home with your Personal computer or any gadget.
Are there any innovations geared towards making tax collection not only seamless but transparent as well as blocking loopholes/ leakages?
To a large extent, we have come a long way, we have done a lot to reduce leakages from all angles. The first measure was to discourage “cash collection by hand”, we don’t collect cash in the hand. Nobody in this agency or our any of our stations is allowed to collect cash from any tax payer. Every payment is either made through cheques which must be paid to the bank or online payment to avoid fraudulent practices. We encourage tax payers not to go through third parties, this does not mean we are discouraging tax consultancy-No, all we are saying is you can have a consultant but you yourself can go into our online platform and fill your personal data after which you generate your assessment and receipt, but you see people are lazy to explore the online platform. Another challenge people who engage consultant- is signing a Proxy Form which put a responsibility on the tax payer which must be submitted to our office, so in case of any eventuality, the tax payer takes the responsibility because the tax consultant acts on your behalf.
What are you doing to ensure that tax payers don’t fall into the hands of fraudsters?
All our accountants and tax consultants must either be members ICAN or CITN, you know taxation is a very high profession, before you practice, you have to be a member of either of these professional bodies. if any individual is engaging a tax consultant, it’s fine but the person must be wary of who he/she is engaging. if you bring such person here we must ensure you are coming from a reputable organization whom we are cocksure does not work with quacks, so anyone who acts as a tax consultant where we are involved must show proof of professionalism like your letterhead among other verifications to show the organization you represent. As for our Professional members here, CITN or ICAN is a must because tax issues is a critical one.
How has the much celebrated e-tax impacted on the collection of your directorate?
It has been quite effective and efficient. The whole essence of introducing e-tax is to enable us to have access to individual tax payers and to enable us serve a wider audience/ stakeholders better. But we must understand what e-tax is all about first. Now it’s a payment platform solution system designed to enhance efficiency and provide adequate information about individuals and corporates and assist them to submit their information, generate tax assessment, submit information about their employees, to upload withholding taxes. it saves time, cost effective and other myriads of benefits. You do registration, you can also download your receipt. We are not done yet, but we are getting there. So we have adequate information about every tax payer. Most importantly, before you can access it, it carries a unique identification number which no body can replicate, it can only be yours alone. So in that platform, you would be required to input your unique identification number which is your BVN to register or log in, unlike before, people go to the bank to generate Payers Identification Numbers (PIN) for them, now all those has stopped, it can only be generated either here or at the station level. So for you to do all these you have to use your BVN -Just unique for you which has all information about you, that is why it’s called identification number. Now we expect the media to do more in spreading the good news about tax. Help us to sanitize to the public, Lagos state government is doing more as a responsible government, so we are also expected to live and lead a responsible life anywhere anytime any day and one of such ways is by paying tax as and when due, it helps in running quality governance among other benefits for everyone in the state and country at large.
