VAIDS: A call for humane taxation
The Voluntary Assets and Income Declaration Scheme(VAIDS) was introduced by the current administration as an initiative designed to encourage voluntary disclosure of previously undisclosed assets and income for payment of all outstanding taxes.
It has been implemented by the FIRS in collaboration with all the 36 state Internal Revenue Services. The campaign commenced at the headquarters of the Ministry of Finance in Abuja, with top officials of the ministry, as well as the Federal Inland Revenue Service, visiting markets and other popular places to sensitize people on the need for voluntary tax payment.
The Minister of Finance, Kemi Adeosun, while speaking on the campaign earlier, said through data collected, the federal government has detected many people whose lifestyles do not justify the tax they pay, or who do not pay any at all. She assured that such people will not be prosecuted or made to pay their tax arrears if they file the proper returns and regularize their tax payment before the VAIDS deadline which has now been moved from March 31st to June 30.
For those with assets abroad, the minister said the Automatic Exchange of Information (AEoI), to which Nigeria is a signatory will deliver data on such with or without a formal request.
In an uncaring society such as ours in Nigeria, one wonders what the purpose of taxation is. The money realized from taxes are not put to any use that people can see, and those who are unable to provide for themselves are completely neglected and left to die or make a living by inconveniencing others. The needy are all over the place on the streets, begging for money to eat, with no hope of any provision from the social welfare departments, as is the case in other saner societies.
A tax system should encourage savings, production and investment. It should help to maintain full employment, stabilize prices, maintain equilibrium balance of payment and economic development.
The imposition of a certain levy or tax on a group of people like VAIDS should be for a certain purpose, a certain time frame to raise income for either the payment of government debt, certain unforeseen expenditure like war, disaster etc.
The effect of a certain levy/tax changes the relationship between disposable income and national income, the effect is negative on the marginal propensity to consume of the people. When disposable income declines, national income also declines.
VAIDS most likely will be a counter-productive move from the public authority that will discourage savings, investment and hard work.
In Nigeria, government makes money majorly from Pay As You Earn (PAYE) system and company income tax. If an investor/payee after being taxed decides to use his profit after taxation to acquire a property (building) or a civil servant after saving his disposable income decides to buy a house, is it equitable for VAIDS to place a levy on their hard work? It means these people are paying triple taxes which is direct deduction from profit (income), VAT from purchase and VAIDS, all government levy targeted on the productive population.
Government should have a good tax system, potent and effective to minimize tax evasion and ensure wider coverage of tax payers. It should have a flexible tax system geared towards encouraging investments, production and saving which will in turn increase national income.