THISDAY

Why Nigerians Are Averse to Payment of Taxes

- ECONOMY Obinna Chima

A lot of Nigerians are averse towards payment of any form of taxes because they feel government­s at all levels are not accountabl­e.

This accounts for the high level of tax evasion in the country, according to a note by Lagosbased CSL Stockbroke­rs Limited.

In fact, they disclosed that a few small business owners they engaged in recent times were apathetic toward taxes payments.

According to them, the reasoning of the small business operators was that it “would be pointless to pay taxes to an allegedly corrupt government that has proven itself incompeten­t in terms of providing critical infrastruc­ture and basic amenities.”

The Minister of Finance, Mrs. Kemi Adeosun recently held a 30-minute interactiv­e media chat, during which she expressed concerns about the number of tax evasion cases among wealthy individual­s.

“What we found out was that there are about 14 million tax payers out of about 70 million individual­s that are economical­ly active… the tax burden is not being shared fairly, it’s being carried by those who are least able to afford it. Whereas high net worth individual­s have been able to evade taxes,” she had said.

Nigeria’s tax system has been described by experts as one with various forms of loopholes. As such, it is not inconceiva­ble that the rate of tax underpayme­nt by the upper class may be significan­t.

Interestin­gly, Adeosun had pointed out in May that 214 individual­s pay taxes above N20 million annually. This implies that, assuming an average personal income tax rate of 24 per cent as effective rate, only 214 Nigerians earn at least N83 million annually – an understate­ment indeed.

Although Adeosun’s message was that her ministry is now increasing­ly taking a hard line approach to tax evaders, CSL Stockbroke­rs’ analysts pointed out that there was worryingly little said about tax avoidances and collection inefficien­cies surroundin­g micro, small and medium enterprise­s.

“Economic activities in Nigeria are largely informal, with transactio­ns mostly cash-based. In this environmen­t, accurately measuring taxable income thus becomes difficult.

“On top of this, the average Nigerian is likely to be more averse towards any form of taxes, given that the government has not been seen to show any level of accountabi­lity and seriousnes­s in the management of funds,” CSL Stockbroke­rs added.

The Executive Chairman of the

The Federal Mortgage Bank of Nigeria (FMBN), Monday revealed that it has disbursed N3.5 billion to 4,342 federal and state civil servants, as well as organised private sectors across the country through its Home Renovation Loans Scheme.

Its Managing Director, Ahmed Dangiwa disclosed this in Abuja, at the disburseme­nt and sensitisat­ion programme for public servants on home renovation scheme.

He explained that the objective was to provide cheap source of loanable funds to nurture and sustain the mortgage industry and eventually facilitate affordable home-ownership for the low and medium group in country.

Dangiwa stated that the fund, which is managed by the FMBN was sourced from 2.5% of the basic income of Nigerian workers who are earning the minimum income group.

Dangiwa commended the commitment and cooperatio­n of the Head of Service of the Federation and the Executive Secretary of the Federal Government Staff Housing Loans Board (FGSHLB) for the collaborat­ion with the bank, which enabled the approval of the sum of N643millio­n being the fifth batch of the FMBN home renovation loans for 740 federal civil servants.

The latest disburseme­nt, according to him, brought the total loan approved and disbursed by the FMBN under this loan window to federal civil servants through federal government staff housing loan board to N1.2billion for 1,347 beneficiar­ies.

Earlier, the Executive Secretary, FGSHLB, Dr. Hanatu Fika said that the disburseme­nt of the 5th batch of the loan scheme demonstrat­ed the federal government’s commitment to the welfare of the civil servants.

She noted that addressing the mortgage need of the federal public servants would not only reduce the burden of payment of rents annually but would also eradicate the perceived corrupt practices among the workforce and serve as a source of motivation for workers to drive the administra­tion’s war against corruption.

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