Why Nigerians Are Averse to Payment of Taxes
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.