FG’s Bid to Raise $1bn Through VAIDS Faces Compliance Hitches
The bid by the federal government to raise $1billion (N360billion) via the Voluntary Assets and Income Declaration Scheme (VAIDS) may not materialise following the flawed strategy put in place by policy makers and some other factors.
The stronger part of the two-pronged strategy is data mining, and matching between government departments and agencies, a plan analysts believe, might not work due to different political tradition from countries the system was borrowed from.
However, as the March 31, 2018 deadline for compliance approaches, analysts at FBN Quest said the federal govern- ment may not succeed with the plan.
In a report titled, ‘The deadline for Tax eVAIDers,’ FBN Quest stated that it is not sure that the federal government’s strategy is practicable in Nigeria or indeed many countries with a different political tradition.
According to FBN Quest, “At its launch, VAIDS had a target to raise at least $1 billion equivalent. We are not aware of any interim progress reports. The stronger part of the two-pronged strategy is data mining, and matching between government departments and agencies. The Federal Government of Nigeria (FGN) has employed a United State household name in asset recovery to link land registry records and tax receipts. Other areas of interest to the authorities include bureaux de change records, the whistle-blowing scheme, data held at the Corporate Affairs Commission, Wikileaks and the “Panama papers”, the registration of private jets and yachts, and bank verification numbers.
“We have heard extreme parallels made by Nigerian policymakers with data matching in Ethiopia where, it is said, a purchase in a store with a credit/debit card is captured by the tax agencies. We are not sure that this is practicable in Nigeria or indeed many countries with a different political tradition. The other part of the strategy is educational. This is long-term, and requires the state to provide services for which the population is willing to pay in the form of taxes. Lagos State offers the most-quoted template.”
A successful follow-up by the authorities after the deadline, the analysts stressed, requires the full cooperation of the judicial system.
“Another challenge for the authorities is to convince the working population that the amnesty is really an oncein-a-lifetime opportunity. The experience from Turkey, Indonesia and elsewhere is that
such programmes are repeated and gradually their edge in consequence figures cited by the Federal Finance Ministry show that there are 14 million taxpayers in Nigeria, of which 13.4 million have their taxes deducted at source. Those paying some taxes voluntarily represent less than one per cent of the economically active population.
“Non-oil revenue inflows into the federation account amounted to just 2.3 per cent of gross domestic products (GDP) in 2016, and total inflows 5.0 per cent. The ratios from emerging markets such as India, Ghana and South Africa tell us that Nigeria should be managing a bare minimum of 15 per cent.
“Against this background and the FGN’s ambitious plans for the infrastructure, the authorities launched the VAIDS in June. The scheme covers the whole gamut of taxes, and gives Nigerians until end-March to regularise their tax affairs. Should they not meet the deadline, they are liable, if convicted, to imprisonment of up five years, the payment of accrued interest at an annual rate of 21 per cent, penalties and possible confiscation of assets,” they stated.