Mul­ti­ple taxes, bills choke Nige­ri­ans amidst pay cuts, pan­demic

Weekly Trust - - Feature - By Fran­cis Arinze Iloani, Chris Agabi, Vic­to­ria Onehi, Lat­i­fat Opoola, Si­mon Echewo­fun Sun­day (Abuja), Sun­day Michael Ogwu & Chris­tiana T. Alabi (La­gos)

Mul­ti­ple tax­a­tion, bill hike and salary cuts are fast be­com­ing the new nor­mal to busi­ness own­ers and work­ers in Nige­ria. This was fur­ther com­pounded by the eco­nomic ef­fects of the COVID-19 pan­demic, slow­ing turnover level of busi­nesses and af­fect­ing the in­come level of in­di­vid­u­als, amidst job losses.

De­spite the hit from the pan­demic, scores of work­ers and en­trepreneur­s who spoke to Daily Trust Satur­day have de­cried the un­abated rise in ‘forced’ taxes be­ing levied on their strug­gling busi­nesses. They also lamented the ef­fects of these tar­iffs on their pock­ets as their resid­ual and busi­ness in­come have de­clined in the last four months rather than ap­pre­ci­ate.

In Fe­bru­ary 2020, the Fed­eral Gov­ern­ment raised the VAT from 5 per­cent to 7.5 per­cent. The 11 elec­tric­ity Dis­tri­bu­tion Com­pa­nies (DisCos) im­me­di­ately ac­ti­vated that on the bills of over 10 mil­lion reg­is­tered elec­tric­ity users.

De­spite this, the Nige­rian Elec­tric­ity Reg­u­la­tory Com­mis­sion (NERC) was to in­crease elec­tric­ity tar­iff by over 50 per­cent in April but was cut short due to the COVID-19 emer­gence. It tried that again in July but met re­sis­tance from the Na­tional Assem­bly; it’s been sus­pended till 2021.

How­ever, NERC increased the cost of buy­ing me­ters by con­sumers who are al­ready cry­ing over high and un­fair bills. The reg­u­la­tor jus­ti­fied this, say­ing me­ter providers and the DisCos had faced forex and in­fla­tion rise with a sin­gle phase me­ter now sell­ing for N48,263 while three phase is N89,069.

A pro­posed two months free elec­tric­ity for Nige­ria by the Na­tional Assem­bly to cush­ion the pan­demic ef­fect on power tar­iffs was jet­ti­soned over bleak im­ple­men­ta­tion means.

Le­vies, bills press­ing us harder Work­ers

A mi­cro­fi­nance banker in La­gos, Mr. Aderemi Oluyemi, said the gov­ern­ment was in­sen­si­tive to the plight of the peo­ple es­pe­cially dur­ing COVID-19 when it is sup­posed to give pal­lia­tives to the peo­ple and that its ac­tion was putting pres­sure on the econ­omy.

“For the past four months, there has been 20 per­cent cut from my salary, yet the gov­ern­ment is in­creas­ing the bur­den. Even the prices of food items are ris­ing day by day, cost of trans­porta­tion in La­gos is very high par­tic­u­larly with the so­cial dis­tanc­ing di­rec­tive of the gov­ern­ment,” Oluyemi said.

A staff of Air Peace air­line, Mr. Kabiru Ojo, said he suf­fered over 40 per­cent pay cut as a re­sult of COVID-19 pan­demic, and can’t meet up with his re­spon­si­bil­i­ties. How­ever, ris­ing taxes and tar­iffs stare him in the face.

A jour­nal­ist, Bi­ola Yusuf, said his na­tional news­pa­per was af­fected. “I have no salary from my em­ployer, yet we work round the clock and we have fam­i­lies and our­selves to cater for. It is re­ally a ter­ri­ble sit­u­a­tion,” she lamented.

An Abuja-based Agribusi­ness In­ter­ven­tion worker, Dami­lare Ag­bele, lamented the im­pact of mul­ti­ple tax­a­tion on his over­all earn­ing amidst the COVID-19 pan­demic.

“My salary is pri­mar­ily taxed (with­out any ev­i­dent so­cioin­fras­truc­ture ben­e­fit en­joyed). I pay VAT on items pur­chased and ser­vices pro­cured. Banks charge stamp du­ties on trans­ac­tions and other un­ex­plain­able de­duc­tions on trans­ac­tions,” he said.

Ag­bele also said prices of prod­ucts and ser­vices (food and trans­porta­tion es­pe­cially) have increased con­sid­er­ably and at the end of the day, one is left with al­most noth­ing to live on.

On cop­ing with salary cuts, an avi­a­tion sec­tor worker, Arhel Hena, said he got 80 per­cent salary cut due to COVID-19 ef­fects.

“I also had to man­age to pay my rent which was due in May. I would have been out there with peo­ple. It wasn’t funny at all. Avi­a­tion is the worst hit, as I know some com­pa­nies that are also strug­gling to pay a to­ken to their staff,” he said.

Busi­ness own­ers share pains

An­other group of peo­ple im­pacted by mul­ti­ple tax­a­tion is the Mi­cro Small and Medium En­ter­prises (MSMEs) es­pe­cially as Pres­i­dent Muham­madu Buhari signed the Fi­nance Bill in Fe­bru­ary which, among oth­ers increased the Value Added Tax (VAT) from five per cent to 7.5 per­cent.

A 2020 sur­vey re­leased in June on over 1,600 Small and Medium En­ter­prises (SMEs) own­ers in 29 states re­vealed that the mul­ti­ple taxes and le­vies re­main a bane for tax-pay­ing busi­nesses in Nige­ria, es­pe­cially MSMEs.

The Price­wa­ter­house­Coop­ers (PwC) sur­vey showed that 49% of SMEs pay 20 to 40 per­cent of their in­come or prof­its on taxes and le­vies, while 28 per­cent of busi­nesses pointed out that the Lo­cal gov­ern­ment charges, taxes and le­vies were the most dif­fi­cult to com­ply with. The sur­vey cov­ered over 1600 busi­ness own­ers across 29 states.

A shoe­maker and CEO of Shoe­speed In­ter­global Ser­vices Lim­ited in La­gos, Abio­dun Fo­lawiyo, said in de­vel­oped coun­tries like Italy where SMEs have elec­tric­ity, good roads, ac­cess to fund­ing and more, peo­ple do not mind when gov­ern­ment charge ex­or­bi­tant taxes be­cause en­trepreneur­s know what gov­ern­ment will do with it.

“But in Nige­ria, the money they col­lect from us, you hear that some­one stole N30 bil­lion. So, the tax they col­lect is not be­ing trans­lated to good use to pro­vide in­fra­struc­ture.”

Fo­lawiyo said the gov­ern­ment should give SMEs tax hol­i­day in­stead. “They should de­clare a tax hol­i­day for us and not tax us. Gov­ern­ment should make Ease of Do­ing Busi­ness more at­trac­tive for us and for­eign in­vestors.”

The CEO of Dol­phin Restau­rant and Ca­ter­ing Ser­vices, Nneka Agbo, said con­sumers feel the im­pact of any tax.

“Ba­si­cally, when we pay more taxes, the in­cre­ment will di­rectly be trans­ferred to cus­tomers such that it will im­pact on their per­ceived earn­ings and sav­ings. How­ever, the down­turn for reg­is­tered busi­nesses such as ours will be that cus­tomers will now pre­fer to pa­tro­n­ise sub­stan­dard and un­reg­is­tered eater­ies.”

COVID-19: CBN in­ter­venes with N1trn, ef­fects per­sist

The ag­gre­gate in­ter­ven­tions from the Cen­tral Bank of Nige­ria (CBN) in the wake of COVID-19 out­break is N1.15 tril­lion from which it has dis­bursed N295.7 bil­lion to man­u­fac­tur­ers, the health care sec­tor, the SMEs and the house­holds.

These in­ter­ven­tions com­prised the N50bn House­hold and SME fa­cil­ity, the N100bn health­care and N1tn man­u­fac­tur­ing and agri­cul­tural in­ter­ven­tions to sup­port the re­bound in growth from the im­pacts of the pan­demic on the econ­omy.

There is also the CBN co­or­di­nated CA-COVID - Pri­vate sec­tor in­ter­ven­tion scheme - which mo­bi­lized over N32bn to sup­port the econ­omy, lives and liveli­hoods.

De­spite this, our sur­vey shows the ef­fects of the pan­demic re­flected in mul­ti­ple tax­a­tion, salary cuts still per­sist.

En­trepreneur­s, experts con­demn in­ces­sant le­vies

Experts, man­u­fac­tur­ers and other stake­hold­ers in the Nige­rian econ­omy have con­demned the in­ces­sant le­vies amidst the COVID-19 pan­demic. Most of them be­lieve that key tax­a­tion that im­pales the pock­ets of Nige­ri­ans should have been shelved off dur­ing the pan­demic un­til eco­nomic ac­tiv­i­ties fully re­cover.

Mr. David Aku, an Econ­o­mist based in Enugu said it made no sense trou­bling cit­i­zens with so much taxes, le­vies charges, stamp du­ties and so on dur­ing a pan­demic where the pur­chas­ing power is crip­pling.

He also urged the FIRS to sus­pend the six per­cent stamp duty on ten­ancy agree­ment till 2021 when the econ­omy is pro­jected to re­cover.

The Na­tional Co­or­di­na­tor, Pro­gres­sive Share­hold­ers As­so­ci­a­tion of Nige­ria, Boni­face Okezie, said the tax sys­tem de­pletes re­turns on in­vest­ment and sub­se­quently trig­gers busi­ness col­lapse.

The As­so­ci­a­tion of Bureaux De Change Op­er­a­tors of Nige­ria (ABCON) in its Quar­terly Eco­nomic Re­view for Q2 of 2020, called on the Fed­eral Gov­ern­ment to sus­pend all in­creases in tax­a­tion and tar­iffs un­til the econ­omy re­cov­ers from the im­pact of the COVID-19 pan­demic.

While it com­mended the sus­pen­sion of the planned tar­iff hike, ABCON urged that the same de­ci­sion should be ex­tended to other taxes.

The em­bar­rass­ing ways some of the tax­a­tion laws are en­forced are the con­cern of the Man­u­fac­tur­ers As­so­ci­a­tion of Nige­ria (MAN). The as­so­ci­a­tion said these taxes are char­ac­ter­ized by the use of stick­ers, mount­ing of road­blocks, use of rev­enue Agents/Con­sul­tants in­clud­ing mo­tor-park touts.

The Act­ing Di­rec­tor Gen­eral of MAN, Am­brose Oruche said: “We have sit­u­a­tions where a tax­payer is faced with de­mands from two or more dif­fer­ent lev­els of gov­ern­ment for the same or sim­i­lar taxes.

“A good ex­am­ple here is the ad­min­is­tra­tion of the VAT and Sales Tax si­mul­ta­ne­ously. The same level of gov­ern­ment im­poses two or more taxes on the same tax base like the Com­pa­nies In­come Tax, Ed­u­ca­tion Tax and Tech­nol­ogy Levy by the same com­pany,” he said.

Sam­son Si­mon Gal­adima, a Fi­nan­cial Econ­o­mist, said the gov­ern­ment has been an­gling for ways to shore up its rev­enue even be­fore the salary cut.

“That’s how the Fi­nance Act came about; how­ever, the fall in the price of crude oil on the in­ter­na­tional mar­ket has made it the more ur­gent. Fur­ther­more, the coro­n­avirusin­duced re­ces­sion has wors­ened things.”

Also, Muham­mad Ali, an Eco­nomics Lec­turer at Prince Abubakar Audu Univer­sity, Anyigba, Kogi State, said rev­enue gen­er­a­tion was re­ceiv­ing neg­a­tive shock aris­ing from the ef­fect of the pan­demic.

Ali called on the gov­ern­ment to im­pose more tax on lux­ury items as this would not have an ef­fect on prices of com­modi­ties that are ne­ces­si­ties or goods and ser­vices that are mostly con­sumed by the poor masses.

On her part, SME Con­sul­tant and DG of Global Cen­tre for Hu­man De­vel­op­ment and En­trepreneur­ship De­vel­op­ment (GLOCHEED), Rose D. Gyar, said the gov­ern­ment should not al­ways rush to im­pose tax, in­stead it should block leak­ages.

“This will pos­i­tively im­pact on tax col­lec­tions rather than im­po­si­tions that would pos­si­bly lead to clo­sure of busi­nesses and sub­se­quently in­crease the num­ber of un­em­ploy­ment,” Gyar said.

The Fed­eral In­land Rev­enue Ser­vices (FIRS) had in­tro­duced a hike in VAT, stamp duty on ten­ancy pact, among oth­ers. The agency did not re­spond to this pa­per’s en­quiry on the tax re­bate it would pro­vide for SMEs and other af­fected sec­tors of the econ­omy. The Di­rec­tor of Com­mu­ni­ca­tion of the Ser­vice, Ab­dul­lahi Ah­mad, promised to get back to our re­porter but did not a day be­fore this re­port was filed.

Muham­mad Mam­man Nami

Pres­i­dent Muham­madu Buhari

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.