IN Cross River State, hoteliers have 21 different taxes to pay.  Among the taxes on the list is the economic development levy which is ‘absurd,’ according to Charles Ogar, chairperson of the state chapter of the Hoteliers Association of Nigeria.  

In November 2023, worried by the burden of multiple and double taxation that his members had to bear, Ogar wrote to the Cross River Tourism Bureau to notify them on the  “multiple taxation and levies on hotels”. 

In the letter, he referred to the state governor Bassey Otu’s campaign promise to streamline taxes, noting that since he came into office,  the reverse had been the case as “taxes and levies were multiplying by the day, thus putting unbearable financial pressure on hotel operations.” 

Nigeria’s national tax policy describes tax as any compulsory payment to the government imposed by law.  This payment is supposed to serve as revenue to the government to run its operations.  

 A challenge highlighted in the policy, which came into existence in 2012, and was updated in 2017, is a “lack of robust framework for the taxation of the informal sector” and an “inordinate drive by all tiers of government to grow internally generated revenue which has led to the arbitrary exercise of regulatory powers for revenue purposes.” This has resulted in multiple taxations with a negative impact on livelihoods.   

Multiple taxation, a recurring trend across states 

Multiple taxation is a trend noticed across different sectors and in the five focal states : Lagos, Taraba, Kwara, Cross River & Kano , covered by the The ICIR’s Tax Justice, Equity, and Transparency Project.  

The tourism and hospitality is not the only sector experiencing multiple taxation. The informal sector has similar stories. In fact, it appears that the informal sector across Nigeria bears most of the brunt of multiple taxation, perhaps, due to the lack of a robust framework for the taxation there.  

Women participation

In Nigeria, 82.1 per cent of women actively participate in the informal sector, such as agriculture and small businesses. Some of these women who can be found across various markets in Cross River, are grappling with the burden of multiple levies imposed by both government officials and non-state agents.  

In 2015, the government of Cross River State implemented a policy aimed at providing tax rebates to the poor and vulnerable. The Cross River Internal Revenue Service (CRIRS) issued a public statement regarding tax exemption Law No.13.  The law excludes from paying tax all persons whose monthly income is below N50,000. This includes petty traders.  

 The current state governor also moved to reduce the excessive levies collected by council agents.  

“Before now, we used to pay up to N700 daily, and on Saturdays, we pay up to N1,600 to different groups. But since January, we started paying N200 daily while on Saturdays, we pay N400,” says a trader at Marian market.  

The governor also tried to end the illegal collections by non-state agents. These efforts are yet to yield the desired result as findings show that touts still reign in most markets in the state,  collecting all manner of taxes. In most markets, failure by the traders to pay (to the touts) results in loss of goods. 

“If you don’t pay, they snatch your goods and, in the process, destroy some. They take it to their office and before you get it back they ask you to pay N5,000 for bail,” says Mama Ayu, a palm fruit seller in Ikom main market. 

Tax payers lack tangible infrastructural benefits 

In Lagos State, the 2,000 women who ply their trade in Mushin and Oyingbo markets are grappling with poor infrastructure despite paying multiple taxes and levies. 

A representative of the woman leader known as ‘Iyaoloja’ at the Mushin market, Tawakalitu Opogbenro, describing the different taxes said,  “Sellers in this market pay to the Federal Inland Revenue Service(FIRS).

The market collects money for LAWMA, development levy which is the major amount for each shop to pay to the market  leaders; local government staff also collect money from the sellers.” 

Despite all the taxes that the women and traders across markets in Lagos Kano, Taraba, Kwara, and Cross River states pay,  they still complain of a lack of infrastructural development, especially  lack of water, toilets, and good roads.  

“I pay N10,500 per year for owning a shop in this market. The government is doing things but I have not seen it. We pay for development levy, LAWMA which is a government agency that gives the bill,”  a food provision seller in the Mushin market, Folasade Ishola, says, stressing that the tax paid has not translated to any tangible benefits,

A jewellery seller, Eyiwunmi Adewunmi said, “The government only brings buses for refuse which we pay for; that is the only benefit I see from them.”

“Market traders pay above N10,000 which is paid to government representatives allocated to collect tax. However, we have not seen what the government has done,” says Bilikisu Balogun, a representative of the woman leader of Oyingbo market. 

“We do not have electricity in this market, it is a generator we use and we contribute to buy it. We used to have light but for about three years, there was no PHCN light in this Oyingbo market,” she adds.  

Balogun urged the government to provide water for the market because market traders buy water to use in the toilet. In addition, she said a drainage system should be provided.  

Speaking on how development can impact women, Munachi Ugochukwu, the Economic and Gender Justice Lead at Governance and Rights Programme, Christian Aid (UK) Nigeria, observed that at the policy level, there is a lack of emphasis and political commitment towards acknowledging gender concerns and making gender-specific infrastructural provisions.   

Tax evasion,  non-compliance, and  regulatory challenges 

Findings shows that insufficient information available to taxpayers on tax compliance requirements creates uncertainty, confusion, and non-compliance.  

On October 31, 2023, the  Lagos Inland Revenue Service (LIRS)  announced the closure of 34 companies and hotels for non-payment of consumption and personal income taxes totaling N356.12 million. However,  iinvestigations reveal a more nuanced story, shedding light on discrepancies in the shutdown claims.  

A check with the Corporate Affairs Commission (CAC) showed that six companies were actively filing annual tax returns. Additionally, 17 companies appeared inactive on CAC records; while nine were not found on the CAC registry, raising questions about their existence and legitimacy. 

Interestingly, one of the hotels listed by LIRS, Chelsea Hotel, was not found in Lagos. There is a Chelsea Hotel in Abuja, though. Offshoroomz Hotel, located in Ketu, has long been converted into a residential apartment due to a downturn in the hotel business. Chez Moi Apartment in Ikeja is also residential with the occupant saying she bought the property eight years ago. 

Model Motels in Ikotun was locked, and confirmation from residents around the area revealed that the business has not operated for more than a year. This points to the challenge of a fragmented database of taxpayers and a weak structure for the exchange of information by and with tax authorities. 

In one instance, one of the affected hotel’s manager said they were not aware of an outstanding tax.  The manager of High Climax Hotel, Olaoye Olabisi, shared how they were unexpectedly billed almost N1 million in unpaid taxes from 2016, leading to negotiations for payment in installments. 

“Since I took over the payment of taxes for the hotel, I have never owed; but when they (LIRS) came, they also confirmed that I do not owe them,  but that there is an outstanding payment for 2016 that we have not paid,” Olabisi explains. 

“We were caught unawares, and the bill they gave me was about N940,000, almost N1 million.

“Right now, I have about N100,000 to balance up and will do so this year. If not for the bad market and the slow economy, I should have completed the payments,” he adds. 

A tax lawyer, Faith Zekeri, noted the importance of obtaining legal counsels in tax matters, adding that companies often fall into legal trouble due to a lack of understanding of their rights.  

“The problem is that a lot of people and companies do not know their rights. A lot of them do not engage their lawyers when they encounter these kinds of problems,” she explains. 

We can’t act without due diligence – LIRS

Despite the discrepancies noticed with the hotels, the director, Informal Sector and Special Duties at LIRS, Folashade Coker, said the agency cannot take any action without doing its due diligence. Coker said if a company is registered, their details are recorded in the state’s database, which can be accessed by LIRS. 

“These companies are served notices before getting to the point where they are taken to court. Then an ex parte motion is obtained, they are convicted, and the court instructs them to be sealed,” she said. 

Responding to the case of the Chelsea Hotel that was not found anywhere in the state, Coker said, “The company is registered and exists. It could have a different name.” 

Coker also explained that if a company is no longer in operation, it must declare that it has ceased operations, and failure to do so would only lead to accumulated taxes. 

She added that if a company’s building is sold out to someone else or a company is no longer occupied by the original owner and they are not anywhere traceable, “They would be left off the hook, but the original owner who owes the tax would still be located.” 

Lack of tax education, knowledge of tax administration 

Coker says the majority of people in the informal sector do not know how to calculate their taxes. 

Other than the correct tax payable, investigations show that people in the informal sector do not know who they should pay their taxes to and, in some instances, what tax they should pay. 

The Kano State and Local Government Revenue Administration (Consolidation & Codification) Law, 2021 was enacted in December 2022 by former governor, Abdullahi Umar Ganduje. 

The law seeks to harmonise all revenue laws in the state. Thus, the establishment of the Kano Internal Revenue Service (KIRS) with the sole authority for the assessment, collection, and accounting of all revenues in the state.  

The law speaks to the important role of educating the public on matters related to state and council taxes and levies.

Unfortunately, the lack of proper implementation has given room for an opaque tax administration, as tax payers especially in the informal sectors are not enlightened enough to demand accountability.  

Muhammad Bello, who sells dates from his wheelbarrow at the popular Wudil Market in Kano asks why he has to pay taxes to the local government at the market and another levy to the nearby Kara cattle market. 

“Why can’t they harmonise these taxes?” he questions, pointing out that only a road divides the two markets. “We don’t even know who receives our payments; whether local officials, state agents, or market intermediaries, we pay just to keep working,” he says. 

According to him, he pays whoever approaches him as a tax collector without asking them about their jurisdiction or affiliation.  This leaves room for non-state actors to exploit the situation and collect unlawful levies and taxes. 

A vendor, Abubakar Buyage, who sells woven hats, mats, and hand fans at the Wudil Market, when asked about accountability on their tax payment says “We don’t have the means,” expressing their inability to monitor tax usage.  

“If we question, it invites trouble. They’re powerful; we’re not,” he concluded. 

At Wudil market, Shehu Wudil, who sells flour, salt, and sugar, echoed similar frustrations, noting that each year he faithfully pays taxes to both local and state government. According to him, the local government levy amounts to N5,000 annually, while the state’s tax ranges from N15,000 to N20,000.  

“The issue is that despite our prompt tax payments, we see little in return. Especially during the rainy season when drains clog and refuse pile up, we struggle”.  

Pointing toward the market’s infrastructure, where rainwater disrupts open-air vendors and damages government-owned shops, Wudil said, “No assistance comes our way. Even after paying so much in taxes, we’re left to fend for ourselves. Either you fix it or lose your space to someone more influential.” 

Cattle markets lack transparency in tax collection, expenditure 

Lack of enlightenment on taxpayers is reflected in the way cattle unions handle revenue generated from cattle tax.  For instance, a large chunk of the revenue collected in Wudil international cattle market goes to the market union with little or no accountability.  

The state government is not involved in cattle taxing.  The director of budget and planning, Abdulmuminu Ajumawa, who handles revenue-related issues in Kano State, confirmed this. “For now, we are not yet looking at that area of taxing cattle herders in the state”, he says.  

The market attracts an estimated 5,000 cattle weekly, each cattle is taxed N500, of which N200 goes to Wudil local government council and N300 to the market union.  This means that of the estimated N120 million generated annually, N72 million goes to the union.

However, only the N200 which goes to the local government is receipted. This raises the issue of accountability and transparency on the part of the market union as it does not account to anybody for the millions it gets. 

The head of the Wudil cattle market, Kabiru Umar Faruk, said the market survives on the tax, noting that the state government does not provide any support.   

“The state government does not really give us anything,” he said, adding that the un-receipted  N300 is what is used “to maintain the market, provide security, keep it clean and take care of other emergencies”. 

The chairman of Wudil local government area, Bilkisu Yakubu Indabo, declined to speak.   

When approached by the reporter, she simply said, “I am busy.” 

In several cattle markets in Kano State – Danbatta, Kura and Bichi – the tax collection and revenue sharing formulas are similar to  that of  Wudil; N200 to the local government and N300 to the union, the latter which is not ticketed. 

When asked if he is aware of this, the chairman of Danbatta LGA, Ado Muhammad, confirmed knowledge, saying that, “cattle tax is being collected here and the money goes into the local government purse, not the state government.” 

When asked whether he was aware that only N200 out of N500 is ticketed, he said: “All I know is that the market committee submits the money immediately after a day’s market. I am not aware of any other thing.” 

Sadiq Muhammad Mustapha, programme lead at the Tax Justice and Governance Platform (TJ&GP) points out that the Kano consolidation and codification law has not achieved its goal because of a lack of political will, inadequate understanding among tax officers, and coordination challenges among relevant institutions. 

“To address these issues, there is a need for deliberate advocacy of the law’s implementation, frequent awareness activities, and clear definitions of roles and responsibilities among coordinating agencies,” he stressed. 

Comparing  Kano’s tax collection system to that of Kaduna, Mustapha noted that KIRS is mandated to collect taxes on behalf of both state and local governments.

However, he highlighted that the law lacks clear instructions on how to effectively coordinate this process, unlike in Kaduna, where tax harmonisation has been more successful. 

Meanwhile, a Lagos-based tax expert, Chinelo Adindu advocates for digitisation of the tax collection process. Speaking on the development in Kano she says, “The system should be digitised. Handing them N500 every week for a piece of cattle is a recipe for corruption. Reduce human interference and allow people to pay the money into the bank or just through a digital process.”

Lack of streamlined tax administration leaves traders, farmers at the mercy of touts, breeds resistance  

In Taraba State where the government says it has  digitised the process of tax collection, it has not stopped the case of non-state actors collecting illegal tax. This led to tax resistance in the markets of Ardo Kola and Gassol communities earlier in the year. 

Consequently, residents and business owners in the affected areas protested against multiple taxation perceived as excessive and unjust. 

This also triggered accusations of mismanagement and corruption on the part of government officials. 

For instance, Janet Austin a shop owner at Ardo Kola, decries the lack of transparency like issuing a receipt of N100 while demanding N300-N500. “This is unfair,” she says. 

Gassol market women leader, Chiyal Rena, insists that they will pay tax on the condition that the tax will be properly utilised. 

 The Taraba government says touts are responsible for taking advantage and extorting people as the government uses a POS-like device for tax collection.

This raises the question of responsibility for protecting citizens from extortion. It also speaks to the lack of knowledge noticed across the focal states – the people are not aware of proper tax procedures. 

Fishermen, fish farmers, and traders in Taraba state are complaining of government neglect. The chairman of fish traders in Jalingo, Umar Abubakar, says “We have more than 1,000 people selling fish in Jalingo, but we don’t even have any fish market.” 

“We need a better space to do fish business and a cold room to preserve our produce if we cannot sell all of them that day.” 

A trader, Umaru Abubakar, says despite paying a daily levy of N100, the government has refused to create a market space for them in the area. “People come to collect tax from us and we pay them.  The board of Internal Revenue also collects from us and also the state government. 

“Every time, we cry to the government to give us a space that we can use to sell our fish. Staying by the roadside every day is risky and too dangerous”. 

To operate in Taraba State, a fisherman must obtain a fishing permit, to use rivers and ponds. The permit is renewed annually by the Taraba State ministry of agriculture. 

Investigations showed that the tax collection for fish farmers is controlled by the department of fisheries and aquatic affairs in the ministry of agriculture. But the Taraba State Internal Revenue Service (TIRS), said it is unaware of this as the ministry is not revenue-generating.  

 The director of fisheries in the agriculture ministry, Ismaila Ahmed, in a phone conversation confirmed that Ahmed (who collects tax) works in his department, which he also says is in charge of collecting money from fishermen and fish traders. He adds that they have not remitted money to the board so far. 

JTB tax harmonisation on haulage transportation yet to achieve goal 

Danlami Saleh is the director, Sunnah Palm Oil Garkuwan and the chairman of Arewa Palm Oil Association in Cross River State. He has trucks that convey gallons of palm oil to the northern part of the country. He is however frustrated by how much he spends on a trip to convey his goods to Kano – not as a result of consumable resources for transportation but due to what he describes as illegal taxation. 

He insists only a fraction of what they pay as tax goes to the government coffers. 

 “…out of the money collected on the road, 70 percent is illegal. If you take palm oil or cocoa out of Calabar, it seems like you are dealing in cocaine because of the way those illegal boys will rob, and extort money from you,” he says.

 Explaining the process, Saleh said, “Immediately you leave Calabar to Iwuru in Biase LGA, you start meeting illegal check points up to Itigidi in Abi LGA and you spend about N200,000 to N300,000 on illegal taxations.

“Then from Ugep to Gakim border between Cross River and Benue state, you also spend N400,000 on illegal taxations. They present themselves with different titles like the village head, the Chairman’s boys, the senator, the House of Assembly members, the youth leaders, and so on.” 

“Failure to comply attracts certain risks. Sometimes they kill our drivers, break our windscreen, scatter and steal our palm oil and even cause the vehicle to get involved in accidents resulting in loss of lives” Saleh notes.”  

To curb the issues faced by Saleh and other haulage transporters, the Joint Tax Board’s (JTB) came up with the harmonisation initiative to streamline the tax collection process. As such the board initiated the Single Interstate Road Tax Sticker (SIRTS) and Single Haulage Fee (SHF). 

These initiatives were designed to simplify and harmonise tax processes to reduce the financial burden on transporters plying the Nigerian highways and improve efficiency in the sector.

However, investigation reveals that lack of implementation has not only fuelled illegal tax collection and extortion, but it has also failed to block revenue leakages for the government. 

Michael Orere, the divisional head of logistics at ABC logistics, has his reservations about the initiative when it was introduced by the Lagos State Joint Tax Board (JTB).  

“Some states still insist on issuing tickets other than the JTB stickers,” he says, noting that the initiative has remained unsuccessful because it has not been firmly implemented across the states. 

“In some states, the taskforce will compel you to buy their tickets, or else you will be delayed,” Orere says, adding that the trend is common in Port Harcourt, Lokoja, Aba, Benin, and some other parts of the south-south and south-east zone of the country. 

“We are a logistics company; we rely on speed; we can’t afford to waste much time. So, when that happens, we are forced to buy,” he explains. 

“It is not as if when you buy it covers you for a while, but every time you pass, you buy another ticket.” 

This, according to him, is the situation that the company’s truck drivers face daily. 

These ongoing challenges pointed out by Orere and other haulage stakeholders on the failure to implement SIRTS and SHF impact the cost of transportation and the overall efficiency of the haulage sector in Nigeria. 

To mitigate harassment haulage companies resort to transporting cargo mostly at night to avoid taskforce and other law enforcement agents on the interstate roads.

“This is because even though a transporter bought a complete pack of the tickets and emblems, the taskforce people usually find a way of claiming that a particular sticker has not been bought,” says a staff of MSC Line, a shipping company, who requested anonymity. 

He adds that the taskforce agents deliberately refuse to sell the complete assortment of stickers to give room for extortion. 

“Even when they claim that they have the complete pack, they won’t sell it completely to you so that they can use that to hold you some other time,” he says.  

This underscores the need for better enforcement of tax regulations and efficient oversight. 

In January 2023, Obomeghie Nana-Aisha, JTB’s executive secretary noted that the initiative was put in place to end illegal tax collection and extortion on the highways and block revenue leakages in the country.

Over a year after her statement,  the chairman of the Nigerian Association of Road Transport Owners (NARTO) Metropolitan, Abdullahi Inuwa says the JTB policy had yet to harmonise multiple taxes and that the local governments keep harassing truck drivers. 

“As you can see, besides the JTB, the local governments are still on the road extorting people. The JTB has not been feasible in Lagos,” Inuwa said, calling on the government to take action. 

Weaponising tax laws for tribal discrimination  

In Kwara State, investigation uncovered the weaponisation of tax laws to propagate tribal discrimination through selective enforcement.  

“They are forcefully closing my shop. Do they even have such rights? What did I do to them? Without any warning, they just said I owed some tax arrears and locked up my shop,” God First, a shop owner on Taiwo Isale Road in Ilorin, laments.   

Despite prior ‘agreements’ with the Kwara State Internal Revenue Service (KWIRS) outlining expected tax contributions based on the value of goods in their possession and evidence of payment tax enforcement efforts target mostly traders of Igbo extraction, sparking controversy in the state. Many of them received a notice demanding payment of alleged arrears tax dating back to 2018.  

God First explains he has been paying his taxes via his union and had no backlogs.  He was stunned to receive a letter asking for payment arrears which led to the locking of his shop.  

“They first brought N20,000 for the previous year in May and came this morning [time of interview] with another letter stating that I will pay arrears of N188,000,” he says, noting that he had paid N12,000 for 2022 through his union with receipt of payment issued to him. 

“So when they brought that N20,000, I already paid through my association, I tried to explain to them, but they [KWIRS] shut me down. This morning again, they used their hands to pack my market and lock my shops.” 

Apparently, the KWIRS officials came to enforce a court order based on a motion filed under Section 38 (1) of the Kwara State Revenue Administration Law (2005) (as amended).

The motion, dated February 6, 2024, and filed on February 8, 2024, sought the right to shut down shops belonging to tax offenders. 

Although God First was not aware nor invited to any court proceedings the court ordered that the “applicant’s chairman or any other authorised officer assigned to distrain the respondents’ goods and premises bonds to enforce the liability for the personal income tax rate for the period covering the year 2014 to 2023 in the sum of N188,140.00.  

God First and other Igbo traders were paying their taxes through the Kwara State Association of Igbo Traders (KWAITA). The state government had asked the association to collect taxes from their members. KWAITA had initially refused but later agreed. 

“They appealed to us to help them collect tax from our people knowing very well that we know our people more than they do, that they can’t be able to access up to 15 per cent of our traders,” Aloysius Nwora, the coordinating chairman of KWAITA on tax matter, said.  

The KWIRS director of legal services, Shehu Mogaji, confirmed that such an agreement existed with different trade groups noting, it was a strategy to draw people to the tax net.

He however says it was more of a correspondence of the amount expected from the groups than an agreement done by the then chairman when the agency was created in 2015.  

He says the core issue involves personal income tax, which he said is governed by federal law, not state law. 

“Personal income tax is based on individual income. For example, if you are twins and you have a different set of incomes, the law does not expect you to be taxed equally because your income cannot be equal.

“But on what Igbo traders did, I will commend them initially. Because if you are a pioneer chairman or if you are pioneering any organisation, you tend to use strategies that will work for you,” Mogaji ssid. 

When asked why the Igbo traders be punished for the strategy by agency’s pioneer chairman, Mogaji notes that the approach was deemed legally unsound as personal income tax should be based on individual assessments, not flat rates collected by associations, noting that the law allows them to review some of the taxes paid some years back. 

“When we came in, we said this strategy worked for the then chairman, but going forward, we will follow the law. And what does the law say? The law says each person should be given an assessment. We will assess you based on what you have.” 

 “Under this law for the first 300,000, it says you pay 7 per cent of that amount. Any additional 300,000 is another percentage. So it is based on percentage.” 

“So once you file that return, the agency will now give you notice of assessment. They will assess you based on the return you file, but 80 per cent  of businesses don’t file their returns and it is even illegal,” Mogaji says.

 Contrary to Mogaji’s claims, the affected Igbo traders say there were no assessments done.  If that was the case traders like Uchechukwu Nnamani, would not have been billed N1 million. 

Nnamani is a footwear retailer who is contemplating a change in business. His shop is half-empty and has recorded very few sales. This he says has been the trend for over a year.  “I am looking at venturing into another business,” he says,  “I want to start a food business because that’s where money is now. The country is hard and you can’t expect people who haven’t eaten since morning to buy shoes.” 

Another trader,  Ugochukwu Chukwudi argued that even if the traders were to pay additional fees, the failure to conduct on-field assessments on his market to audit his tax payment has led to arbitrary and inflated tax assessments. 

“No, they didn’t do that one (come to assess my shop). They just sent a letter demanding a huge sum,” he replies to questions pertaining on field assessment.   

When asked if he had been filing his annual tax returns, he notes that he has always made his payment based on the money prescribed by his union and agreed by the KWIRs and has his tax clearance with zero as outstanding. 

The enforcement team has also been accused of targeting mostly traders of Igbo origin, and findings by The ICIR show that these allegations were true, as a survey showed that most Indigenous traders have not been instructed to pay new tax or pay arrears despite paying through unions similar to that of Igbo traders 

Godwin Okoro, the chairman of the Kwara Igbo Traders Sawmill/Asadam axis, also said no assessment was done.  This speaks to a lack of insufficient data and communication in tax administration earlier discussed.  

.Last year October, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, says “we do not understand why we have so many taxes in Nigeria, just creating problems for everyone.” 

 He notes that taxes at all levels of government need to be harmonised.  

“We want to go into the constitution itself and address the problem from the roots. Let’s put it there and let it be clear. Clearly define the taxing rights at the different levels of government—this should be what you can collect—from local government to state to federal and here are your responsibilities,” he says. 

It’s however not clear how far they have gone with the proposed reforms.  

This report examines findings from investigations conducted in Kwara, Lagos, Corss River, Taraba and Kano states done under the Tax Justice, Equity, and Transparency Project. You can read them HERE. 

This report was done with support The International Centre for Investigative Reporting (The ICIR).