TAX experts and a traders association leader are demanding a total revamp of primary infrastructure in markets across the country in commensuration with the Federal government’s plan to be collecting tax from traders.
Expressing their reservations on the plan, market stakeholders are complaining that governments cannot reciprocate tax payments with commensurate infrastructural development, especially in major markets.
The Federal government, through the Federal Inland Revenue Services (FIRS), had announced the VAT (valued added tax) Direct scheme, it explained would enable it to collect taxes from the informal sector and reduce multiple taxation in the informal economy.
The FIRS said in a statement it issued on July 3 that it would be partnering with the Market Traders Association of Nigeria (MATAN) to collect VAT from traders, especially those in the informal sector, using a unified system of technology.
The president of the National Association of Nigerian Traders (NANTS), Ken Ukaoha, told The ICIR that the government needed to allow traders “breathe” amid the excruciating inflation spike.
“The basic question is: what are the traders gaining from taxation? Look at our taxation and see lots of vagabonds taxing the people that are struggling to breathe. Lots of non-state actors are exploiting the people with different kinds of taxes, and that is a huge concern. Is it the tomato seller, the pepper seller and the vulcanisers that are struggling to raise their heads from poor economic management that you are going to tax?” Ukaoha asked.
Flowing from Ukaoha’s reservations, a tax policy expert with the Price Waterhouse Coopers (PwC), Taiwo Oyedele spoke of the people’s “low confidence” on government’s application of taxes for their (people’s) benefits.
Oyedele said, “I was a research department director for the Fiscal Policy Roundtable set up by the Nigerian Economic Summit Group in 2019. We conducted a national tax perception study which revealed that Nigerians have a very low tax morale, that is, the willingness to voluntarily comply with tax obligations. The study shows that only 17 per cent of individuals and 31 per cent of businesses believe that they should pay their taxes correctly.”
Though he regarded the initiative as “good” with the capability to ward off the threats of multiple taxes and extortion by non-state actors, he mentioned, however, the need for proper education to ensure that the readers know their rights and are not exploited by tax officers.
He suggested that the biggest win for the government in the policy initiatives would be tax awareness and data about traders that could be used for economic planning and possible interventions to support informal sector businesses.
An economist and tax expert, Kalu Aja, knocked off the Federal government’s intention to be collecting VAT Direct, saying it is the mandate of state governments and not the Federal government to be collecting VAT.
“VAT is a final consumption tax and most certainly should not be shared. Allow states to determine their best rates so that VAT becomes a marketing tool for states,” Kalu said.
An economist with Arise Television, Chika Mbonu, said the Federal government has to rise on renewed confidence in it to sustain the reciprocity required to drive taxation at the informal level.
Mbonu said, “I know there are multifarious taxes in the markets. However, there is a moral issue here – that tax represents the share of government in your profits. Why? Because the government is expected to provide infrastructure and carry out its responsibilities to encourage taxation.
“Nigerians need to see what the money is being used for, as people are not eager to pay tax if there is no commensurate action to match tax payments.”
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.