Only 10% Of Nigeria’s Population Pays Taxes

The Chartered Institute of Taxation of Nigeria has attributed the poor compliance of tax payment in Nigeria to lack of accountability and transparency in the expenditure of tax money by tiers of government.

The body which made this claim at the 2021 annual tax lecture in Lagos made reference to a recent research by the Nigeria Economic Summit Group, NESG.

The research revealed that more than 81 percent of taxable Nigerians do not pay their income taxes as and when due thereby, accounting for low revenue from taxes.

The research showed that of the tiers of government on whose shoulders tax collection is reposed, local governments and their officials are among the most untrustworthy, followed by the state governments and the tax officials.

NESG, commenting further, said the figures available revealed that there are 20 million registered taxpayers in the country.

However the figure which seems paltry when placed alongside the country’s population of nearly 200 million people is just 10 percent.

It attributed the trend to “ironic twist to the distrust that pervades the environment when it comes to paying taxes, dues and levies to a government that does not command the public trust.”

The Chairman of CITN, Ikeja, Mr Funso Abidakun  urged governments, especially the state governments to correct the ills that are denying the country of its collectible revenues from taxes by showing justification for taxes being collected and change the ‘sour tax narrative’ in the polity as well as fight corruption holistically in the tax system.

“Most taxable adults believe that it is unwise to pay taxes to entities that do not translate taxes to services, or to officials who divert the same to personal use.

“It is the duty of CITN, as a professional body, to educate the society on reasons why they should pay tax and what the government is doing with the taxes being collected.

“Every budget year the Federal Government prepares a budget giving the fiscal intention of the government in the coming year. On December 31, 2020, the Federal Government signed the Finance Act and came into effect from January 1, 2021. The Act made a lot of amendments to personal income tax, company income tax, VAT, and other tax law to fine-tune grey areas in the tax system designed to support the implementation of the 2021 Federal   budget of economic   recovery and   resilience.

“The reason is not far-fetched, tax is dynamic, you can not be using the law that has been obsolete, hence, the need for upgrading of the law which we are bringing to the knowledge of the general public which also informed the choice of the theme.

“For example, the minimum wage of N30, 000 and below does not pay tax that shows the government recognizes the fact that poor people should not be bothered about tax payment.”

On the reason for low tax income, Abidakun stressed that the social contract between government and the tax paying public should be respected and upheld.

“One important thing that I need to say here is that there is a social contract between the government and the citizens that pay tax.

In return citizens expect the government to perform and provide a minimum basic standard of living, such: as qualitative education, health, power, road infrastructure, among others.

“If there are no good roads, hospitals, portable water supply, functional public transportation, and other basic amenities, there will be indifference to tax payment by the public.

“Because, when the taxable public keeps hearing government officials embezzling billions of money it   naturally discourages and demoralises them in performing their civic responsibility of paying tax. That is why we are bringing to the knowledge of the public their rights on tax payment.

“Government in Nigeria should display a high sense of accountability, transparency in tax administration and must live to expectations if it desires to generate needed revenue from tax.

The era of ineffective utilization of tax revenue for public use is gone. Government must justify the tax by being collected from the public.

“We want to make the public realize that it is when they pay tax that they will have the audacity to challenge the government and demand to see what they are doing with the tax revenue. If they don’t pay tax they don’t have locus-standi to question the government on their spendings,” Abidakun stated.