83% eligible taxpayers evade payments in Nigeria – Report
Daily Courier – Merely about 13 per cent of Nigerian taxpayers, especially informal sector players in the Nigerian economy pay their taxes, according to a taxpayer perception survey that was conducted by the Nigerian Governors Forum (NGF) for 2021.
A larger portion of workers in the sector, 83 per cent are likely to evade tax payments because they do not believe that tax authorities have the right to make people pay taxes. The survey revealed the distrust between the citizen and government.
The size of the informal sector in Nigeria is estimated at about 65 per cent, accounting for significant portion of employment and national Gross Domestic Product (GDP) of the economy. Ubiquitous official corruption, resulting in widespread poverty and infrastructure deficit created lack of confidence in government.
The social contract between the government and its citizens – represented by the quality of public services and the public’s willingness to pay or evade taxes. Perceived weak social contract between citizens and the government continues to threaten legitimacy of taxation.
Speaking at a workshop that was organised by the national coordinating office of the Fiscal Transparency Accountability and Sustainability (SFTAS) for financial journalists in Abuja at the weekend, senior programme manager, NGF/SFTAS Mr Lanre Ajogbasil said weak transparency and accountability by federal government and States internal revenue services; misunderstood tax law(s) and incomplete revenue codes and multiplicity of taxation system, fees, levies and charges are some of the factors responsible for the distrust.
The survey by the governors forum also revealed that poor collaboration between the state revenue services and identity management ministries, departments and agencies; institutional capacity constraints due to inadequate funding and professional staffing to deliver on mandate; lack of standard operating procedures and processes guiding operations of SIRSs and their zonal/area offices, and proliferation of private contractors/consultants for same revenue items were responsible for the poor tax compliance level in Nigeria.
As a solution, Ajogbasil urged the authorities to strengthen the perverse social contract to build tax legitimacy, ensure certainty around tax laws, promote administrative efficiency and harness the new shadow economy and strengthen taxpayer enumeration.
Earlier, national programme coordinator for SFTAS, Mr Stephen Okon said the workshop with the theme SFTAS: ‘Beyond the Grants, Ensuring Programme Sustanability through Advocacy’ is meant to explain the rationale behind SFTAS programme; educate you on the processes, procedures and operations of SFIAS programme implementation; apprise you of the status of programme implementation by implementing agencies and partners, promote national buy-in and ensure programme sustainability.
The $1.5bn World Bank-assisted SFTAS programme for results seeks to entrench accountability, transparency and maximum utilisation of funds in the citizens’ best interest across the States.
The World Bank intervention which is a loan to the federal government but a performance-based grant to the states entails providing technical support for officials in the 36 states towards successful implementation of the programme.
The programme is aimed at providing support for achieving reform actions set out in the fiscal sustainability Plan and the Nigeria Open Government Partnership national Action plan towards promoting fiscal transparency and accountability, strengthening domestic revenue mobilisation, increasing efficiency in public expenditure, strengthening debt transparency and sustainability as well as enhancing COVID-19 fiscal response in the States.