By Ben Adoga
Tax is described as an inevitable aspect of government as tax is crucial for sustenance and development. The government also uses tax as means of control and checks, not just revenue generation which is the main focus now.

In the FCT tax has been an issue like in any other administration or state. The nation’s capital needs a huge capital outlay to provide infrastructure and services.

Though the bulk of the funds for the FCT Administration comes from the statutory budgetary federal accounts, there is still a need for funds from taxation.

It is against this background that the FCT Administration recently organized a sensitization for eligible taxpayers in the FCT to willingly and voluntarily pay and file their tax returns promptly and regularly.

NAF Conference Centre, Abuja plaid host to tax experts that brainstorm on the theme: Reviving the Culture of Tax Returns.

The brainstorming session took an interesting twist when the keynote address was delivered by no other person than a tax expert, James Naiyeju, Managing Director, JK Consulting.

Naiyeju noted that Nigeria and all nations of the world are going through a period of dwindling economy and that the FCT being part of the Nigerian economy could not be isolated.

This is why revenue generation in a dwindling economy is a very difficult task. In every dwindling economy, the mass of the people who are those who make up the taxpayers have less disposable income as businesses suffer just like the individuals.

Using Lagos State as a model where tax revenues have been utilised for development, he said tax remained the most reliable source of government revenue.

While pointing at Lagos State as a model for FCT to adopt, he was quick to warn, against the economic down turn that has pauperised the citizenry and FCT residents alike not to make tax become a burden to FCT residents.

“Care must be taken not to tax poverty, don’t make tax become a burden to taxpayers in the FCT because the economic situation of the country is affecting everybody, including FCT residents who are the prospective taxpayers.”

The tax expert suggested ways to sustain increased government revenue despite the ailing economy, paramount among which is strong advice to the government not to increase taxes during this period, not to introduce new taxes as well as increase or introduce new rates payable by existing taxpayers.

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This probably was not what regular tax experts were expecting from their respected colleagues. The norm in tax discourse is to emphasis ‘increase tax’.

It has erroneously become a norm to say that Nigerians don’t pay tax. But it is as difficult as for a healthy living man to avoid oxygen, for the ordinary Nigerian not to pay tax. Ranging from VAT which is completely inevitable as a consumption tax, except one, stops consumption he cannot avoid VAT.

Check the common man and his insurgencies, alcohol, smoking, regular beverages like tea, and the staple bread which are all heavily VATed. Where then does the ordinary Nigerian avoid the tax?

Ask the very poor market woman who must survive by bringing farm produce to the market, only to enable her to buy other needs like condiments or even oat school fees, the tax man from the local authorities is on the ground to enforce collection, even before sales commences.

However, when tax revenue is mentioned, the big players readily come to mind and these are the entities that can evade.

Truth be told, people, especially in third world countries where citizens see government, in most cases, as instruments of oppression and tax men as agents of the oppressors and top government functionaries in both the executive and legislature as “thieves,” embezzlers, and grabbers of the people’s commonwealth, citizens do not see the sense in parting with the hard-earned money for government officials to pilfer and show off wealth while they wallow in poverty.

However Naiyaju did not just pose a difficult challenge to tax administrators, he proffered solutions. That when taxes become truly progressive and with a focus not just on huge earners, but government officials too are made to transparently pay and file tax returns, government revenue generation through tax becomes easy.

Reduction of cost of governance will help in the hermitage in government while frivolous allowances of state and federal legislators that may not be captured in the tax net are a huge challenge.

In Nigeria, for example, citizens are not convinced that federal legislators pay commensurate taxes. While Pay As You Earn, PAYE is a reliable tax strategy, several allowances are available to top public servants that make tax tracking difficult.

Tax authorities should concentrate on a return to the culture of making the effective filling of tax returns by top functionaries like federal legislators, top judicial officers, and top business operators.

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It is not enough to file tax returns, but it has to be regular and correctly filed. It also has to be prompt and complete.

These may look simple. Experts, however, recognise the difficulty and challenges accompanying these. It is common knowledge that it’s the same tax experts are used in creating shortcuts to under-declare to facilitate low tax by businesses.

“If every FCT resident files tax returns to meet these conditions, government revenue will increase without increasing taxes and levies.” Naiyeju pointed out.

Other recommendations that would build the culture of tax returns and increase government revenue are serious sanctions, not only for defaulting but also for lying by under-declaring profits.

In all these, it is still incumbent on citizens of any nation to pay their taxes, so also Nigerians and FCT residents alike.

The culture of prompt tax payment should be inculcated while citizens should be proud to be taxpayers.

However, one cannot give what one does not have. While tax is paid on income and profits, most Nigerians who are willing and able are unemployed. Most in so-called employment are grossly underemployed.

A lot barely survive informally and cannot keep track of their earnings or profit margin.

The government always claims to engage global best practices in taxation, even in the advanced countries of the world, most taxed items like staple food items are VATed flatly across the board for the rich and the poor, making such taxes which are largely inevitable because they are consumption taxes un-progressive.

In the FCT, experience shows that the poor are taxed most effectively while the rich are most likely to evade or under-declare without consequences.

The very poor who bring out of their subsistence to meet other needs are compelled by area council (local government) authorities.

The area council markets are so well policed by their tax agents, who like in the days of old, are notorious for extortion.

A case in point is Karu Market, Abuja where AMAC agents sold car parks and any other available space to traders for daily returns, and other markets, and such situations replete the FCT without consequences for perpetrators.

Most of the challenge is in the remittance of such funds as the agents have mastered the art of diversion of funds to personal coffers instead of making returns to the government.

However, the FCT Minister, Muhammad Bello in his address reemphasised the need for prompt tax returns as it is crucial to “Reviving the Culture of Tax Returns.”

He noted that the Administration seeks more ways to shore up its revenue base for the implementation of various projects, particularly, in a dwindling economy faced by dwindling allocations from the federal allocation.

“It is no secret that the global economic downturn which is orchestrated largely by the COVID-19 pandemic has taken a toll on the FCT Administration.

“Over-reliance on oil export which is being impacted by an unstable international energy market has contributed immensely to a reduction in revenue accruing to the government.

“Invariably, this would eat into any possible surplus funds that can be deployed into the provision of infrastructural and social facilities to meet the increasing needs of our growing population.

“ While l commend the FCT Internal Revenue Service for the steady growth of revenue accruing from taxation since its establishment, it is also very clear that a lot more needs to be done to optimise this very important source of public finance.

“It is, however, worrisome that, according to reports reaching me, only 10% of registered residents of the FCT are contributing to the maintenance and development of the Territory by paying their taxes.

“This needs to change, both for fairness and entrenchment of the rule of law. We must begin to treat tax evasion as the crime that it is. High-income individuals who provide false information on their income should also refrain from doing so.

“One of the canons of taxation is fairness, such that payment of tax is proportional to the income of the person. Therefore, tax should be equitable in a way that the amount of tax payable should be proportionate to income.

“We must understand that taxation is not just a means of providing funds for services and infrastructure it is also a means for the high earners to contribute to the uplifting the quality of life of the low earners.”

On his part, Acting Executive Chairman of FCT -IRS, Haruna Abdullahi noted that tax is fundamental to government financing of critical infrastructures like education, healthcare, roads, and others, therefore, it’s not smart to run away from a tax man.