22 December 2008

Nigeria: Experts Condemn Draft National Tax Policy

Tax experts have condemned the proposed national tax policy being canvassed by the Federal Government.

They argue that it is a time bomb which may kill development, stunt fiscal federalism and relegate the states and local government to mere appendages of the Federal Government.

The tax experts said in Lagos at the weekend that the Federal Government did not, with the Draft National Tax Policy, adduce adequate reasons for desiring a centralised tax system other than providing a set of rules, modus operandi and guidance to which all stakeholders in the tax system would subscribe.

The Draft National Tax Policy proposes a new tax regime for the country, that is, "centralisation of the tax system and revenues whereby all tax collections from all parts of the federation would first be moved to the federation account before being redistributed to the states and local governments."

Speaking at the presentation of the report, "Taxation, Our Common Wealth", which is a collection of the opinions of stakeholders on the draft tax policy and put together by Lagos based Accounting Education and Research Services Company (ACCERS), Mrs Morenikeji Babbington-Ashaye, an accounting and tax expert said the tax policy, especially its emphasis on centralisation would rob the states of their rights as federating units as tax issues would be decided for them by the Federal Government.

"The Draft National Tax Policy, as it is, doesn't recognise the states and the local governments. The policy is as if we are saying that all there is to Nigeria is the Federal Government. What is being proposed in the draft policy is that whatever is paid as tax will first of all go into the Federation account before it would be redistributed to the people. With that, there is going to be delay in servicing the people", she added.

Mrs Babington- Ashaye, who is also the president of ACCERS deplored the inequitable distribution of Value Added Tax from the Federal Government to the states, pointing out that the states that contribute don't get commensurate benefits in the process.

Delivering a paper on "Tax Policy and Administration", Mr Odubunmi Solarin, a tax consultant and chattered accountant also said there is no basis for tax proceeds to be moved into the federation account and then redistributed to states and local governments.

According to him, what is needed is a policy framework that will recognise the autonomy of the states and imbue the various component units of the federation with the power to make laws and also administer taxes in their jurisdiction and as spelt out in the constitution.

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