18 April 2019

Nigeria: Professionals Call for Due Process, Fault 'Piecemeal' Tax Reforms

The controversies dogging the nations tax reforms, now with Value Added Tax (VAT) regime, may not achieve anything positive unless a holistic approach is taken and urgently, tax professionals have said.

The top tax administrators, at the sensitisation seminar on proposed VAT increase and the non-assented housing fund bill, organised by the Chartered Institute of Taxation of Nigeria (CITN), at its headquarters building in Lagos, said tax is a serious issue and must be seen as such.

The President of CITN, Chief Cyril Ede, who was represented by the Vice President, Olajumoke Surplice, admitted that time has come for comprehensive reforms of VAT regime, particularly as it relates to small business and imported items.

Noting that such reforms will bring about balance with respect to disposable income of customers and stability of businesses, he also commended the government for refusing assent to National Housing Fund bill.

Former Director of Tax Policy at FIRS, Chief Mark Dike, said the current discordant tunes trailing VAT rate are not new but have only shown lack of due process.

According to him, the enactment of VAT in 1993 was a struggle and the process of the only recorded hike to 10 per cent and subsequent reversal in a short period was a display of shoddy arrangement.

He said that discussions about tax must be inclusive, with professionals and other stakeholders consulted to smoothen the rough edges that must be followed strictly when agreed.

"We must get back to the drawing and the same is true of the housing fund bill. The way we are currently going about these issues, we may not make any headway," he said.

Prof. Abiola Sanni, during a panel discussion, described the recent report on planned VAT increase as a moot, as there was no bill to that effect at the National Assembly, which must precede any discussion.

For him, there has been inconsistency overtime in both actions and speech by some government officials but warned that any increase in VAT now would be in bad faith.

"The best option is to widen the tax net, not increasing the burden now. Granted, there are opportunities in VAT segment, but it is not right at this point," he said.

The panel moderator, Prof Teju Somorin, said her study of over 15 countries, including Ghana, at the point of VAT increment, shows that there is always public outcry, with some of these countries raising their VAT to 30 per cent.

But she appealed to government to follow due process and focus mainly on luxury items, while holding a standard rate of five per cent for non-luxury items, as well as broaden the tax base.

Another tax administrator, Azeez Olatoye, said he wants a general review of tax processes to identify the challenges against VAT and other taxes, with a view to balancing the interest of all stakeholders.

For him, the government must build trust, as it is not presently adding up, citing budget inconsistencies.

He said that the country's debt profile and the huge service bill is discouraging to taxpayers, who already know that the tax proceeds would not end up in development pursuits.

He said that downward adjustment of tax rate would encourage more to voluntarily enter the pool, but would be resisted by the governors, who rely solely on high tax.

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