Recently, the Ikeja chapter of the Manufacturers Association of Nigeria (MAN) called on the Lagos state Government to review and put in place an acceptable tax administration system in order to encourage more investments in the state. MAN also charged the state government to outlaw the use of unorthodox means of collecting taxes and levies in the state. Chairman of the chapter, Prince F. Oba Okojie, who made the call at the 2014 Business Luncheon for CEOs and MDs organised by the association, said presently, most businesses consider the tax environment in Lagos unfriendly and disincentive to entreprenurship.
He explained that in addition to the taxes payable to the state government under Act CAP.T2 Laws of the Federation of Nigeria 2004, a total of 10 other taxes/levies are being collected by the Lagos state Government, saying that the incidence of multiple taxation and astronomical increase in taxes and levies has led to disruption of businesses in Lagos.
“The growth of the Nigerian economy has remained slow as a result of many factors, one of which is the challenge faced by businesses in the form of un-coordinated tax administration leading to what is referred to as ‘multiple taxations’,” Okojie said.
He stated that multiple taxations discourage both local and foreign investment and makes locally manufactured products uncompetitive compared to imported ones, adding that it portrays a lawless and carefree society and also restricts business expansion.
Similarly, Rivers/Beyelsa states branch of MAN last week, expressed dismay over the negative impact of multiple taxations on business development in the states. The Chairman, Mrs. Emilia Ekama Akpan, who stated this at a public function in Port Harcourt, advocated the formulation of a well defined tax standard in the country. She observed that such a step would check the problem of multiple taxations and promote business in the society.
The foregoing instances are a reflection of the general tax regime in virtually all the 36 states of the federation including the Federal Capital Territory (FCT). Multiple taxations is a lingering problem in Nigeria which seems to have defied all the measures adopted to solve it. Taxes and levies are being imposed on corporate bodies by states and local governments, even when they had already paid Companies Income Tax. Local government levies are particularly worrisome as many are unknown, unpredictable and administered without any verifiable basis or supporting legislation. These were made even more annoying and disruptive of business with many local authorities setting up road blocks at which they arbitrarily enforced payments and impounded vehicles.
Following complaints from mainly stakeholders in the organised sector such as MAN, the federal government recently imposed a ban on multiple taxations across the country. The policy was aimed at harmonising all taxes and levies throughout the country in order to sanitise the corrupt and disorganised system of tax and levy collection. It was also to improve considerably, the practice of the tax profession in Nigeria. The harmonized tax policy made it unlawful for any state government to engage individuals or organisations to collect taxes and levies approved by the federal government as only the Federal Internal Revenue Service (FIRS) is charged with the responsibility.
As commendable as this policy was, it collapsed moments after it was adopted by the Joint Tax Board (JTB). This is quite regrettable given the adverse effect of multiple taxations on the nation’s economy. There is no gainsaying the fact that multiple taxations have largely contributed to the near total collapse of the manufacturing sector. Multiple taxations are largely responsible for the industrial stagnation, forcing many to close down. Consequently, we urge the JTB to revisit the harmonised tax policy with a view to tighten the loose ends and make it fully implementable.