Sections
Poll: Power pledge
Is Mr. President's promise of additional 6,000 MW of electricity in 18 months achievable?
Experts list ways to check corrupt tax practices
Font size:
Making the recommendation at a recent forum in Lagos on Tax Administration in Nigeria, organised by the Manufacturers Association of Nigeria (MAN), Taofeeq Abdulrazaq, Partner, Tax Services, Ernst & Young, Nigeria, noted that in Nigeria laws dating back to colonial times had not been updated and changed in line with modern needs.
“Indeed, it is essential to reform the overall tax design and introduce new tax statutes simultaneously.”
Apart from the above, the professor of the law of taxation stressed the need to ensure that tax rates were realistic in relation to trade and profit margins, and in relation to asset values.
“The temptation to create overly complex tax structures should be avoided particularly in the case of income, VAT (value Added Tax), and excise taxes,” said the former dean, faculty of law, University of Ilorin.
He advocated greater use of withholding provisions, particularly for capital income. This measure could be combined with a gradual shift towards a system of self-assessment of taxes.
“But to succeed, such a system would need to be backed by a tax office or administration with enhanced auditing capabilities,” he said.
Another way of checking corrupt tax practices, according to the immediate past registrar/chief executive, Chartered Institute of Taxation, is by making tax rules and regulations more transparent. In the case of taxes, (and charges) simple measures such as posting the various charges (including form fees) prominently, disallowing the use of any receipts other than machine-printed receipts, and using IT to disseminate forms and information could help minimise information asymmetry and reduce the discretionary power of low-level bureaucrats.
“A tax guide not only written in the local language, but also in simple and plain language that a layman can easily understand, could also help taxpayers to negotiate daily routines.
The guide should include a code of conduct for tax officials and politicians in charge of the ministries with revenue generating responsibilities. The central authorities would also need to fight illegal local levies, or illegal payments at lower levels.”
Abdulrasaq’s other recommendations include the following:
•Improving transparency and accountability in budget preparation, execution, and oversight in governmental organisations and public enterprises.
· Adopting administrative reforms that introduce some competitive pressures in the working of government departments and enterprises. These reforms should also provide the decision makers and the public with the appropriate information needed to assess performance and service quality.
· Devising a scheme to give due recognition to tax payers, both individual and corporate, which maintain a good taxpaying record over a considerable period of time.
· Making payments for bribes non-deductible for both domestic and foreign business.
In his contribution, president of the Chartered Institute of taxation, K. A. Adigun looked at measures being taken to address the issue of multiplicity of taxes such as the Decree 21 of 1998 now CAP T2 LFN 2004. According to him, the law suffered from deficiencies largely due to its loose language particularly with regard to the charges and levies due to the local governments.
The other issue has to do with non incorporation of the applicable rates, procedure for assessment, collection and appeal process.
“While we agree with the Lagos state government’s efforts at streamlining this aspect of the law for local governments within the state, it is strongly advised that a review of the entire Act should be carried out.”
Adigun described as a welcome development the draft national tax policy which tends to shift emphasis from direct to indirect tax taxation, calling on stakeholders to support this course.
He however called on government to ensure judicious use of all collected revenue as complaints over the years had been that such government revenue was not judiciously used.
To reduce the incidence of undue tax burden, he noted the need for organizations to set up tax departments manned by professionals to cater for their tax needs.
“Indeed, it is essential to reform the overall tax design and introduce new tax statutes simultaneously.”
Apart from the above, the professor of the law of taxation stressed the need to ensure that tax rates were realistic in relation to trade and profit margins, and in relation to asset values.
“The temptation to create overly complex tax structures should be avoided particularly in the case of income, VAT (value Added Tax), and excise taxes,” said the former dean, faculty of law, University of Ilorin.
He advocated greater use of withholding provisions, particularly for capital income. This measure could be combined with a gradual shift towards a system of self-assessment of taxes.
“But to succeed, such a system would need to be backed by a tax office or administration with enhanced auditing capabilities,” he said.
Another way of checking corrupt tax practices, according to the immediate past registrar/chief executive, Chartered Institute of Taxation, is by making tax rules and regulations more transparent. In the case of taxes, (and charges) simple measures such as posting the various charges (including form fees) prominently, disallowing the use of any receipts other than machine-printed receipts, and using IT to disseminate forms and information could help minimise information asymmetry and reduce the discretionary power of low-level bureaucrats.
“A tax guide not only written in the local language, but also in simple and plain language that a layman can easily understand, could also help taxpayers to negotiate daily routines.
The guide should include a code of conduct for tax officials and politicians in charge of the ministries with revenue generating responsibilities. The central authorities would also need to fight illegal local levies, or illegal payments at lower levels.”
Abdulrasaq’s other recommendations include the following:
•Improving transparency and accountability in budget preparation, execution, and oversight in governmental organisations and public enterprises.
· Adopting administrative reforms that introduce some competitive pressures in the working of government departments and enterprises. These reforms should also provide the decision makers and the public with the appropriate information needed to assess performance and service quality.
· Devising a scheme to give due recognition to tax payers, both individual and corporate, which maintain a good taxpaying record over a considerable period of time.
· Making payments for bribes non-deductible for both domestic and foreign business.
In his contribution, president of the Chartered Institute of taxation, K. A. Adigun looked at measures being taken to address the issue of multiplicity of taxes such as the Decree 21 of 1998 now CAP T2 LFN 2004. According to him, the law suffered from deficiencies largely due to its loose language particularly with regard to the charges and levies due to the local governments.
The other issue has to do with non incorporation of the applicable rates, procedure for assessment, collection and appeal process.
“While we agree with the Lagos state government’s efforts at streamlining this aspect of the law for local governments within the state, it is strongly advised that a review of the entire Act should be carried out.”
Adigun described as a welcome development the draft national tax policy which tends to shift emphasis from direct to indirect tax taxation, calling on stakeholders to support this course.
He however called on government to ensure judicious use of all collected revenue as complaints over the years had been that such government revenue was not judiciously used.
To reduce the incidence of undue tax burden, he noted the need for organizations to set up tax departments manned by professionals to cater for their tax needs.
Add to:
del.icio.us |
Digg
del.icio.us |
Digg
Email to a friend
Print version
Plain textRate this article
Comments ( posted):
Post your comment