BusinessDay... the voice of business: Why hold government responsible for bad infrastructure without paying taxes?

Why hold government responsible for bad infrastructure without paying taxes?
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IHEANYI NWACHUKWU on 27 April, 2008 02:00:00
 
Even those deducted at source like the Pay As You Earn (PAYE) are not remitted
on time to enable government executeits projected capital projects.
Anthough,  every time, we complain about infrastructural decay. The like the
United Kingdom and other developed countries where most of us travel to do not
compromise the revenue from taxes. Why wouldn’t they have good infrastructure
that drive businesses and makes life worth living.
Taxation as a fiscal tool is to raise revenue for the government, regulate the
economy and economic activities and to control income and employment.
True to this maxim, government has upscaled investment in infrastructure in the
last few years, corresponding to the rise in revenue. For instance, Wole
Olanipekun, a Senior Advocate of Nigeria (SAN) said Nigeria as a whole does not
explore up to 70.1 percent of taxation potentials.
”Even without oil, Nigeria can make it with taxation. What makes developed
countries different from third world countries like ours is that they adhere to
the ethics of taxation”.
The much asked question is: can we generate more than we have done in the past?
Between 1999 and 2006, the Federal Government generated N918-billion from
companies’ income tax.
Details of taxes collected by the Federal Inland Revenue Service (FIRS) in the
period show that companies’ income taxes rose by 433.3 percent.
Also in this vain, in 2000, N53.3-billion was generated from companies as taxes
compared to N46.2-billion in 1999.
The growth trend continued from 2001 to 2006 with the Federal Government
generating N69.4-billion, N89.1-billion, N114.8-billion, N129.1-billion,
N170.2-billion, and N246.7-billion respectively.
In the same period, about N7.1-trillion was raked in from various taxes,
ranging from petroleum, companies income, value added to education, and
consolidated taxes.
Over the eight year-period, Petroleum Profit Tax (PPT)  revenue increased by
1,798 percent from N71.1-billion in 1999 to N1.3-trillion in 2006. PPT remains
the single largest source of government revenue in Nigeria since the oil boom
days of the 1970’s and early 1980’s.
This trend of revenue generation from taxes could be an indication of the
effective government policy of increasing non-oil revenue. Indeed, there was an
upsurge of government activity in the areas of electricity, water, construction
of roads, and health care facilities.
For instance, in the period (1999-2006), the country saw a beehive of
development in terms of roads construction, provision of health care facilities,
drinkable water and others. All these correlate the rise in tax revenue over the
period under review.
As part of efforts to accelerate growth in these areas (social amenities), in
2005, the Federal Government decided to fund revenue generating agencies
(Federal Inland Revenue Service and the Nigerian Customs Service) from the
federation account.
Revenue from Value Added Tax (VAT) rose from N47.8-billion in 1999 to
N232.7-billion in 2006. With revenue from VAT increasing at 386.82 percent in
the eight-year period, analysts say that though VAT helps the economy in
adopting those forms of production which are economically more suitable, but one
of its downside is that tax evasion becomes a major possibility and a common
practice once firms discover that the administrative machinery of government is
ill-equipped to do the necessary cross-checking since each firm calculates its
own tax liability.
At 398.2 percent increase level, revenue from education tax hit N28.4-billion
in 2006 from N5.7-billion in 1999. Going by the importance of taxation to the
economic development of this nation, experts say that the country is not
exploring up to 70.1 percent of taxation potentials.
On other form of taxes, about N5.9-billion was generated in 2006, against
N1.1-billion in 1999.
A total of N1.8-trillion tax revenue was realised from various taxes in 2006,
against N171.9-billion representing a huge increase of about 983.8 percent.   
Industry experts have advocated that the potentials of taxation alone in the
country, if fully explored is capable of equipping us for development even with
oil.