The Nigeria Communications Commission (NCC) says multiple taxation constitutes a serious threat to economic growth and development of the country.
NCC’s Executive Commissioner, Stakeholder Management, Adeleke Adewolu, conveyed the message to participants at a Regional Workshop, organised by the Agency in the ancient city of Ibadan, Oyo State, recently.
The workshop was hosted specifically to dialogue with senior government functionaries from all the States in the South West Geo-political Zone to build better understanding on the issue of multiple taxation.
This follows regulations being imposed on the telecom companies by the States and their agencies that is threatening the institutions’ growth and the country’s development.
In his keynote speach on the topic; ‘Multiple Taxation: an Impediment to Economic Development”, Adewolu derined Multiple Taxation as the imposition of the same or similar taxes on the same income base, transaction or person by one or more levels of Government, in one or more jurisdictions.
He argued that, although a fiscal tool for economic development, taxation if not properly applied can become inimical to economic development.
In his words, “Nigeria is widely known to be not only Africas most populous country but also the largest economy on the Continent and it is expected that strong economic growth in Nigeria would generate substantial prospects for growth and spillovers for the whole West African region.
“Despite the prospect of accelerated economic growth, the presence of multiple taxation, which the World Bank has termed nuisance taxes has and continues to prove to be a bane on economic development in the Country.
“Taxation is the backbone for public finance. It provides guaranteed and sustainable sources of funding for social programs and public investments, .
“Taxation by design is an instrument for economic development and it is important to acknowledge and support the initiative of all tiers of Government in using taxation as an instrument for socio-economic development.
“However, supporting the tax initiatives by the various tiers of Government includes indicating where a category of taxes have become cancerous to economic development.
“These type of taxes typically manifest themselves in the form of multiple taxation and by design, they reverse growth, stifle innovation and discourage investment. In parabolic terms, they are the scarecrows mounted by government to disincentivize development.”
According to Adewolu, the National Tax Policy 2017 emphasizes the need to eradicate multiple taxation at all tiers of government. “Specifically, the Policy states that taxes similar to those being collected by a level of Government should not be introduced by the same or another level of Government.
“The Federal, State and Local Governments shall ensure collaboration in harmonizing and eliminating multiple taxation
“Also, the President and Commander-in-Chief of the Federal Republic of Nigeria, His Excellency, President Bola Ahmed Tinubu, in his commitment to address the vexed issue of multiple taxation, recently signed a number of Executive Orders to curb arbitrary taxes in the Country.”
He expressed the hope that the inauguration of the Committee on Fiscal Policy, Tax Reforms by the President, which is geared towards harmonizing taxes will provide an avenue to further engage various stakeholders in order to identify their pain points and critical concerns bothering tax and fiscal policies.
“This would also facilitate a conducive environment for conducive for local and foreign investment into the country.” He said.
He further argued that multiple taxes, rather than increase Government’s revenue, can destroy businesses and discourage investors.
“While a level of multiplicity is expected in federal system of governance, the levying of a particular tax on the same person/entity, in respect of the same liability by more than one State or Local Government Council should be avoided.
,”The paradox of multiple taxation is that it does not lead to an increment in government revenue, rather the crippling effect of these taxes, is that it makes otherwise profitable businesses, unprofitable.
“It negatively impacts the ease of doing business, shrinks the tax base, incentivizes tax evasion and complicate tax compliance.
“According to the World Bank, taxing a specific tax base will lead to increasing revenues up to a specific point, after which the overall tax revenue will decline because companies go out of business, or evasion increases significantly.
“In addition to these challenges, the economic burden of multiple taxation is further exacerbated by the administrative burden of complying with these taxes.
“It further makes Nigeria an undesirable ground for breeding healthy business and competitive practices.
“The effect of this is that, business enterprises in Nigeria struggle to compete with their counterparts abroad.
“These incidents weakens our economic foundations, devalues the symbol of economic strength, which is our currency – the Naira and contracts our gross domestic product.”
He called for a review of the approach towards taxation by adhering to its founding principles of neutrality, efficiency, flexibility, certainly and simplicity, Effectiveness and fairness.
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