ax, as a subject of discussion, is not one of the easiest topics to read or write on. The natural inclination of the average Nigerian reader is to turn away from this subject with undisguised alacrity. However, this attitude itself is a part of the subject matter under discussion, and on the supposition that you are still reading this, we will commence with a postulation – or more accurately, a generic postulation that, quite simply, we can categorize the attitudinal nature of Nigerians to the existing tax regime under three headings: (i) those who are knowledgeable about taxes but use their knowledge to avoid or evade tax obligations; (ii) those that are ordinarily willing to pay their tax, but have insufficient understanding of the technicalities and the rationale underlying the system; and (iii) those who are enlightened about the tax system and are willing to meet their tax obligations. For the sake of argument, we might add a fourth category—that is, those who are neither knowledgeable about the tax system and are not willing to comply with its requirements; but this category is almost improbable, as a person, logically, cannot avoid a circumstance he is ignorant about. These categories distinguished, we can then proceed on the premise that the effectiveness of the Nigerian—or in fact, any other—tax regime is predicated on the ability of the tax administration to detect and punish the people categorized under (i); educate and motivate the people in (ii); and justify and reward the people in (iii). While our theory looks quite straightforward on paper, reality – historical and current – reveals that tax regimes are fraught with peril, and not a few rulers have lost their seats – and their heads – in the process of pursuing an unpopular tax policy. The Taxpayer On The Street And how does this work out in Nigeria? Today, a form of organized chaos seems prevalent within the tax system. Organized, because there are rules, agencies, and enforcement procedures. Chaos – because, well, none of it seems to work as efficiently as it should. The citizens in category (ii) above are the majority and, whether as a result of administrative inefficiency or inherent deficiency, the average Nigerian is no more interested in the intricacies of the Nigerian tax regime than he is in the cultural ceremonies of Byzantium. So who then are the current taxpayers? An analysis of the tax administration would reveal that the revenue that comes into government coffers is mostly from either the automated tax deduction processes, such as the “withholding tax” method and the Pay-As-You-Earn (“PAYE”) method or from individuals and corporate entities too “big” to escape the scrutiny of the taxman. Beyond these two methods of collection, the rest is a topsy-turvy nondescript wasteland of indiscriminate assessments and arbitrary compliance. And for those who do pay their taxes (whether because the process is automated or because they are within the public glare) the psychology is almost always inclined towards a treatment of the tax as some form of blackmail payoff to the government – an exaction without expectation of social reward, complied with merely to avoid the imposition of punishment and penalty.
Posted on: Wed, 21 Aug 2013 11:33:12 +0000
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