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Federal and State Government move to end multiple taxes, levies

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The federal and state governments on Monday took a step closer to ending the regime of multiple taxes in the country as the Ministerial Implementation Committee on Multiple Taxation met in Abuja to deliberate on the road map.

The National Economic Council had constituted an ad hoc committee to review the presentation made by the Manufacturers Association of Nigeria on multiple taxation and other challenges facing businesses in the country.

Subsequently, the Ministerial Implementation Committee chaired by the Minister of Finance, Dr. Ngozi Okonjo-Iweala, was set up to draft the road map that was considered by stakeholders under the auspices of the Joint Tax Board.

Okonjo-Iweala said at the meeting on Monday that multiple taxation was harmful to the economy as it increased the cost of doing business, discouraged local trade and investment, and gave a negative perception of the Nigerian business environment to foreign investors.

She said, “As we all know, the issue of multiple taxation is one, which has been on the front burner for many years now in Nigeria. Despite several attempts by the government to tackle this issue, it has remained unabated, affecting both big and small businesses, and the movement of goods and services in the country.

“According to MAN, some states have as many as 97 different taxes, levies and charges that are imposed on businesses. This is simply not economically viable; the costs to the government of administering these various taxes and the costs to business of paying these taxes outweigh their benefits to both the private businesses and the government.

“A recent World Bank report shows that for every N100 that businesses have to pay in taxes, they pay about N35 in compliance costs. This is a waste of capital that could be reinvested in these businesses to grow them and create more jobs for our economy. By streamlining and harmonising taxes across the federation, we will increase Nigeria’s productive potential.”

By impairing the integration of the national market, the mobile levies also reduce competition between companies located in different states in the country, the minister added.The multiplicity of taxes on the transportation of goods impairs the integration of internal markets and the establishment of a fully integrated economic space within Nigeria, she said.

Okonjo-Iweala said the implementation of the recommendations contained in the road map would not only increase economic efficiency, but also make enforcement simpler.

She said, “Reducing the total number of taxes paid, increasing transparency as to how and what to pay, and facilitating procedures for filing taxes will be essential to reducing high compliance costs, and in so doing, increase Nigeria’s tax compliance rate and also the revenue.

“This is going to be a historical piece of work. We are very happy to embark on it because it is something that needs to be done. I know that uncertainty in the tax environment makes it difficult for businesses to thrive.

“Therefore, we have to have a transparent process that makes it easy for people to know what taxes and levies to pay and to harmonise these activities across the country.”

Speaking at the event, the Acting Executive Director, Federal Inland Revenue Service, Mr. Kabir Mashi, linked multiple taxation to the quest by state and local governments for improved Internally Generated Revenue.

According to him, the trend continues despite the attempt to harmonise and streamline taxing activities across the levels of government with the introduction of the Taxes and Levies (Approved list of Collection) Act, 1998.

He told journalists that the road map contained some recommendations that could come into effect within three to six months, while some would require legislation by the National Assembly.

Article Credit: Business Day Newspaper

Updated 5 Years ago

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