The life of every citizen is circumscribed by taxation, an imperative in public finance for facilitating development in the provision of public goods and services. Hardly can one escape or evade taxation when compliance monitoring and enforcement by relevant authorities are efficient and effective.
Taxation, coming in different shades and shapes can be income tax, withholding tax, and value added tax. And as we have taxes, we also have duties, dues, levies and licences to pay as a civic obligation to the state. Such strategic responsibility, as a matter of public policy, requires that only the vastly experienced, brilliant and dynamic minds are recruited to man institutions managing taxation in any nation, because at the core of public finance is the effective and efficient management of the tax system.
So as the year 2019 was closing, President Muhammadu Buhari appointed a new chairman to lead the Federal Inland Revenue Service (FIRS), the institution managing taxation in Nigeria. In naming Muhammad Nami as a replacement for Tunde Fowler whose tenure as the chairman of the revenue collection agency expired, President Buhari also approved the composition of a new FIRS board.
Indeed, in many developing countries, taxation is very problematic and has even been the cause of the collapse of governments when the citizen angst against arbitrariness in its assessment gets to the boiling point.
Of cause, there are always claims that taxation is often punitive, or lacks transparency and consideration for the situation of the citizen just as there are allegations that it is a heavily corrupted or compromised obligation, with proceeds hardly getting into government coffers but ending in the deep pockets of unscrupulous government officials.
Remarkably however, in government budgeting, part of the revenue for its implementation will be derived from taxes, which the citizens should bear. But in a country like Nigeria, will the citizens voluntarily pay?
A 2001 International Monetary Fund’s (IMF) journal article authored by Tanzi, V. and Zee, H., sees the tax system as a very powerful device of redistributing income more equitably. How true this assertion is for Nigeria and most third world countries is debatable given the tax burden on the low income earners and the ease with which many rich and big corporate bodies and individuals either evade tax or are undervalued.
However, the two scholars quoted noted that developing countries would probably need a higher tax regime if they wish to be fully integrated into the global economy and attain the economic level reached by the industrial countries.
This suggests that a country like Nigeria must implement a higher tax regime to meet the citizens’ needs. Can the nation afford such? What is the implication on the image of a government that accepts such prescription usually bandied by consultants, experts and economists from the World Bank and its organs?
So, how do we factor in the known apathy of the people towards taxation and the pervasive suspicion that tax ends up in the pockets of tax consultants, internal revenue officers, and the big men in the government?
Nonetheless, behind the crux of taxation remains the enduring need of poverty alleviation, equitable and hitch free revenue mobilization, efficiency of fiscal allocation and management, and sustainable development.
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