Amid outcry over the proposed increase of Value Added Tax (VAT) from 5 per cent, President, Chartered Institute of Taxation of Nigeria (CITN), Olajumoke Simplice has urged Nigerians to demand accountability from their states and local governments who get a total of 85 per cent of the VAT.

Speaking on the sidelines of the 6th CITN Tax Conference (South West) held in Ibadan, with the theme, “Taxation and Social Justice: The Roles and Responsibilities of Stakeholders,” she explained that state governments get 50 per cent from each VAT paid, local governments get 35 per cent share while the Federal Government gets 15 per cent.

Pointing out that VAT was solely taxing on consumption, she bemoaned the failure of Nigerians to ask the government for accountability for the VAT collected over the years.

“The good thing about VAT is that it is not general; it is what you buy, you consume. It is consumption tax; that is, it is when you consume that you pay. It is also a way of telling us to act on your needs, not on your wants. I believe it is the easiest way of the distribution of wealth from the rich to the poor.

“The people should do their part first and then ask for accountability. From the VAT, only 15 per cent goes to the federal government; 50 per cent goes to the state government and 35 per cent goes to the local government.

“So the bulk of the money goes to the state and local government; Federal Government only takes 15 per cent as the cost of collection. It is the people’s duty to ask for accountability.

“Take for example the Agbekoya issue, in the Western region. The government said the people must pay additional tax and the people refused.

“The people maintained that before they can pay additional tax, the government must fix the road to their farms. This became big issues such that soldiers were drafted leading to a clash between the soldiers and farmers. But at the end of the day, reason prevailed. The good roads in the Western region were the roads built in those days,” Simplice said.

Arguing that 5 per cent VAT rate in Nigeria was 25 years old, was among the least globally, she held that an increase in VAT was long overdue.

Rather than the opposition against VAT increase from 5 to 7.5 per cent, Simplice said attention should be diverted to calls for a reduction in income tax, Pay As You Earn (PAYE).

“The VAT increment should have happened so many years ago; it is long overdue. The tax act came into being in 1993 but it did not take effect until 1994. Back then, it was advocated that we start with five per cent and increase it subsequently.

“But 25 years down the line, nothing has been done. In 2007, an attempt was made, it was scuttled; earlier this year, attempt was made, it was scuttled. But you cannot play the ostrich. Our tax rate is the lowest globally apart from Bahrain and two other countries.

“So, if you are playing in the comity of professionals, financial world, you have to play along with the globe. You cannot have five per cent when Benin republic is having 18 per cent. We are saying it is good we increase the rate of VAT.

“But, in our clime, we are also saying that something has to give way. We are calling for a reduction in income tax from about 30 per cent to 20 per cent; and reduction in the rate of PAYE from the highest of 24 per cent to about 17 per cent,” Simplice said.

Other speakers at the event also stressed the need for increased sensitisation of Nigerians on why an increase in VAT had become imperative.

Lead International Tax and Regulatory, Deloitte, Asiata Agboluaje stressed the Nigerians to demand accountability of their government, while urging the government to judiciously use the revenue they collect.

Agboluaje also harped on the need for regular update of taxpayer database, regular review of tax policies, and that tax payers should be treated equally.

She also called for the full deployment of Information technology in revenue collection by the relevant tax authorities.

A tax consultant, Mr Albert Folorunsho urged the government to bring down the high cost of doing business by removing cumbersome start-up processes and providing basic social amenities.

He emphasized the need for the government to introduce presumptive tax and collaborate with stakeholders in taxation while urging tax authorities to remove impediments to voluntary compliance.

In enforcing collection, Folorunso said the focus should be on high taxpayers/high-income earners.

Though he expressed pessimism at the intent of the government to prosecute and jail tax evaders, a discussant, Tayo Okugbenro urged the government to establish tax court to prosecute tax evaders.

Another tax consultant, Akinyele Oladeji bemoaned the failure of the federal and states government to bring the informal sector into the tax net so as to boost their Gross Domestic Product (GDP).

He urged states and the Federal Government to be innovative, come up with incentives to ensure that everyone in the formal and informal sector pays their taxes.

Source: https://tribuneonlineng.com/states-lg-get-85-of-vat-nigerians-should-demand-accountability-%E2%80%95-citn-president/

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Haaa, 85%?

Nigerians don't know their right... plain and simple!

They prefer to fight over irrelevant things.

The tax code in general should be reworked. The corprate tax is high on a federal level. The states should also stop chasing for petty levies and focus on stuff like income tax or property tax. Local government just need get their IGR up in general.

It's pretty funny how the tax code wasn't a big part of the 2019 election. I think Atiku talked about it a bit though. In general people are more worried about economy in terms of minimum wage, unemployment rate and GDP growth.

Demand which accountability when buhari is there to be insulted?

Father and son made roster for sleeping with his daughter and when caught, he had buhari to blame, na VAT accountability he no go insult buhari ni?

Though he expressed pessimism at the intent of the government to prosecute and jail tax evaders, a discussant, Tayo Okugbenro urged the government to establish tax court to prosecute tax evaders.

What is the pessimism about? If Buhari was smart about his war on corruption he would have madeit a two prong approach. Having be FIRS and
EFCC would be a deadly combo. Go after them on both tax evasion and corruption charges. Alot of these guys dont even bother washing their cash under legit businesses so it shouldn't be too hard to catch them.

Most people don’t understand that the plan to increase VAT is simply to help states generate more revenue to enable them pay the new minimum wage. Federal government’s share of VAT revenue is just a negligible 15%. Increasing VAT from 5% to 7.5% won’t amount to any significant increase in Federal governments revenue but Buhari is the one taking the blame for a policy that benefits the states majorly.

seunmsg:
Most people don’t understand that the plan to increase VAT is simply to help states generate more revenue to enable them pay the new minimum wage.

Lol it's not Buhari's job to help states obey the law. His job is to enforce the law. The minimum wage isn't a request afterall. It's just funny that these governors are essentially patting themselves on back for doing jobs. The FG should sanction any state runs fowl of law but this is Nigeria we're talking about.

I doubt he's interested in this policy because he's being altruistic. The FG is looking for revenue to fund expenses themselves. That 15% isn't chump change.

Blue3k:


Lol it's not Buhari's job to help states obey the law. His job is to enforce the law. The minimum wage isn't a request afterall. It's just funny that these governors are essentially patting themselves on back for doing jobs. The FG should sanction any state runs fowl of law but this is Nigeria we're talking about.

I doubt he's interested in this policy because he's being altruistic. The FG is looking for revenue to fund expenses themselves. That 15% isn't chump change.

Your comment is extremely laughable. If governors cannot pay salaries, who will the people blame? Why did Buhari introduced budget support, Paris refund and bailout to states in 2016?

Government’s economic policies cannot be effective when states and local government cannot meet up basic obligations like salaries. The president signed the N30k minimum wage into law and he has a responsibility to ensure that government at all levels comply with the law.

seunmsg:


Your comment is extremely laughable. If governors cannot pay salaries, who will the people blame? Why did Buhari introduced budget support, Paris refund and bailout to states in 2016?

Government’s economic policies cannot be effective when states and local government cannot meet up basic obligations like salaries. The president signed the N30k minimum wage into law and he has a responsibility to ensure that government at all levels comply with the law.

My comment is factual the issue is Nigerians dont enforce laws. If you're dumb you blame someone who's not responsible. It's just that simple. The reason he introduced it was because most states sre run incompetently. It was just more pragmatic then having a dozens of fiscal crises not because he's some altruist.

The first paris club was because the states were owned cash. The second was a loan to help states that needed it. Funny enough they still blew it without accomplishing the required fiscal goals since FG didnt enforce rules again.

Lol are the states too dumb to budget now? The only mistake Buhari did was to sign 30k minimum wage in middle of fiscal year. The law should have stated changes are effective 2020.

Blue3k:


My comment is factual the issue is Nigerians dont enforce laws. If you're dumb you blame someone who's not responsible. It's just that simple. The reason he introduced it was because most states sre run incompetently. It was just more pragmatic then having a dozens of fiscal crises not because he's just some altruist.

The first paris club was because the states were owned cash. The second was a loan to help states that needed it. Funny enough they still blew it without accomplishing the required fiscal goals since FG didnt enforce rules again.

Lol the states are too dumb to budget now? The only mistake Buhari did was to sign 30k minimum wage in middle of fiscal year. The law should have stated changes are effective 2020.

It’s obvious you don’t know anything about Nigeria. The president takes the blame for everything. Let’s assume about 20 states cannot pay salaries, who do you think Nigerians will blame?

States are integral parts of Nigeria and whatever happens to them affects the entire country. The president cannot dictate to governors how they run their states and how they expend revenues accruing to them. State governments are independent of the federal government. The best the president can do is to introduce policies and programs that can be of benefits to the states and that is what Buhari is doing.

seunmsg:


It’s obvious you don’t know anything about Nigeria. The president takes the blame for everything. Let’s assume about 20 states cannot pay salaries, who do you think Nigerians will blame?

States are integral parts of Nigeria and whatever happens to them affects the entire country. The president cannot dictate to governors how they run their states and how they expend revenues accruing to them. State governments are independent of the federal government. The best the president can do is to introduce policies and programs that can be of benefits to the states and that is what Buhari is doing.

I already told you stupid people blame wrong person. Is that a hard concept for you to understand. The state's budgets and collects taxes. If they blame anyome other than stste government they're dumb.

Yes he can dictate how much they pay workers. Its the law hence why the minimum wage is under exclusive list. The national minimum wage applies to everyone federal government says it appies to its a law not a suggestion. If he can't enforce rule its just a sign of weakness. If states form police force or legalized marijuana tomorrow Buhari cant do anything about it correct?

If you're telling me Buhari is too weak to enforce these labor rules I'll believe you. If you're telling he has no authority on matter I disagree.

Sa