₦airaland Forum

budaatum:
I'm from Osun State. I pay tax on my income there and also where I live, which is not in Osun State.

I get an annual record of expenditure from the tax authority where I live. And tax I pay on what I earn in Osun State is seen spent where I pay it, as minimal as it, is since my state is rather incompetent in tax collection as seen by our very low IGR.

And since my state is incompetent at collecting tax, I tax myself on my state's behalf and spend it on behalf of my local authority and keep records of my self imposed taxation.

To be honest with you, I think my state is afraid to tax me properly since they see what I spend my self imposed tax on.

budaatum:
I'm absolutely certain you are smart and intelligent enough to move your business where my 50% tax can't touch you.

How much IGR would I get then?

OruExpress:
You don't believe businesses are moving out of Lagos and into Ogun due to cost of business and taxes?

MetaPhysical:
Patriotism! Accountability! Social progress!

Budaatum, open a new thread and post this there. We need to discuss your response thoroughly. This thread you are posting on does not do justice to what you just shared bro..

Copy me on the thread.

budaatum:
Lol! This may sound corny but modesty won't let me, and just reading this makes me blush.

OruExpress:
I think taxation is something new to young Nigerians and many of the people on Nairaland are wards of their parents. These elements mixed creates a strange environment for taxation conversations so I don't know where you can I can go when I just gave you the math to tell you that IGR and revenue don't correlate as much as tax rate and IGR correlate

MetaPhysical:
Have you ever read " The People's Republic", written by Chief Obafemi Awolowo?

What you narrated in that post about the way you handle tax is a billboard post about social contract and civic obligation to home country.

It is a model to mentor Ibo tax evaders about their duty to their homestates.

budaatum:
Now that I got your time. Tax is a people influencing thing. If I tax you your hard earned money, you would, or at least, should, be concerned with what I do with it. If I'm out there spending your money I have taken as tax on olosho, I am very certain to piss you off. And if you are not spineless, you would most likely campaign for my opposition so I get kicked out and can tax you no more. But if I spend your tax money fixing roads so your trucks don't get damaged by potholes, and pay police to protect you from bandits, and I use it to build schools to educate those you might want to employ so your business can grow and you employ more of my people, you are very likely to invest more so you generate more income that I can tax and thereby increase the IGR of the taxation area I am in charge of. And the people you employ that I spent your money educating will vote me back into office.

Now, assume I tax your factory at a rate of 50%. You probably pay 10-15% in labour cost, and perhaps 10% for raw materials, and perhaps another 10% on energy costs, and depreciation might take another say 5%, and let's say 5% goes on interest on capital for your business, leaving you with a measely 10% profit at best. Do tell, you being smart and intelligent and hardworking, why would you not pack up your factory and go where you are taxed much less? And how much IGR will I get from you once I have chased you away with my greedy 50% tax?

Low tax rates encourage businesses to stay, is what has been found the world over, all other things being equal, and the more businesses there are, the more I am likely to be able to collect as tax, is the point here, and not that high tax equals high IGR, as you seem to be implying I am inferring, which I am not.

budaatum:
Now that I got your time. Tax is a people influencing thing. If I tax you your hard earned money, you would, or at least, should, be concerned with what I do with it. If I'm out there spending your money I have taken as tax on olosho, I am very certain to piss you off. And if you are not spineless, you would most likely campaign for my opposition so I get kicked out and can tax you no more. But if I spend your tax money fixing roads so your trucks don't get damaged by potholes, and pay police to protect you from bandits, and I use it to build schools to educate those you might want to employ so your business can grow and you employ more of my people, you are very likely to invest more so you generate more income that I can tax and thereby increase the IGR of the taxation area I am in charge of. And the people you employ that I spent your money educating will vote me back into office.

Now, assume I tax your factory at a rate of 50%. You probably pay 10-15% in labour cost, and perhaps 10% for raw materials, and perhaps another 10% on energy costs, and depreciation might take another say 5%, and let's say 5% goes on interest on capital for your business, leaving you with a measely 10% profit at best. Do tell, you being smart and intelligent and hardworking, why would you not pack up your factory and go where you are taxed much less? And how much IGR will I get from you once I have chased you away with my greedy 50% tax?

Low tax rates encourage businesses to stay, is what has been found the world over, all other things being equal, and the more businesses there are, the more I am likely to be able to collect as tax, is the point here, and not that high tax equals high IGR, as you seem to be implying I am inferring, which I am not.

The state of Osun is in the news for the wrong reason as the imposition of tax on students by the state government is presently causing furore in many schools. LATEEF DADA writes.

The fall in the price of oil resulting in the reduction of monthly allocation accruable to Osun state had led to the introduction of tax by the immediate past governor of Osun state, Mr Rauf Aregbesola, in order to meet the demands of the people of the state, and particularly to pay workers salary.

The development appeared strange thereby leading to series of protests in some quarters.

The introduction of tax to public schools, in particular, generated reaction as some public secondary schools’ students protested against the demands of three years tax clearance from their parents by the state government.

The state government had directed adult artisan to pay the sum of N1,500 per year as tax, while the arrears of three years tax beginning from 2013 to 2015 amounted to N4,500 to be paid altogether. The state government also demanded evidence of tax payment from students resuming in new schools in the state while the tax payment was laid as precondition for the students to write examination then.

However, students in all stages have concurred and have been used to the payment annually until recently when the state government through the Osun Internal Revenue Service issued a letter to heads of state-owned tertiary institutions, informing them that the tax has been jacked up to N3,500 and each students is expected to pay a total sum of N10,500.

The increase in the flat-rate tax for informal workers in Osun State, which comprises artisans and peasants is currently generating mixed feelings in the state.

While it has not been clearly ascertained if there is a new tax regime in the state that also affects formal workers who are on PAYE platform, DAILY POST exclusively confirmed the proposed increment for informal workers through a document emanating from the Osun Internal Revenue Service.

A letter dated 7th November 2019, which was signed by a senior official of the agency, one Mr Abiodun Olaitan on behalf of Chairman/ CEO of Osun IRS was obtained by our Correspondent over the weekend, which notified managements of tertiary institutions in the state of a new tax regime in the Ivory Towers.

Our Correspondent also sighted an internal memo in one of the higher institutions of learning in the state, informing Provosts and Deans of Colleges and Faculties respectively about the increment.

Meanwhile, the Chairman/ CEO of Osun IRS, Mr Gbite Ademikanra, when contacted on phone to get his reaction denied that there is a new tax regime in the state.

He explained that there was no plan by the agency to jack up taxes meant for any resident in the state, including informal workers.

Ademikanra said: ” I don’t know what you mean by over 100 per cent increment on tax meant for informal workers. How much are they paying before, how much are they paying now?

“There is no increment sir, what we do for informal sector people is based on their income, except I know your income now, I wouldn’t be able to determine how much you will pay.

“So, I did not issue any document like that informing anybody of increment in tax, such document didn’t come from my office at all”.

However, the import of the letter, which is on Osun IRS letterhead, coupled with an internal memo in the said higher institution of learning clearly indicates a new tax regime.

The circular from the agency, titled: ‘Compliance and Enforcement of Taxes in The State Of Osun ‘ which was addressed to management of tertiary institutions in the state reads in part: ” With reference to our earlier circular letter of January 2018, on the urgent need for parents and guardians to pay taxes. I wish to inform all managements of higher institutions in the State of Osun to be fully involved in the exercise.

“For clarity sake, the tax payment is ‘NOW’ Three Thousand Naira, and CPDL is Five Hundred Naira only, totalling (N3, 500) per year. Therefore, for three(3) years, each student is expected to pay a total of Ten Thousand Five Hundred Naira(N10, 500)”.

Internal memo from one of the higher institutions of learning in the state, which was signed by the bursar and titled: ‘REVIEW OF TAX CLEARANCE FEE’ reads thus:” This is to inform the general populace that the State of Osun has reviewed the amount payable as taxes per annum from One Thousand Five Hundred Naira(N1,500) per annum to Three Thousand Five Hundred Naira (N3,500) per annum.

“Therefore, for the three (3) years, each student is expected to pay a total of Ten Thousand Five Hundred Naira (10,500). Each student must collect the E-payment receipt and certificate as evidence of payment “.

When later confronted with the contents of the quoted circulars, the IRS’s chairman quickly said:” There is no increment. I can’t confirm that the letter was written to inform provosts and Vice-Chancellors the need for parents to pay tax.

OruExpress:
Alright so you're premising what you're saying on companies leaving high tax areas. As in, if you over tax (or double tax when it comes to Nigeria) companies will relocate.

It is already happening. Ogun's economy is based on companies no longer being able to afford to stay in Lagos.

OruExpress:
Confusion as Osun govt secretly increases tax of informal workers by 130.5 per cent

https://dailypost.ng/2019/11/26/confusion-as-osun-govt-secretly-increases-tax-of-informal-workers-by-130-5-per-cent/

lawani:
because a taxed economy is organised,formal and have MINIMUM WAGE, it tends to be an immigrant worker destination. This is why workers relocate from Nigeria to Europe and the United States. However businesses tend to move to low tax countries if there is infrastructure in the low tax country. This is why the United States lose business to China. The best way out is to formalize the whole global economy and take tax everywhere with no exception.

budaatum:
That's my stupid state for you! No wonder we have only few companies there.

If only we could go learn from more intelligent Ogun State. Though, in what you posted, Ademikanra said: ”I don’t know what you mean by over 100 per cent increment on tax meant for informal workers. How much are they paying before, how much are they paying now?"

OruExpress:
I will leave this thread alone because I think I said what I've had to say, though I will also add this.

We are moving into a world where people are reconsidering GDP and GNP as measures of national wealth. We as Nigerians know 'GDP increases 5% v. GDP decreases 10%' makes no difference as far as quality of life. They are even reconsidering the term 'development'. In 10 years these reconsiderations will manifest into something more inclined towards measuring the quality of people's life as a measure of how well people are in a country.

As this advancement is happening, a lot of our young people are considering using 'how much money the government collects from taxes' as a measurement of their own quality of life or how well the economy around them is doing. Be very careful because you are not moving in the direction of progress. Everyone will have their opinion and everyone will speak and for the most part, most people are of no consequence.

But the cold war you want to create around government revenue is not going to benefit you in the end. I live in the US. This new fixation on tax as progress won't hurt me at all. But I'm in a society that has had a healthy regular tax culture for 400 years, and you cannot bring up the proposal that the tax revenue of a state is a measure of it's economic health because it is well understood as ignorant with the examples given.

Texas uses low tax rates to attract business. Connecticut and Missouri come close to not taxing at all. Some states tax food, some don't. Some tax your income, others don't. Lets maintain a healthy mentality towards taxation because it isn't progress. It has benefits and it is necessary but know what you're unleashing. It is careless talk that this that created the 'photo-op governor'.

SLAP44:
They want their IGR to be higher than Lagos own by fire by force.

OruExpress:
But the cold war you want to create around government revenue is not going to benefit you in the end. I live in the US. This new fixation on tax as progress won't hurt me at all. But I'm in a society that has had a healthy regular tax culture for 400 years, and you cannot bring up the proposal that the tax revenue of a state is a measure of it's economic health because it is well understood as ignorant with the examples given.

budaatum:
Republicans wake up and say, No More Socialism!

www.nairaland.com/attachments/11658115_20200603131827963_jpeg_jpeg6177e95d484b1b9585eb5130e7a9a0d5

lawani:
because a taxed economy is organised,formal and have MINIMUM WAGE, it tends to be an immigrant worker destination. This is why workers relocate from Nigeria to Europe and the United States. However businesses tend to move to low tax countries if there is infrastructure in the low tax country. This is why the United States lose business to China. The best way out is to formalize the whole global economy and take tax everywhere with no exception.

budaatum:
No, never read Awolowo's "The People's Republic". I do know of my own social responsibility however, and its a motivating force for me.

I come from an obligated family. And I'm just doing my duty, according to family traditions.

budaatum:
OruExpress, for someone who lives in the States, I'm rather surprised at your attitude to tax.

Governments have no where else to get money from except from tax. And unless you do not want any of the things that tax is spent on like roads, public schools, and regulatory authorities, I wonder where you expect the state to get it's money from? Do states in America rely on allocations from Federal Goverment like ours do? You must wonder how such states intend to survive when a barrel of oil drops, or when the little they do collect dries up due to Covid-10 lockdowns, as we are currently seeing.

Below is an article about some states crying for money already because their IGRs no more cover expenditure. And if I lived in those states I'd expect taxation to go up, so I'd be planning to migrate elsewhere.

budaatum:
I wonder how you plan to have infrastructure if you have no tax to pay to build it.

SLAP44:
I am sure you didn't know that there are parts of this country where citizens build their own infrastructure? Give government like the FG same money and we will hear stories.

budaatum:
I'm from Osun State. I pay tax on my income there and also where I live, which is not in Osun State.

I get an annual record of expenditure from the tax authority where I live. And tax I pay on what I earn in Osun State is seen spent where I pay it, as minimal as it, is since my state is rather incompetent in tax collection as seen by our very low IGR.

And since my state is incompetent at collecting tax, I tax myself on my state's behalf and spend it on behalf of my local authority and keep records of my self imposed taxation.

To be honest with you, I think my state is afraid to tax me properly since they see what I spend my self imposed tax on.

MetaPhysical:
Great! I admire your sense of duty and civic responsibility to the homeland.

All Ibos should follow your model and humble themselves to learn from what you shared. Not paying tax is not cool and is not something to beat chest about.

SLAP44:
Do you even have to go as far as USA to pull your example? Peter Obi left up to $75m in Anambra coffers plus many investments that are still yielding profits till today. He didn't have to tax his subjects to business death before he gave us a better life.

So stop telling us that if oil dries up the FG will go broke, but then again, knowing the kind of illiterates you support to sit in your government houses, I am not surprised to hear that you have oil as your only option.

That's why I think this country is not going anywhere if we continue to share the same country with people who have no other options than to retain their oil feeding bottles or starve to death.

budaatum:
Why only Ibos?

MetaPhysical:
Leave that side alone, they are my in-laws.

budaatum:
Well, I think all Nigerians should contribute to their society. And taxation is one way to make them.

MetaPhysical:
You believe that because you are Yoruba.

Yorubas are urban dwellers and to sustain urbanism you need amenities. This is why tax is important.

Do people in village worry about tax the way people in city do? No.

Moreover people that have never had kings are clueless about state rulership and thus do not have need for taxation.

Ibo enwe eze!
As my inlaws say, Ibo has no king.

budaatum:
I think you are too lazy to read. You have clearly shown you speak without considering the evidence before you and I'm therefore considering it a waste of time engaging you but shall wait till you've proven conclusively whether you can read or not.