Ease of doing business: State revenue agencies engage thugs for multiple levies collection
..As APBN members protest multiple taxes in Delta
…Gov’t must exercise caution in overtaxing masses — Experts
By Salim Umar Ibrahim, Bankole Taiwo, Barth Ndubuwah, & Abimbola Abatta
With weak revenue allocation from federal government, state government agencies, according to Nigerian NewsDirect investigation have adopted aggressive revenue mobilisation o by engaging thugs as a strategy to boost Internal Generation Revenue (IGR).
The federal government allocation to state government and local government has witnessed mixed proportion this year amid stable global oil prices and ease on COVID-19 lockdown.
Nigerian NewsDirect gathered that some state governments have introduced new levy as revenue dropped last year over lockdown
Specifically, levy on signpost, additional levy on motorists, land use charge and levies on hawkers in some strategies places.
Members of the Association of Professional Bodies of Nigeria Delta State Chapter on Friday appealed to the Delta State Governor, Senator Dr Ifeanyi Okowa to address the issue of multiplicity and duplication of taxes, uncivil collection of taxes and undue burden on practicing professionals and small businesses in the state.
The appeal of the Professional Bodies was contained in a resolution reached by members at enlarged meeting held at the body’s Secretariat in Effurun, Uvwie local government area of Delta State.
Members of the professional body after the enlarged meeting staged a walk to the Delta State Board of Internal Revenue Services @ Warri to deliver the resolution of the meeting. The resolution and the Letter to the Delta State was routed through the Chairman of DIRS and was received by the secretary to the Chairman of the Delta State Board of Internal Revenue Services.
The letter was signed by Paul Akporowho and Lewis Afolabi, Chairman and Secretary of the Association respectively.
Some of the contentious tax issues protested by the Association of professional bodies of Nigeria include the basis for tenement rate assessment and the engagement of non-professionals/ cum quacks to issue, demand notices and collection of revenue on properties.
Contrary to subsisting court ruling on the subject matter (see Annexure-A: copy of court ruling).This is rather uncivil, appalling and counterproductive.
Another issue protested is the collection of levies on property development. Aside the procurement of building plan permits, developers are often harassed and compelled to pay levy on building permit, health permit and contractor permit in addition to development levy, foundation levy and engineer’s levy which are payable to the respective youths and executives of communities. This is in spite of the Private Properties Protection Act (Anti Deve Law 2018). The brazen impunityat which the youths go about the collection of these burdensome levies without restraint, gives the impression that they havethe backing of those in authority.
The association noted that here are all manner of levieson waste management, sewage, private enterprises/ firms, sanitation, Physical and Infrastructural Development Levy, Drink and Liquor etc. This is despite the fact that there are no moral justifications or tangible services rendered for such levies/ charges. As a matter of fact, most of our members in private practices and other small business have arrangement with PSPs,who collect and dispose their refuses and sewages.
Our correspondent in Kano State gathered that the State revenue agency has been perceived to be agents of extorting public funds.
A Keke rider in Kano, Kabiru Sani explained to our correspondent that government agencies are typical example of ‘hunting-dogs’ used as machineries to extort and disturb people.
According to Sani, “for me, I don’t know the purpose of these agencies apart from just bullying people around.”
Another business owner in a chat with Nigerian NewsDirect on the condition of anonymity said “the government really established these agencies for a purpose, and that’s to wickedly hide under the law that made those agencies stay and extort the common man of his hard earned money without accounting for it.”
On his part, Sule Ungogo said, “If the money being collected from us is being accounted for, we know where and how it’s being spent.
“We have no problem with these agencies, but, truth be told, they are just there to witch-hunt business owners to mobilize funds for the government and authorities concerned. A good example is the Karota in Kano”
Speaking with rage, a commercial driver, Mr Ahmed said, “See how traffic officials are now occupying major roads in and outside the state.
“What are they doing with the money they have collecting from motorist? Look at our roads, potholes and incomplete road projects everywhere.”
A resident in Port Harcourt, Mrs Chinwe Frank decried the menace of using thugs to collect revenue, describing it as fraud.
According to her, in view of the havoc caused by these thugs in the name of collecting the so- called revenue, such practice should be completely scrapped.
“How can state agencies in the first place use thugs to collect revenue? If such agencies are doing the right thing by delivering their services to the people, they won’t think of using thugs to unleash mayhem on the people in the name of collecting revenue.
“So they should do their work well and people will willingly pay their bills, taxes or levies as the case may be.”
However, the Chief Press Secretary to Ogun State governor, Mr Kunle Somorin said that the state government has never indulged in the act of using touts to collect revenue from market women, others.
He said that the government has always collected taxes within the ambit of the law.
According to him, “If you are talking about those collecting for the transport unions, these are groups recognised under the law doing their legitimate duties as assigned to them by their unions.
“So, I don’t see a case of touting here.”“Since I have been driving around, I have never been harassed by anyone. So, our dear State doesn’t use thugs to collect revenue.”
A truck driver, Mr Alagbe Yekeen who operates in the state said there are some of these revenue collectors who sometimes act as thugs.
He said “as a driver, I do encounter some of these revenue collectors who sometimes act as touts, their manner of approach could be very rude, uncouth but that is not to say that is how the government told them to do the job.
“In fact, from what I have gathered they are contractors and mainly from local government. I just wished the government could help in giving them training to be more respectful and safety conscious”.
A financial analyst, Mr Mayowa Odetola, however, confirmed that it is obvious that government across the country are in the habit of hiring people suspected to be thugs to collect revenue for the government.
Odetola said these suspected thugs are commonly those who collect taxes from transporters who are also thought to be violent and therefore need people of their type to confront them
He explained that “there’s no doubt the fact that we see these suspected thugs collecting taxes from transporters, sometimes they will break mirrors of vehicles of drivers not cooperating with them.
“What I have, however, observed is that you don’t see these people coming to offices for collection of taxes. Those that come are educated!.
“These suspected thugs only work on the road and mainly deal with transporters and I think it is because these transporters are also considered to be tough and therefore, those who will deal with them must also be stern looking and tough or else government won’t get anything from them.”
He said more often, these jobs are contracted out but the government can help rescue the situation by giving these contractors necessary training.
A financial expert, Dr Tunji Ogunyemi, in a chat with our correspondent averred that the majority of the states in Nigeria are low on the internally generated revenue, adding that only six states generate up to 30per cent of their expenditure from their IGR.
According to him, “The States of Nigeria are very low on IGR.
“We have just about 6 states in Nigeria generating up to 30per cent of their expenditure from their IGR. The rest are grossly under generated.
“The issue is not (essentially ) maybe how to collect or inability to collect or as a result of the wrong methodology of the collection as you have mentioned.
“But actually, of the structure of the states, the Nigerian state is structured in such a way that the revenue generation capacity of the state is almost completely compromised.
“As for the states, they have to earn their revenue principally from personal income taxes, state taxes and value-added taxes.
“These three forms of taxation are the most primary sources of income in any federating state. But the problem in Nigeria is that these three forms of taxes have been confiscated by the federal government. and the confiscation started in 1968 during General Gowon’s regime.
“We have a situation where we now have personal income taxes Act which is a federal law regulating personal income.
“We have the state forms, Value Added Tax Act under the VAT, which started during the time of General Sanni Abacha, also regulating consumption.
“So we have an extant duty that is constituted by the federal level. We have so many other revenues including revenues with respect to royalties and mineral oil and mineral exportation including the exportation of gold in Ilesha area.
“What can a state do under that system? It is to begin to scavenge for all manners of revenues it may think it has.”
The financial expert, however, noted that the state must be cautious about overtaxing its citizens, which according to him can impede investment and employment opportunities.
In his words, “A state has to be very careful not to overtax its people. The reason is pure economics is that you don’t tax your people to prosperity. A very good way to make your country not to be prosperous is to overtax your people thinking that you will generate enough revenue to be able to run the government.
“No country grows that way because the basic and primary definition of taxation is that it is a compulsory excision or levy on private income for public purpose. So if you begin to exercise private purposes or private income, one, it will discourage investment. And two, it will discourage employment. So states are to be careful.”
Speaking further, Dr Tunji said all states in Nigeria solicit the help of transport associations to generate revenue from their members.
He, however, emphasised the need for accountability and transparency in the process of generating and remitting taxes.
“The issue of fanning out the issue of transport levy which is like a way tax is collected at different shops in Nigeria by some states to private investors.
“Lagos has done it and they are doing well in that area. But generally in Nigeria, the administration of transport levy does not lend itself to the easy collection, and that is why all states in Nigeria with no exception are relying on the road employee, the association of national road workers to collect.
Because drivers are not people you can easily collect taxes from so we will need some of their own members to collect from them.
“I know that a lot of leakages happen and they leak out. But I tell you that if any state wants to do it directly, they will need more than a battalion of policemen to collect from Osogbo for example not to talk of the whole of Osun to where it is reasonable to permit them to move, to organise and collect the taxes.
“What we now need is the accountability process. That is, that which was collected, to what extent is it correlating to what was actually in regulation. That is what was collected, is it correlating to what was regulated? If the accountability process can be checked and you block the leakages, of course, it makes be good.
“But to think that you will stop the action of the National Road Transport Workers from collecting it, is almost an unattainable thing because how many vehicles do the government have?
“I mean these vehicles are also owned by the National Union of Road Transport Workers and they are collecting money by themselves so you can be sure that they will take some percentage for the tax administration and the tax collection expenses.
“That is the administration of that tax, they will take some percentage. And that is why chairmen of garages are extremely powerful that they can be major determinants in elections and electioneering in any state,” he added.
