The Federal Minister of Finance, Kemi Adeosun, broadcasted a live Facebook session on her Facebook page on Thursday, August 3, 2017.
The broadcast is a fulfillment of the Federal Government’s Tax Thursday initiative under the new Voluntary Assets Income Declaration Scheme (VAIDS).
Tax Thursday has been slated, every Thursdays till March 2018, by the government to be a designated day of the week where there is a focus on the tax system in the country.
1. Nigeria is not an oil economy, so taxation is
important
According to Adeosun, "Oil economies tend to have a lot of oil
and very few people. Saudi Arabia has 30 million people and they pump 10
million barrels of oil a day; so, if they wanted to share their oil, 3 people
share one barrel.
"Nigeria, with 190 million people, only
pumps two million barrels of oil a day; so, if you wanted to share the oil, 90
people will share a barrel.
"Most oil economies with a lot of oil and
few people can afford not to have a real tax system. So, in Saudi Arabia for
example, the tax-to-GDP is 6%, same as Nigeria.
"But because Nigeria is not really an oil
economy, we can't afford to do that because oil is actually 10% of our
GDP."
2. 56 million economically active Nigerians are
not paying their taxes
"What we found in Nigeria at the moment is
that we only have 14 million taxpayers out of about 70 million people that are
economically active.
"And the majority of that 14 million are
people who have their taxes deducted at the source; largely lower income
workers.
"That means that the tax burden is not
being shared fairly. It's being carried by those who are least able to afford
it whereas high net worth people are able to evade tax.
3. VAIDS is amnesty for honest Nigerians
"What we've done is launch Voluntary Assets
Income Declaration Scheme (VAIDS) to give people an opportunity to regularise,
we know, we have the data now.
"So we have a picture of the assets that
people have, and those assets are supposed to be purchased out of tax returns.
"Under VAIDS, we're now giving people an
opportunity to go back over the last five, six years and restate their tax
returns, and regularise, and pay any taxes that they should have paid at the
time.
"People have a window of nine months to go
and regularise their tax status. Look at your lifestyle, the assets that you
hold, how did you fund them, have you paid tax on those monies before you
bought those assets.
"We're not saying if you have a home
abroad, you have to pay for it, but when you bought that house abroad, where
did you get the money from? If that money came from Nigeria or you're a
Nigerian resident tax payer, did you pay the right taxes before you bought that
house?
4. Tax evasion is as bad as corruption
"We've had a project running here in the
Ministry of Finance for the past 15 months and what it's been doing is building
profiles. It looks at BVN, land records, car registration, private jet
ownership, company's house records. It's building a financial profile of the
individual.
"What do you own both here and abroad? And
then we check your tax record. What did you declare?
"And once there's a disconnect, and in many
thousands of cases, there's a huge disconnect, and once people understand how
much data we have, they will begin to come into the tax net.
"We're building a very accurate financial
picture of people, not just on assets here in Nigeria, but around the world.
"After March, once you don't come clean, we
commence really very aggressive prosecutions and we're going to be discussing
with the CJ about the possibility of setting up special tax courts.
"Tax evasion is one of the easiest
prosecutions, and it's one of the hardest things to defend because the law is
very clear.
"There can't be very many defences. If you
have this asset, how did you get it?
5. Response has been positive
"The response has been very positive. I
think there's the sort of attitude, sort of national recognition. We need to
come together and get this done. We think the resistance to paying tax is
breaking down.
"And of course, part of that resistance is
that people feel like, 'Even if I pay tax, what do I get?'.
"Our response to that is which one came
first? The chicken or the egg? Somebody has to break that cycle. And we have to
break that cycle by doing the right thing.
"If a man in the hot sun is paying his/her
taxes correctly, if a policeman is paying his/her taxes correctly, the high net
worth and middle class individuals must also do the right thing. Everybody must
do what is needful."
6. Government needs to be more responsible with spending
taxpayer money
"On government's side, we've got to be
better at spending money, we've got to be more efficient, we've got to be more
accountable so that people can see that it's a partnership, and that as they
pay, government is doing what government is meant to do.
"Under President Muhammadu Buhari, we are
incredibly committed to doing the right thing, providing value for money.
"We already have an efficiency unit and
we're trying to cut cost wherever we can to make sure that when people do pay
the taxes, they can see the benefits in their own lives."
7. Side businesses must also pay tax
"We have a lot of people who are in the tax
net that have a full time job but also have like three, four, five businesses
running on the side. Those businesses are also taxable.
"In some cases, what we find is that the
main job is actually just a little bit of the income.
"You find someone making jewelry and
they're making a fortune but they're not paying any taxes. That's got to be
corrected.
8. Air tickets will soon
be taxed
"We signed something yesterday on luxury
goods; champagne, brandy, whiskey, wine, jewelry, high-end jewelry.
"We've signed something that will be a
surcharge on first class and business class tickets, we are just doing the
final parts of the implementation and we also want to try and amend the tax
payer book on high end cars, and an additional surcharge on luxury cars."
9. Some Nigerians in diaspora will have to pay
tax too
"If you're a Nigerian resident for tax
purposes, it means you lived in Nigeria for 185 days of the year. We've signed
bilateral agreements with many countries so there's no double taxation; if
you're paying your taxes in the UK, or in America, or Canada, you're not
affected by this.
"If you're resident for tax purposes in
Nigeria, you have to pay your tax in Nigeria. You might live abroad, or holed
up in Dubai or London for most of the year, but if you're registered in Nigeria
as a taxpayer, you have to pay your tax in Nigeria, including taxes on income
that you earn abroad.
"A Nigerian that owns a property abroad and
rents it out, that income is taxable in Nigeria. The fact that you earned it
(as a Nigerian resident for tax purposes), you have to declare in Nigeria and
pay tax on it in Nigeria. That's what the law requires, and that's what we're
enforcing."
10. Nigeria has survived solely on tax before
"The overall objective is to move our tax-to-GDP, our tax
compliance rate from 6%. Really, we need to be able to be in the 16% range;
Ghana is at 15%, South Africa is at 24%. We've really got to, as a nation, come
together and sort this out.
"Some countries don't have oil. Before we had oil, we lived
on taxes. Most of the works done on the old roads and old railways were done
from the cocoa, the groundnut, and stuff we had before oil. So now, we've got
to rewind and reset and go back to doing the right thing.
"And that'll put this country in an amazing position for the
future because we'll not be dependent on oil, we'll have a far more diversified
economy.
"There's absolutely nothing unique about our problems that
we'll not be able to solve. We pool together, have a credible budget, we fight
corruption, wastage, and make sure everybody who's meant to pay taxes pays the
right taxes, brings the money into the pool and then we hold people accountable.
"The citizens have an assurance of a far better Nigeria.
We'll grow at a stable and consistent base if we have a stable tax base.
"If we really aspire to be like many of the countries we
admire, we've got to get this tax issue right." Culled from Pulse online.
