Of FIRS and tax defaulters

WHILE receiving the acting Inspector-General of Police (IGP), Muhammed Adamu, during a courtesy visit to his office recently, the Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, said the service, in collaboration with stakeholders like the Nigeria Police Force, would continue to go after wealthy tax defaulters this year. He disclosed that the service had recovered N23 billion from a closer look at the books of over 45,000 tax defaulters with over N100 million as turnover, promising that it would go after another set of millionaire tax defaulters. 

Earlier at a management retreat at the Eko Hotels in Lagos State last month, Fowler spoke of the FIRS’s plan to identify and tax bank account holders with over N100 million as turnover but with no evidence of tax payment. To be sure, if the objective of the FIRS is to ensure that all citizens of this country are dragged into the tax net to ensure tax payment, then this initiative is quite salutary. Ideally, tax payment by citizens is a sure evidence of an existing social contract between them and the state. To say the least, civic duties are not restricted to voting during elections; they also include the payment of taxes.  Besides, the seemingly intractable problems of poverty and inequality in the country can, in part, be traced to inefficient and negligent revenue collection methods. This has been the bane of the Nigerian state since it morphed into a mono product economy upon the discovery of oil as the principal source of revenue. Apparently, FIRS is now living up to its billing as a revenue agency for the Nigerian state poised to recoup the former losses from state negligence.

Indeed, while governments and their personnel may act irresponsibly, citizens still owe a duty to pay taxes. Then, they can take up the irresponsible politicians and sack them from office. For a poor country like Nigeria, it is even befuddling how it is expected to handle its various duties like improving infrastructure when private people in their tens of thousands with turnovers in excess of N100 million are outside the tax net. Elsewhere, tax evasion attracts very heavy sanctions, like long jail terms for individuals. It is even unimaginable at the corporate level. It is crucial, therefore, that the FIRS insists on this initiative even if its critics, and they are numerous, are wary of the impact this may have on the ease of doing business index in the country.

It is imperative that all citizens are brought into the tax net. The question of the ease of doing business and attracting local or foreign investments are different issues that should be addressed more comprehensively. Before crude oil became the prince of revenue generation in Nigeria, tax payment by all adult citizens was compulsory and defaulters were regularly reined in. The tax defaulters themselves knew they were felons, hence their fugitive existence. If they were farmers, they came to pay as soon as they became solvent after the harvest season.

We commend the FIRS for the initiative of recovering N23 billion from 45,000 tax defaulters and encourage it to go after other wealthy Nigerians who are doing profitable businesses in the country without paying the state its dues. Beyond compelling these defaulters to pay, it is also crucial to make them realise that it pays to pay taxes. Certainly, it cannot continue to be business as usual.

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