Multiple taxation, injurious to Nigeria’s economic development, says NCC

Multiple taxation, injurious to Nigeria’s economic development, says NCC Executive Commissioner, Adewolu

By Emma Ogbuehi

Despite Nigeria’s chances of accelerated economic growth and development, presence of multiple taxation, if not tackled, will continue to hinder its potential.

This was the submission of the Executive Commissioner, Stakeholder Management, Nigerian Communications Commission (NCC), Adeleke Adewolu, on behalf of the Commission, at a Regional Stakeholders Workshop on multiple taxation and regulations, in Ibadan, Oyo state, recently. The workshop was an interactive session with senior government functionaries from all the States in the South West geo-political Zone in order to build better understanding on how cancerous and harmful the issue of multiple taxations and regulations being imposed on the telecom companies by the States and their agencies and agents can be to the country’s development.

Adewolu who spoke on the topic, Multiple Taxation: An impediment to economic development, acknowledged that taxation, in and of itself, is a veritable tool for economic development, as against the misguided notion that it is a penal tool on thriving business enterprise.

He listed the gains of taxation in the economic wellbeing of a country and its development. According to Adewolu, “Taxation is the backbone for public finance. It provides guaranteed and sustainable sources of funding for social programs and public investments, it also serves as a tool curated by the government to effectively and efficiently distribute our commonwealth. It is thus evident that taxation is critical for making growth sustainable and equitable. Thus, taxation by design is an instrument for economic development and it is important to acknowledge and support the initiative of all tiers of Government in using taxation as an instrument for socio-economic development”.

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These gains, he however observed, cannot be realised without identifying where a category of taxes have become cancerous to economic development of the system. Such situations, he said, typically manifest themselves in the form of multiple taxation which in the long run, reverse growth, stifle innovation and discourage investment.

The Commissioner urged the Federal, State and Local Governments to ensure collaboration in harmonizing and eliminating multiple taxation. He asked them to key into the Executive Orders and inauguration of the Committee on Fiscal Policy, Tax Reforms by the President, Bola Tinubu, to curb arbitrary taxes in the country and harmonize taxation. Doing so, Adewolu said, will provide an avenue to further engage various stakeholders in order to identify their pain points and critical concerns bothering tax and fiscal policies. This would also facilitate a conducive environment for local and foreign investment into the country.

He noted that while a level of multiplicity is expected in federal system of governance, the levying of a particular tax on the same person/entity, in respect of the same liability by more than one State or Local Government Council should be avoided.

“The paradox of multiple taxation is that it does not lead to an increment in government revenue, rather the crippling effect of these taxes, is that it makes otherwise profitable businesses, unprofitable. It negatively impacts the ease of doing business, shrinks the tax base, incentivizes tax evasion and complicate tax compliance”, the NCC Executive Commissioner stressed.

Multiple taxation, he added, further makes Nigeria an undesirable ground for breeding healthy business and competitive practices, stressing; “The effect of this is that, business enterprises in Nigeria struggle to compete with their counterparts abroad. These incidents weaken our economic foundations, devalue the symbol of economic strength, which is our currency – the Naira and contract our gross domestic product”.

To get out of the situation, Adewolu recommended that taxation should seek to be neutral and equitable between forms of business activities. A neutral tax, he said, will contribute to efficiency by ensuring that optimal allocation of the means of production is achieved. Tax rules, he said, should be clear and simple to understand, so that taxpayers know where they stand. According to him, a simple tax system makes it easier for individuals and businesses to understand their obligations and entitlements. As a result, businesses are more likely to make optimal decisions and respond to intended policy choices.

The Executive Commissioner further suggested that taxation should produce the right amount of tax at the right time, while avoiding both double taxation and unintentional non-taxation. In addition, the potential for evasion and avoidance should be minimised.

Taxation systems, he added, should be flexible and dynamic enough to ensure they keep pace with technological and commercial developments. “It is important that a tax system is dynamic and flexible enough to meet the current revenue needs of governments while adapting to changing needs on an ongoing basis”, Adewolu said.  

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