Does the 9th National Assembly want to Tax Businesses out of Existence

Does the 9th National Assembly want to Tax Businesses out of Existence

Does the 9th National Assembly want to Tax Businesses out of Existence?

By ATER, Solomon Vendaga

The move by the 9th National Assembly to earmark a new tax to fund NYSC is not only insensitive but an attempt to tax businesses out of existence. It shows the Assembly does not care about the effects of some blind policies and decisions taken on its floor. In the words of my mentor, Mr. Taiwo Oyedele, “the number of income taxes alone introduced by 9th @nassnigeria is set to exceed the number of income taxes we had since independence notably: Police tax, NASENI levy, NYSC levy(Not even the military imposed as many taxes). We will remember this legacy!”

He stressed that“The 9th @nassnigeria will go down in history as the most insensitive to the plight of businesses regarding the multiplicity of taxes despite the difficult operating environment. We will remember this legacy!”

They are often found running to the tax sector to earmark taxes whenever there is a need to fund an institution. So they ran to the tax sector for Education tax to fund the educational sector, to the Police Trust Fund to fund police welfare, and they did the same for NASENI to fund the activities with science and engineering. Now it is for NYSC. Imagine collecting about six taxes from the profits of companies and/or businesses because the NYSC levy will add up to the existing 5 taxes thereby making companies pay; CIT, TET, NITDA, Police levy, NASENI, and NYSC levy.

THE BREAK DOWN OF THE CHARGES FOR THE SIX TAXES.

1. The proposed NYSC Found: The Trust Fund would be financed with a levy of 1% of the net profit of companies and organized private sector operating a business in Nigeria, a 0.2% of total revenue accruing to the federation account, and any takeoff grant and special intervention fund as may be provided by the federal, state and local governments of the federation.

2. NASENI was introduced under the Finance Act 2021. It requires a 0.25% Levy on the profit of commercial Companies to fund research in that industry.

3. TEF: The Finance Act 2021 has increased the rate of Tertiary Education tax payable by companies in Nigeria from 2% to 2.5% of their assessable profit by amending the relevant provision of the Tertiary Education Trust Fund Act 2011.

4. Police Trust Fund: By the same 2021 Finance Act, the Nigerian Police Trust Fund Act 2019 is amended to empower the FIRS to assess, collect, account, and enforce the payment of the stipulated 0.005% of the net profit of companies in Nigeria, into the Police Trust Fund.

5. NITDA Levy: The Levy is governed by National Information Technology Development Agency Act, CAP N156 LFN 2004 (as amended)and it is charged at the rate of 1% of the Profit of some companies (GSM Service Providers and all Telecommunication Companies, Cyber Companies and Internet Providers, Pension Managers and Pension Related Companies, Banks and other Financial Institutions and Insurance Companies) before tax-deductible.

6. Company Income Tax: The tax is charged at 20% for Medium-sized companies (companies with gross annual turnovers greater than N25m but less than N100 million) and 30% for large companies (Companies with annual gross turnovers higher than N100m).

When you check these taxes you will find out that most of them were introduced or increased by the 9th Assembly.

This is not a good environment for businesses to grow. It is becoming hostile to economic development. It will cripple businesses and drive away investment.

It is not a great thing for the National Assembly to always run to the tax sector to earmark taxes arbitrarily. The sector is paying and is sustainable but should not be interpreted as an opportunity to misuse.

The Nigerian Tax Ecosystem is already burdened with enormously overwhelming taxes to be paid by the taxpayers. Increasing the number of taxes again is not a good decision. It only makes rife, the question of whether these guys there in the National Assembly consider the views of experts before making laws. For crying out loud, these taxes are too much and can only chase investors away and make businesses cripple and die. This will then make it difficult to attain one of the objectives of taxation which is economic stability, a powerful fiscal weapon to plan and develop a country.

This explains further the baffling question of why would other countries like South Africa with few taxes collect over 10trn from taxes and Nigeria with several taxes still struggle with tax compliance and celebrates getting 4-6 trn from taxes. Despite these taxes, we still have a low tax to GDP ratio dangling at an abysmal ratio of 6.0%

Besides, there are no signs that tax monies are used efficiently. Companies pay Education Tax but schools are still on strike, so logically, what is the effect of the so much taxes they pay?

So the government needs to turn the tide and follow up to implement the conversations on the harmonization of taxes for effective and efficient tax administration. Let us not waste the opportunities the sector presents to us.

Winston Churchill would earlier warn about the effect of this kind of attitude when he contended that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself by the handle.”

Stop earmarking new taxes, and concentrate on harmonization and administration of available ones.

ATER, Solomon Vendaga is a Penultimate Law Undergraduate at the University of Abuja and the current President of the Tax Club, University of Abuja.

Does the 9th National Assembly want to Tax Businesses out of Existence

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One Response

  1. This information is indeed vital to readers and I recommend persons to read up readers are leaders

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