Nigeria: Stepping up tax systems in Africa
11 March 2014
Payment of tax is a constitutional responsibility of working class citizens and a source of revenue for the government. Through taxes the government raise revenue to provide social amenities for its citizens and develop infrastructure and also improve the economy of the nation with its attendant impart on standard living of the citizenry. However, it is one of those responsibilities the citizens reluctantly perform especially as many do not understand why they pay the taxes. This is even as there are sometimes issues relating to double taxation.
Corruption and vague tax systems have also been identified as factors preventing Nigerians and other Africans from paying taxes. Integrity of tax authorities and officials also thwarts citizens in Africa from paying their taxes.
A survey conducted by Afrobarometer, an international network in collaboration with CLEEN Foundation Nigeria has however revealed that from the 29 countries in sub-Saharan Africa comprising Southern, East and West Africa, there was widespread citizen commitment to the principle of taxation. Findings showed that 66% Africans believe that taxes must be paid for their countries to develop, 52% favours paying higher taxes in exchange for better services, compared to just one in three (35%) who would give up services in favour of keeping taxes low.
However, perceived corruption among tax officials appears to undermine commitment to the integrity of the tax system and large majorities report that tax systems remain opaque. 62% say it is difficult t find out what taxes they owe while 76% say it is difficult to find out how the government uses tax revenue.
Speaking at the presentation of the survey data in Lagos, Rose Aiko, Director of Research on Governance and Delivery at REPOA Policy Research for Development, Tanzania, said that seven in ten people found it difficult to know how the government spends the taxes and that distrust in tax officials increases tolerance for tax avoidance in principle and reported non-compliance with tax obligations in practice.
“A majority of 52% across Africa supports taxation provided it will guarantee more services for the citizens except from Malawi and Lesotho which have minority. Africa region is facing taxation challenge. From the survey, majority of Africans are willing to pay taxes but are frustrated that the way governments spend its money is not accessible. Integrity of tax authorities and officials is very important. To enhance tax payment, integrity is vital. Tax payment will help Africa to have more revenue to develop the continent. Mobilisation of resources through taxation is a top priority on Africa’s development agenda. Many countries have had to rely on foreign donors to fill the gap. As governments face demand for better services and improved living conditions from growing populations, reform of tax and public finance systems to improve domestic revenue collection are likely to remain top development priorities,” she said.
The survey highlights that support for taxation is a majority position in all regions, but is substantially higher in West Africa (73%) than East (59%) or Southern Africa (60%). West Africans express the highest levels of support for taxation in principle, but the lowest levels of confidence that everyone complies with tax obligations. East Africans face the greatest information barriers. Southern Africans have better access to information, and perceive far less corruption, but they also report that it is somewhat easier to avoid paying taxes than in other regions.
On the legitimacy of taxation, Africans widespread recognition of its value is matched by their support for the role of revenue authorities in collecting taxes from people, and to people’s obligation to pay what they owe. Across the 29 countries fully 70% say tax agencies have a right to collect taxes. Tax departments enjoy the highest levels of legitimacy in Ghana (90%) and Niger (84%). However, many Africans reject deception about paying tax obligations, though not all are willing to fully condemn it. A large majority (84%) find tax evasion wrong; just under half (49%) deem it not only wrong but also punishable, while 35% find it wrong but understandable.
While most governments have not succeeded in making information on taxes owed accessible, they nonetheless appear to have established a credible threat of enforcement, 69% of respondents believe that it is difficult or very difficult to avoid paying income or property taxes that is being owed the government. East Africans report the highest levels of frustration with the opaqueness of the tax system, with nearly eight in ten (75%) saying it is difficult to know what taxes to pay and nearly nine in ten (86&) reporting difficulty finding out how the government spends revenue.
The findings therefore suggest governments need to improve the transparency and accountability of revenue authorities if they want to strengthen the foundations of a sound revenue system.
Consequently, reform of domestic taxation systems has been accorded high priority across the continent over the past two decades. The survey data recommend that Africans are largely on board: people affirm that national development should be built on a foundation of domestic taxation, rather than relying solely on other sources of revenue. But transparency of tax authorities and accountability of public finance systems remain public concerns.
The findings stressed that “improving transparency and accountability among revenue authorities must therefore remain a cornerstone of efforts to strengthen domestic revenue generation. Improving popular access to information about taxes people owe and about public spending, while reducing corruption and misuse of public monies will help encourage voluntary compliance and enhance government revenue generation.”
On his part, Nengak Daniel Gondyi, Programme Officer, CLEEN said for citizens to participate in taxation, they need to know issues and government also has obligation to return to the citizens.
“Citizens would be the one to contribute to the policy system. Majority of Nigerians are willing to pay taxes. They believe it is wrong when you avoid paying taxes.” While declaring that the survey data revealed a worrying report that 18% citizens made payment to non-state agents he said, “This should be stopped because it will be damaging the image of tax officials. The essence of the presentation is that policy makers can work with and respond to some of these findings.”
Source: daily independent, Nigeria