A tax expert and university don, Prof. Abiola Sanni, has said that the success of the Voluntary Assets and Income Declaration Scheme, VAIDS, will depend on the capacity of the government and the tax authorities to capture more high net-worth individuals in the country in the tax net.
He made this observation at a training workshop organised by the Federal Ministry of Finance for tax professionals in Lagos.
Sanni, a law professor at the Department of Tax Law, University of Lagos, urged the governments at national and sub-national levels to pay more attention to pay special attention to this category of people if their plans to improve tax revenue through the scheme is to achieve the desired objectives.
Noting that as critical as the informal sector is, less emphasis should be placed on the sector, which he said is already heavily taxed and levied, the tax expert recalled that already, scores of Community Tax Liaison Officers, CTLOs, had been deployed nationwide to assist the states in enforcing tax compliance in the informal sector.
He explained: “The weakness of our system is the over concentration on the middle class who are already over taxed through various means. The informal sector is very large and critical and arrangement has been made to bring in the sector into the VAIDS.
“While the informal sector is very important, but for VAIDS to be very successful, we must look at high networth, a very few individuals who control large resources. In nations where the tax system works, they focus more on those people because a single super rich billionaire can pay much more than all of us put together”, the university don added.
He advised the revenue authorities and the tiers of government to remain committed to the implementation of the VAIDS, particularly as the 2018 general election approaches, in order not to lose the potential revenue benefits of the current initiatives targeted at boosting non-oil tax revenue.
According to him, the implications of non-compliance for the economy is that all the promises on offer such as, waiver of interest, waiver of penalty, which could amount to over 31 percent of someone’s outstanding tax obligation, would be forgone.
“Also the tax authority can then move in and audit and ensure that the principal, interest and penalties are paid. In addition, they can prosecute and that is the real risk,” Sanni said.
Earlier in his welcome remarks, Executive Chairman, Federal Inland Revenue Service, FIRS, Mr. Babatunde Fowler, said that the Service had identified over 500 high net-worth individuals who are non-complaint and have written to them to key into the exercise.