The National Association of Nigerian Traders, (NANTS) has charged government and tax authorities in the country to adopt proactive measures in tackling the twin-problem of tax evasion and tax avoidance as a strategic option of improving tax revenue at all tiers for government for national development.
The National President of the association, Barrister Ken Ukaoha, in an interview with BRTNews at the weekend noted that the issue of tax evasion and avoidance remained a complex multidimensional problems and phenomena undermining efforts targeted at sustainable and inclusive growth of the economy
Expatiating on the problems of tax evasion generally but with particular reference to the Nigerian situation, Ukaoha linked the country’s fiscal inefficiency challenges to social, political and administrative difficulties in establishing a sound public finance system as it is the case with other African countries
According to him, as a result of these hurdles, the country becomes particularly vulnerable to tax evasion and avoidance, adding that this practice accounts primarily for large differences in the ability to mobilize own resources between developed and developing countries. Third is
In addition, the NANTS’ leader pointed out “that our tax systems are characterized by structures that are incongruent with international standards, by lack of tax policy management, low compliance levels and inappropriate capacities for tax administration as well as the nation’s economic conditions, including the size of the informal sector.
Ukaoha, who was reacting to the Federal Government’s disclosure that over 500 tax evaders had been identified under the ongoing Voluntary Assets and Income Declaration Scheme (VAIDS) investigations, explained that five key steps should be taken by the fiscal authorities to deal with the menace in order to plug revenue loopholes in the public finance system.
He explained: “One; it is important to develop methods and instruments for fighting tax evasion and avoidance, by first establishing a broad understanding of the different reasons underlying the subject matter. Two is to underscore factors that negatively affect taxpayers’ compliance with tax policy and legislations that are implementable/enforceable. When Government enforcement agencies are serious, tax payers would reform their attitude.
“Thirdly, there is an urgent need to address the subject of low willingness (poor tax morale) to pay taxes by ensuring tax funds are properly and effectively utilized for the benefit of tax payers. Fourth is the consideration of strengthening the capacity of tax administration and fiscal courts to enforce tax liabilities. Finally, there is the need to address the weak auditing capacity and monitoring of tax payments which limit the possibility to detect and prosecute violators”, the trade expert added.
Ukaoha pointed out that the overall amount of tax avoidance or tax evasion may not be of highest priority but that rather, it is more relevant to understand the causes of the tax losses and the policy instruments that are most effective in encountering tax evasion and avoidance.
He concluded that this implied that empirical research should put an emphasis on the evaluation of policy reforms.