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Informal sector calls for fairer, equitable taxes

Shock as Federal Account revenue drops by N183bn in July
Minister of Finance, Mrs. Kemi Adeosun

Members of the informal Sector have called for a just, fairer and equitable tax for their members. They demanded that there should be even spread of social facilities and other services to justify the payment of taxes. They have also asked for greater engagement and consultation by government on tax issues while charging tax officials to be more humane and eschew undue harassment of their members in the process of collection.

At a one-day workshop with the theme “Enhancing A Fair Equitable And Transparent Tax Regime In The Informal Sector”, organised in Lagos by Community Life Project (CLP) with support from United States Agency for International Development (USAID), they also called for more citizen enlightenment by government on tax issues.

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They also complain that the taxes are arbitrary and called for transparency and openness on the process of assessment and collection through the use of e-payment platforms. They asked for the abolition of all sorts of cash payments in order to check the antics of many officials who prefer to deal under the table.

“We have paid taxes and even won an award but we have not seen the impact of the taxes that we dutifully pay, there are no facilities at the Mechanic Village”, said Comrade Segun Apaoka of the National Automobile Technicians Association (NATA). “The charges are arbitrary, some agencies come to harass us with exorbitant fines and taxes”, he said.

Apaoka was particularly piqued on the shifting of goal post on how rates change arbitrarily from year to year. He could not understand why rates that were N5000 in 2015 and N10,000 in 2016 had suddenly climbed to N100,000 in 2017. “Government officials should regularly discuss and consult with us instead of just forcing arbitrary charges and rates down our throats”, he said.

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Mr Kunle Ajayi, a member of the Federation of Informal Workers of Nigeria (FIWON) said the market women and men are at the mercy of their leaders, the “iyaolojas and babaolojas” who daily milk them by imposing all sorts of nebulous charges. All these payments are usually not a reflection of the quality of services”.

Another troubling issue is the myriads of artisans who are operating outside any organised associationswho they claim are always causing problems for their operations.  The informal Sector workers want government to regulate and make membership of their different associations mandatory in order to ward off these “quacks who evade taxes and levies and do damage to our businesses”.

“Most of the artisans who do not belong to associations are the ones causing problem for us”, Apaoka revealed. Mr Michael Onyealu, vice president, Nigerian Association of Cosmotologistswho disclosed that “there’s a proliferation of associations in Lagos state” noted the urgent need to merge them. “Let’s merge them so that we can have some order”, he said.

“The government wants leaders of the Informal Sector associations to partner with them on collection of taxes. Everything you want to do in Lagos, you come to the artisans but you say membership of tourassociations is not by force. We want them to regulate quacks on the streets. What penalties are you meting out to those who are not organised”, Mrs Comfort Akinkawo queried.

Dr Francis Nchuchuwe, Associate Professor, and Head, Department of Public Administration, Lagos State University (LASU) was not particularly happy that the government has usurped the powers of the local governments in the collection of tenement rates and radio license fees demanding to know who should actually collect radio license fees that are now collected as part of the vehicle license fees.

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Mr Charles Abani, head of Civil Society USAID Project said it was clear from the responses of the participants that not all collected revenue are getting to the coffers of government. He counsel for all rates to be merged into one bill rather than multiple collections which cause frictions.

Mr Lanre Lawal who represented Mr Owolabi Kamson, director, Informal Sector & Special Duties, Lagos State Internal Revenue Service (LIRS) called on citizens to dutifully pay their taxes so that government can have enough resources to provide quality services to the people.

Enumerating the gains of the government in the area of roads, education, health care, security and other social infrastructure, he said, “government will be hamstrung in providing all these quality services if the citizens do not pay their taxes”. On the issue of provision of facilities at the mechanic village he said, “We are agents of government, we are a revenue generating agency, we do not determine the locationof any infrastructure”.

Responding to the changing rates from what they were in 2015, 2016 and 2017, Lawal said, it was a reflection of the rising cost of providing services. He however drew the ire of participants when he said, “the government is not expected to consult artisans when they are formulating policies”.

It was the view of Dr Olayinka Akanle of the department of Sociology, University of Ilorin that “this talk down attitude and lack of consultation is the reason for the failure of many government policies”.

On the conversion of tenement rates to land use charge, Lawal said, “before the abolition of tenement rates, you know what the LG chairmen and councillors were doing . The receipt of the tenement rate in the past was issued on pieces of paper which made them difficult to trace. With land use charge receipt is verifiable”.

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Other highlights of the workshop was the discussion of the summary of “Report of Baseline Study on Informal Sector Taxation Practices in Lagos State conducted by CPL in May this year which showed that the Informal Sector is not averse to paying taxes but wanted it to be fair and equitable.

Akanle who presented the report said two LGAs, Mushin and Kosofe were selected for pre-test while four others, Ikeja, Ikorodu, Isolo and Oshodi were selected for the main survey. Majority of the respondents are of the opinion that “taxes and rates/tariffs are constantly changing and unpredictable making it difficult for payers to make payment plans”.

The only slight exception was in ikeja where only 50 per cent of the respondents said that “taxes are constantly changing and uncertain as government officials change rates/tariffs/taxes unilaterally without any sufficient recourse to informal sector actors.

The report also found out that the “enforcers are abusive and aggressive” while the rates wereperceived as being “arbitrary”.  Some of the respondents say “payment default is a survival strategy so that they can bargain and deal below the table”. Most respondents however were in favour of greater transparency and accountability in order to promote public confidence in the payment of taxes.

Mrs Ngozi Iwerre, executive director of CLP said the engagement between the state government and LG officials and members of the Informal Sector was productive and expressed the hope that it will impact on future policies on taxation. “We hope this will improve the process of taxation and encourage more people to pay since the aim is to make our country better”, she said.

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