Caution is required as alcohol and tobacco taxes go up in new revenue drive
TAX authorities seem to be firing on all cylinders around here recently. Various revenues collecting regimes and schemes are being churned out by the day. It is, of course, a response to the shrinking revenue base of the government as well as the urgent need for more infrastructure funds.
It is also symptomatic of the enhanced paradigms that have been brought about in revenue collection which are not unconnected with the fresh minds managing the process. Ebullient Mr. Tunde Fowler, for instance, who leads the Federal Inland Revenue Service (FIRS), must be mentioned for showing his mettle already.
However, tax which is almost as old as man lugs a lacuna all of its own. All through its long history, mankind has detested both the tax collector and his trade. Unless it is in exchange for valued goods and services, ever seen a man part with his money with a smile?
Fowler had illustrated this point when he decried the fact that only 943 individuals out of the entire taxable adults in Nigeria pay up to N10 million as tax yearly. Of this figure, 941 are in Lagos and two in Ogun State.
Fowler notes: “That tells us that in all other states of the federation, including the Federal Capital Territory, there is no billionaire or multi-millionaire.
“But, when you look at the assets and the vehicles that are on our roads, then you will know that something is wrong. If you look at the average house in Ikoyi or the average house in the high net worth neighbourhoods in Kaduna, Rivers, Onitsha and other cities, you find houses that are worth over N500 million. So if an individual has a house worth over N500 million and he did not pay N10 million in tax, where did he get his money from?”
No thanks to years of oil boom, tax collection and payment have been abysmal. Various governments, awash with petro-dollars have been lax in collecting and the citizen didn’t see the need to hand government officials more cash. But oil revenues have dwindled drastically while infrastructure gaps keep widening.
This explains why measures have been put in place in the last two years to capture more tax payers. For instance, the Voluntary Assets and Income Declaration Scheme (VAIDS) has reportedly yielded N20 billion already in just a few months and with little hassles.
These are just a few of the activities going on in the FIRS and the 36 states’ revenues services under a more collaborative Joint Tax Board, JTB.
Amidst all this, the Federal Government apparently succumbed to a long-sustained pressure from the World Bank to hike excise duty on alcoholic drinks and tobacco.
According to the Minister of Finance, Mrs. Kemi Adeosun, “the upward review of the excise duty rates for alcoholic beverages and tobacco will achieve the dual benefits of raising government’s revenues as well as reducing the health hazards associated with tobacco-related diseases and alcoholic abuse.”
Though it is said that the increase followed all-inclusive stakeholders’ engagements, apart from the fact that the increment would be graduated over a period of three years; we call for caution. The largely downtrodden consumers could resort to illicit smoke and drinks, thereby jeopardising the beverage and tobacco sectors of the economy, and even their health.
The economy is yet to completely come out of recession, inflation remains in the double digits and income has not risen in nearly seven years. There has been also a rash of jacked up levies, charges and tolls from different states. Government must therefore be wary of excessive taxation.
In fact it must create a fine balance between the quest for more revenues and the right of the citizenry to individual wealth and happiness.
The Nation
