January 28, 2015 – Members of the organised private sector, comprising Manufacturers Association of Nigeria (MAN), Chattered Institute of Taxation of Nigeria (CITN) and others today criticized the tax policies of the Lagos State Government, describing it as unfavorable to the sector.
Speaking at 8th Annual Lagos State Taxation Stakeholders’ Conference, Executive Secretary, MAN, Mr. Joseph Emoleke criticized the Lagos State Government for using non-professionals as commission agent adding that the current practice makes the task of auditing cumbersome.
He also criticized officials of the Lagos State Government for inability of tax payers to access tax information to reconcile actual PAYE deductions and returns filed with the tax office, which he said inhibits transparency and does not promote employer-employee relationship.
MAN also condemned the practice of using non-professional and commission driven tax consultants as tax auditors, adding that the development make auditing processes cumbersome, hinders effective communication and increases the level of complexities in tax administration.
The organisation also criticized the Lagos State Governent for arbitrary demand for payment of taxes for company directors residing outside the state ; collection of illegal charges, fees, levies and taxes by LGA’s, and Development Councils in Lagos State outside what is provided for by the State Act on approved list of taxes and levies adding that the development is nothing more than a drain on the purse of the meager income of industries and that it promotes evasion and non-compliance of legal taxes.
The organisation also criticized excessive use of Best of Judgment (BOJ) as yardstick for assessing income of expatriate, noting that the practice should be in line with convenience principle of tax administration.
“ The current procedure where employment letter, remuneration, fringes and other relevant documents are disregarded by tax administrators negates the principle of predictability and unnecessarily bloats the overhead cost of the manufacturing concern”, he said.
MAN explained that the current yearly audit exercise should be discouraged because of the man-hour productivity loss but that a 2-3 year audit exercise will be more appropriate.
The organised private sector also criticised the omission and non-recognition of insurance premium and pension contribution as tax relief in the computation of PAYE in the current tax template of the state.
As a way of getting out of the woods, MAN called on government to discourage use of Best of Judgment (BoJ) in assessing the income of expatriates as against the actual amount paid or earned should be stopped forthwith while the income as declared and certified by any High court should be upheld or through other verifiable process.
It called on government to expand its tax net to capture more of the informal sector adding that over dependence on the formal sector has become a great burden and a disincentive for investment.
It recommended that tax allowances should be given to employees that are paying life assurance premium and the contributory pension as required by the Pension Act, Insurance Act and the Personal Income Act and provide relevant ICT infrastructure that will enable all tax payers to access tax information as filed by their employers.
Also speaking, President Chattered Institute of Taxation, Mr. S Dike criticized government across board for inability to match tax payment with performance. He criticized government for subsuming tax issues during budget presentation and called on government to focus on tax the way it was done through annual review of tax laws during the military government, stressing that reduction in tax burden will lead to more revenue since more people will comply voluntarily.
Speaking at the event, Lagos State Governor, Mr. Babatunde Fashola accused governorship candidate of the Peoples Democratic Party(PDP), Mr. Jimi Agbjea of defaulting in tax payment, totaling about N1.629 million.
According to him, Agbaje’s JKK Pharmacy in Apapa, defaulted in payment of land use charge for three years, 2009, 2011 and 2012 adding that the firm only paid for 2013 and 2014 when it became clear that he will be contesting the 2015 election.
