NASS to Amend Personal Income Tax Act 2004

The National Assembly Joint Committees on Finance on Wednesday March 9th 2011, held a public hearing on a Bill for an amendment to the Personal Income Tax Act, Cap P8 LFN 2004.

The Bill which has gone through the second reading at the National Assembly was brought to the fore at the public hearing with a view to allowing the various stakeholders in the Nigerian Tax System to make additional oral and written submissions on it.

The Executive Chairman of FIRS, Mrs. Ifueko Omoigui-Okauru who presented a position paper said that the Bill when passed and signed into law will among other things; reduce the overall tax burden on the tax payers . According to her, “the Bill is expected to bring the existing provisions in line with existing realities to enable easier compliance with the provisions and to bring about a higher level of voluntary compliance on the part of the taxpayers. It is also expected that it will aid easier implementation and administration of the provisions of the Act by tax authorities and enhance the ability of tax authorities to assess, collect and account for taxes imposed under the Act”.

The bill for the amendment was given a tremendous support by majority of the stakeholders who also prayed the National Assembly for an accelerated passage of the Bill.

Meanwhile in another development, Mrs Ifueko Omoigue Okauru has observed that if African countries are to get to the next level; there is need for very strong institutions and systems. Noting that one of the more important systems that requires sustained focus is the tax system.

The FIRS boss made the disclosure in a presentation made on her behalf by Director of Corporate Communications, Mr. Emmanuel Obeta at a public forum under the umbrella of African Tax Administration Forum (ATAF).

She insisted that tax system holds the potential for being the pivot of development for many African countries. “To develop the institutions that will take African nations out of the current level of development and into the comity of developed nations, tax systems must be at a level that will be able to support the growth and development we all seek for,” she noted.

Speaking on “Developing an African culture of tax compliance,” Omoigui-Okauru said that “We need to determine whether a culture of tax compliance has ever existed in Africa and if it did, what were the factors responsible for that, what circumstances intervened to alter that culture and what can be done to bring it back. “Historically, African communities were organized and administered on a communal basis – with internal control mechanisms usually administered on a persuasive basis and appealing to the sense of communal belonging.”

Part of the mechanisms for administering such societies, she said, included voluntary contributions to a common purse for meeting communal needs. Voluntary contributions are largely enforced not with a threat of sanction, but with an appeal to the sense of belonging but regretted that expansion and interaction with foreigners began to alter means of enforcing such contributions – use of sanctions, ostracization and force were introduced, she observed.

She said that systems evolved until the time of complete conquest and colonial rule, where formal systems of taxation were imposed and the basis for enforcement changed from a largely persuasive to a coercive one this is the system still largely in place in most African countries – debatable whether it is the most efficient system – need to look back and see what lessons can be learnt from the past.

Having examined Africa’s tax history, Ms Omoigui-Okauru noted that, a culture of tax compliance was necessary, if African nations are to make the transition from perpetually developing to developed nations.

She said that in recent times African nations have experienced growth rates comparable and in some instances higher than those of more developed economies. However, concern is whether African nations can sustain this impressive economic performance or whether they will regress. The answer to this, she said lies in part on the ability of African nations to build strong systems and institutions, which can serve as the platform for constantly delivering the required level of growth for development.

She that if the tax system in Africa is properly harnessed, it is capable of not just providing revenue for sustainable development in Africa, but is capable of putting up Africa as a model to be emulated, adding that it is with this focus that “we must consider the benefits of developing an African culture of tax compliance.” For professor Mick More, African countries have to improve on their tax collection, while also improving on their political and financial independence if they wish to develop their economies. “We need to look at the weaknesses of fiscal policies, noting that crisis in Africa does not help in the growth of the continent. He said African countries are trying to put in place fiscal policies that can assist in tax collection, adding that incentives in place are not enough adding that, “it is for reason that many people evade tax in Africa.”

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