Caulcrick: Why Nigeria’s Tax Policy Will Continue To Stagnate
According to Capt. Samuel Caulcrick, Nigeria’s flawed tax policy and the failure of the government to properly capture the economy market in the country are a few reasons why the economy would continue to be in doldrums.
Capt. Caulcrick, an avid contributor to Economy Market, in an exclusive interview with Saturday Independent on Friday, also said that the Federal Government should have widened the tax net before floating the naira.
Caulcrick warned that the economy would continue to nosedive until everyone paid their fair share of taxes to the right coffers.
He explained that the current regime distorts market values and social justice in the country.
According to him, the tax authorities in Nigeria do not collect a fair share of taxes from the top 1 per cent of taxpayers, while less than 13 per cent of the bottom 90 per cent pay taxes, thereby distorting market valuation and causing price instability in the Nigerian economy.
He insisted that a market economy without a robust tax system lacked the main ingredient to prevent market distortions.
For instance, Caulcrick pointed out that in the American market economy, the top 1 per cent of taxpayers paid over $1 trillion in income taxes, while the bottom 90 per cent paid $531 billion.
He argued that the share of income taxes paid by the top 1 per cent increased from 33.2 per cent in 2001 to 45.8 per cent in 2021.
He said: “A market economy relies on voluntary exchange and private enterprise, but it requires a level playing field and fair contribution from all participants.
“A market economy is unable to function properly if everyone does not pay their fair share of taxes, as it distorts market values and social justice. Taxation should be everyone’s fair contribution based on their access to the nation’s resources, as stated in the Constitution.
Caulcrick warned that if some individuals or groups continued to evade accurate taxes, it could lead to reduced government revenue, inequitable distribution of resources, distorted market, which would favour tax evaders over compliant businesses and inefficient allocation of resources due to insufficient tax revenue.
Others are erosion of trust in institutions and the tax system, heavier burden on compliant taxpayers, limited investment in growth-enhancing initiatives and exacerbation of income inequality, stressing that the wealthy often benefitted most from tax avoidance.
In a bid to correct the flawed system and ensure success of a market economy, Caulcrick canvassed tax reform, which seeks to simplify and clarify tax laws and improved enforcement with the aim of strengthening tax authorities and enforcement mechanisms.
Others are transparency, accountability, progressive taxation: Implementing a fair and progressive tax system and international cooperation.
“By ensuring fair tax contribution, third-world countries such as Nigeria can create a more level playing field, promote economic growth, and achieve desired outcomes.
“Nigeria should have widened the tax net before floating the country’s currency. People now use their unpaid taxes to distort the valuation of the naira in the foreign exchange market, as well as using what they ought to have paid as taxes to invest the uncollected taxes in government debt instruments using uncollected taxes, such as treasury bills and government saving bonds.”
SOURCE: Independent
