Multiple taxation bane on economic development -NCC commissioner

By Joy Baba-Yesufu

Despite the prospect of accelerated economic growth, the presence of multiple taxation, which the World Bank has termed ‘nuisance taxes’ has and continues to prove to be a bane on economic development in the Nigeria.

This was the crux of the conversation of a regional stakeholders workshop on multiple taxation and regulations held by the Nigerian Communications Commission (NCC).

In his key note address, the executive commissioner, stakeholder’s management, Mr. Adeleke Adewolu said paradox of multiple taxation is that, it does not lead to an increment in government revenue, rather the crippling effect of these taxes, is that it makes otherwise profitable businesses, unprofitable adding that it negatively impacts the ease of doing business, shrinks the tax base, incentives tax evasion and complicate tax compliance

He also said the National Tax Policy 2017 emphasizes the need to eradicate multiple taxation at all tiers of government specifically. The Policy states that taxes similar to those being collected by a level of Government should not be introduced by the same or another level of Government. “The Federal, State and Local Governments shall ensure collaboration in harmonizing and eliminating multiple taxation”

According to the commissioner “multiple taxation is the imposition of the same or similar taxes on the same income base, transaction or person by one or more levels of Government, in one or more jurisdictions. While a level of multiplicity is expected in federal system of governance, the levying of a particular tax on the same person/entity, in respect of the same liability by more than one State or Local Government Council should be avoided.

“The paradox of multiple taxation is that it does not lead to an increment in government revenue, rather the crippling effect of these taxes, is that it makes otherwise profitable businesses, unprofitable. It negatively impacts the ease of doing business, shrinks the tax base, incentivizes tax evasion and complicate tax compliance.

“Taxation is the backbone for public finance. It provides guaranteed and sustainable sources of funding for social programs and public investments, it also serves as a tool curated by the government to effectively and efficiently distribute our commonwealth. It is thus evident that taxation is critical for making growth sustainable and equitable.

Thus, taxation by design is an instrument for economic development and it is important to acknowledge and support the initiative of all tiers of Government in using taxation as an instrument for socio-economic development.

“However, supporting the tax initiatives by the various tiers of Government includes indicating where a category of taxes have become cancerous to economic development. These type of taxes typically manifest themselves in the form of multiple taxation and by design, they reverse growth, stifle innovation and discourage investment. In parabolic terms, they are the scarecrows mounted by government to disincentivize development”.

Adewolu further emphasized that the incidents weakens our economic foundations, devalues the symbol of economic strength, which is our currency, the Naira and contracts our gross domestic product.

He maintained that taxation systems should be flexible and dynamic enough to ensure they keep pace with technological and commercial developments noting that it is important that a tax system is dynamic and flexible enough to meet the current revenue needs of governments while adapting to changing needs on an ongoing basis.