Finance

Multiple Taxations in Nigeria; problems, causes, effects, possible solutions

Multiple Taxations in Nigeria

All countries collect taxes from their citizens. Every income-earning adult is expected to pay tax. All income-generating ventures are expected to pay taxes.Information Guide Nigeria

However, multiple taxations is a situation where an individual or a business venture pays the tax more than once. For instance, Nigeria has the federal government, the states, and the local government areas. If the federal government collects tax from an individual, the state collects the same tax and the local government collects the same tax, it becomes multiple taxations.

Multiple taxations also result where the same tax is collected under different names or by different authorities. A notable case is business premises. When you are doing nothing, nobody cares about you. The moment you put a little kiosk in front of your house, you begin to see different people come around with different documents. They want to collect business premises tax.Multiple Taxations

Another notable case is market taxes. Different authorities collect market taxes, all claiming to come from the local government. The most annoying is transportation taxes. The driver pays tax in the motor park. The police and other uniform men collect their own on the way. All these taxes go on the head of the committer.

Read Also: Nigeria Value-Added Tax (VAT) Ruling, Economic Impacts, Challenges and Prospects

Causes of Multiple Taxations in Nigeria

There are many reasons why multiple taxes are collected in Nigeria. The causes of multiple taxations in Nigeria include:

1. Unemployment

Unemployment is the major reason why there are so many touts out there collecting illegal taxes. They want their share of any income that is being generated anywhere. You see them going from place to place looking for income opportunities.10 Effects of Secession Agitation in Nigeria

2. Ignorance of the Law

Many Nigerians are ignorant of the law that states the type of taxes they should pay and how they should pay them. The approved list of taxes and levies that Nigerians should pay is clearly stated in the taxes and levies decree of 1998. Yet, many Nigerians are ignorant of these taxes and levies.

Some Nigerians are not also aware of the authorities that are responsible for the collection of the various taxes. They honour whoever comes to collect taxes from them. Thus, they pay multiple taxes ignorantly.

3. Corruption

Some members of staff of the authorities that are responsible for the collection of taxes are corrupt. They take the advantage of the ignorance of the citizens. Therefore, they create the same taxes under different names, making the payers feel that they are paying different taxes whereas they are only paying the same tax in another way.History of Separatist Agitations in Nigeria since 1914 to Date

Read Also: History of Separatist Agitations in Nigeria since 1914 to Date

4. Conflicts among the three tiers of Government

The taxes and levies decree, 1998, states clearly the taxes and the levies that the federal government should collect; those that the states should collect, and those that the local government should collect. Conflicts sometimes make one of them collect the taxes that it should not collect. Thus, the citizens pay one tax more than once.Npower recruitment

Effects of Multiple Taxations on Businesses in Nigeria

Studies have proven that multiple taxations are responsible for the death of many small business ventures in Nigeria. The emergence of new businesses attracts many touts who come to them to collect illegal taxes. These touts sometimes threaten to take innocent business owners to court. Because some of the business owners are ignorant of the type of taxes that they should pay, and to whom such taxes should be paid, they continue to pay taxes until they have no money left for their businesses.

Multiple taxations have also scared so many foreign investors away from investing in Nigeria. Their countries collect taxes from them. Nigeria also collects taxes from them. When they cannot make profits that can cover their expenses, they fold up or stop coming at all.

Multiple taxations are responsible for the high cost of some materials in the market. Multiple taxations harm consumers and producers. Multiple taxations reduce profits.dollar to naira rate

Read Also: 10 Effects of Secession Agitation in Nigeria

Possible Solutions to Multiple Taxations in Nigeria

Multiple taxations in Nigeria have possible solutions. The possible solutions include:

1. Awareness

Information has power. Nigerians should make it a point of duty to become aware of what it takes to run a particular business. The law does not keep anybody in ignorance. The taxes that all citizens of the country should pay are clearly stated in the laws. All levies are also clearly stated. Nigerians should take advantage of these pieces of information to become aware of what is expected of them.

2. Pay Taxes to the Right Authorities

There are taxes that the federal government authorities should collect. These taxes are different from the ones that the state government collects. They are both different from the ones that the local government collects. All taxpayers should be aware of the different authorities that are responsible for the collection of these taxes and pay to the right authorities.

Touts who are not the staff of any of the authorities collect, oftentimes, the illegal taxes and levies. Nigerians should not be afraid to go to the offices of various authorities. Thus, the taxes would be paid in the right place. Paying the right tax in the right place with receipt duly issued will avoid multiple taxations.WAEC result

Read Also: How To Get Tax Identification Number In Nigeria

3. Involve a Lawyer

Lawyers are people who know the laws of the land in and out. They help individuals who are ignorant of the laws. Involving them can help in avoiding multiple taxations.

All business owners should consult lawyers who would help them to know what they are required to do by law. The taxes they should pay and to whom such taxes are to be paid.JAMB form

4. Register your Business

Some people like doing business without being noticed. If a legal business is duly registered, such a business cannot be subjected to multiple taxations.

5. Go to Court

Many people are afraid of going to court. It is at the court that all the laws can be rightly interpreted. Going to court can help in avoiding multiple taxations.

Most touts are aware that many people dread going to court. Therefore, they often threaten to take their victims to the court. Some people, the moment they hear of going to court, start begging. This is the point at which the touts succeed. They go into negotiation, a compromise is reached and some money is paid. Another time, another group will come and another money would be paid. If care is not taken, the same people would come with different demands.

Such multiple taxations can be avoided by going to court. Courts are aware of multiple taxations. They do not support multiple taxations in any form. Therefore, they are there to defend you. They make sure that you pay what you ought to pay.

Oftentimes, those who collect illegal taxes do not collect the right amount. They hike the amount to be paid because they know that the payer will go into negotiation with them. After all said and done, the amount to be paid would still be higher than the right tax to be paid. The court would detect this out.

Invariably, the court is the saviour of the common person. Nobody should dread going to court. Going to court can go a long way in avoiding multiple taxations.

Read Also: Types and Penalty for Tax Evasion in Nigeria

Conclusion

Multiple taxations do not do any business any good. It kills so many small business ventures. It has so many negative effects on the consumers and producers of many products. It reduces profit and scares away many foreign investors. Therefore, it should be avoided at all costs.JAMB Result

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Isaiah Atawheke

Isaiah is a Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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