The economic stability of a nation is largely dependent on the productivity of its people; however, to achieve the status of a developed nation, the tax system of a country must be able to uphold the ideal principles of taxation. Tax is a legitimate source of public revenue to government for its proper functioning. It suffices to say that tax work is the lifeblood of all economic works. A tax, in the general undertanding of the term, and as used in the constitution, signifies an exaction for the support of the Government (Somorin 2012). Therefore, revenue generation significantly affects the performance of any economy – be it developed, developing, or underdeveloped.
Government needs sustainable sources of funding for social programmes and public investments to foster economic growth and development. These programmes such as provision of health, education, infrastructure, and other services are important to achieve the common goal of a prosperous, functional, and orderly society. Taxes are the government’s revenue for financing public spending, including building roads, schools, hospitals, and funding local government services such as police and fire departments, parks, playgrounds, and public libraries, and the list goes on. Government uses the tax(es) collected to provide its citizens with all basic facilities and services to lead a good life.
Tax is a civic responsibility of the citizens to their countries. This is to say that the extent to which governments can provide these resources mostly depends on the citizens’ cooperation to pay their taxes; thus citizens have an obligation to fund these services as it is through taxes that governments provide the social amenities.
Tax revenue could be directly levied on the person who is intended to pay the tax, such as personal income tax, company income tax, capital gain tax, petroleum profit tax, education tax, whereas indirect tax is borne by a person other than the one from whom the tax is collected such as value added tax, and custom and excise duties. Furthermore, the tax burden could be distributed among the tax paying persons on a progressive, proportional, or retrogressive tax bases.
Collaboration among all tax authorities in the country is a catalyst to increase in revenue generation and improve taxpayers’ service delivery.
Regulatory provisions requiring collaboration among tax authorities call for collaboration between and among the federal, state, and local authorities to ensure the avoidance of multiplicity of tax and to improve taxpayer’s satisfaction. Where there is no cooperation among tax authorities, the taxpayer will hold on it for either tax avoidance or evasion; whichever way, tax revenue generation will decrease.
To enhance the Nigeria tax system, measures such as the following should be encouraged: teamwork between tax authorities to stimulate economic growth on a sustainable basis by treating tax revenue as citizen’s compulsory contribution in trust for the funding of the business of government with the expectation that the money would be utilized for the benefit of the people in accordance with the relevant laws; the whole machinery of tax administration should be efficient and cost-effective; double taxation by the various tiers of government on income, property, imports, production and turnover should be avoided; the convenience of the taxpayer and minimal compliance cost should guide the design and implementation of any tax in Nigeria; the overall Nigerian Tax System should be fair; the international tax bodies should provide the platform for the exchange of information and sharing of ideas among members to boost tax administration towards increasing tax revenue generation and improve taxpayer’s service; better record keeping and accounting system among different tax authorities will help to improve efficient tax service to taxpayers; review of tax laws, tax policies to meet the criteria for quality tax system in Nigeria, and promotion of justice and equity; partnering students’ tax club at various school levels to promote an all-round tax advocacy and enlightenment campaign- this is because every tax payment is a contribution to the progress of students.
The need to go beyond educating the citizenry on the tax system to actively create and inculcate a tax culture among Nigerians has become very necessary if government is to attain its goals of diversifying the Nigerian economy and obtaining sustainable and stable revenue from taxation. It is necessary that Governments at all levels clearly articulate and propagate the philosophy of taxation to their citizens, and effective cooperation among tax authorities can achieve this.
Taxpayers are the most important stakeholders for the existence of the tax authority. Without taxpayers, there will be no basis for the creation of tax collection agency (Okauru, 2012). Levels of interface between the tax authorities and taxpayers include registration, assessment, collection, and where there is disagreement over assessment, appeals (Okauru, 2012).
The ultimate focus of all engagements with this category of stakeholder is to ensure voluntary compliance. For voluntary compliance to continue, the means, principles of convenience, fairness, administrative efficiency, simplicity, certainty, flexibility, productivity, among others, must be observed. Interactions with taxpayers could be with taxpayer education service; efficient, effective, and correct service delivery. When tax authorities interface in this direction, they will build trust, confidence in tax system. In this way, taxpayer will desire to meet their civic responsibilities through obliging to pay tax as and when due.
The importance of tax authorities’ collaboration is to support the tax system in achieving its mission and vision and by so doing increase revenue generation and enhance taxpayer’s service delivery.
Collaboration among tax authorities will help to institutionalize tax culture in Nigeria. There is every need for patriotism on the part of the citizenry and corporate organizations with specific regard to tax payment; transparency and accountability on the part of public office holders.
According to the World Bank, taxation not only pays for public goods and services; it is also a key ingredient in the social contract between citizens and the economy. Tax is the most common and important government’s intervention to redistribute income among the population. The benefits of paying taxes can’t be overemphasized; ranging from development and maintenance of infrastructure to creating or maintaining the institutions needed for the rule of law and the functioning of the democratic process.
■ Sylvia N.C. Chinegwu contributed this piece from Abuja.
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