MULTIPLICITY OF TAX

 

MULTIPLICITY OF TAX

This is a tax regime under which various and similar types of taxes are imposed on tax payers by different tiers of government. For instance, while the federal government imposed the Value Added Tax on consumption and made it applicable throughout the federation, some states, notably Lagos state, introduced the Sales Tax based on the same principles as the former and made it applicable in Lagos State.

Particularly guilty of the problem of multiplicity of taxes are the Local Governments, where all kinds of taxes were introduced.

 

Types of Multiple Taxes

1.    Entertainment tax

2.    Road tax

3.    Permits for closure of streets

4.    Refuse collection tax

5.    Market taxes and levies

6.    Loading and offloading levies

Collection of Multiple Taxes

The greatest problem of multiple taxes is that of its enforcement and use of unorthodox procedures and methods.

Some of these procedures/methods are:

1.    Mounting of road blocks

2.    Use of Revenue/Agents/Consultants

Causes of Multiplicity of Taxes

1.    The listing of 20 items in taxes and levies Act in favor of the local governments is a factor that motivated them into drive of revenue through those items

2.    Most of the state internal revenue are plagued  with various problems like poor funding, lack of infrastructures, poor remuneration and lack of motivations

3.    Lack of tax information and data

4.    All the tiers of government usually fail to adequately fund their departments and agencies.

Problems Arising from Multiplicity of Taxes

1.    It comes with uncertainties in investment environment

2.    Tax yield is very low as a result of numerous taxes that brings in little but with high cost of administration.

Possible Solutions

1.    Streamlining the number of taxes in Nigerian view of low yields of many of the taxes

2.    Accepting the recommendations of 2003 study group which states that all existing taxes in Nigeria should be abolished and replaced by only two taxes imposed at the rate of 10%.

3.    Following the outcry of the citizenry to the problem of multiplicity of taxes, especially its unorthodox collection procedures, the Federal Military Government of Nigeria intervened by the promulgation of Act 21 which was cited as the taxes and levies (approved list for collection) Act, 1998. The purpose of the Act was to resolve confusion created by the multiplicity of taxes imposed by the three tiers of government.

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