The Federal Inland Revenue Service (FIRS) has urged governments to report projects executed by them as being funded by taxpayers.
A statement from the FIRS in Abuja said the Executive Chairman of the Service Mr Muhammad Nami made the call at the launch of the Public Finance Database by the Nigeria Governors’ Forum.
FIRS boss argued that projects funded by taxes should be reported as such and not personalised, so citizens would relate these projects as the proceeds of their taxes.
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“Those in political leadership should promote the tax-paying culture by relating projects and infrastructural developments executed by them to tax.
“The government at all levels are doing a lot with taxpayers’ money but citizens do not easily appreciate these facts because of the way and manner the projects are reported.
“There is the need to de-emphasise and de-personalise projects so that the citizens will begin to relate all the ongoing laudable projects in the states to tax revenue. This singular act to a great extent will increase the tax morale and enhance compliance,” he said.
Nami argued that the low compliance tax rate in most developing countries was as a result of the failure of the social contract between the taxpayers and the government, noting that those in political leadership had a duty to promote a tax-paying culture by relating projects and infrastructural developments executed by them to taxes paid by taxpayers.
“Taxpayers need to see what has been done with their money to be encouraged to continue to pay their obligations under the Social Contract they have with the government.
“The low level of tax compliance in developing countries can be attributed to the failure of the social contract between the taxpayers and the government. It is expected that if the citizens are committed to paying taxes, the government should be committed to using the taxes for the common good of all citizens.”
Muhammad Nami also advocated for the harmonization of the nation’s tax systems to cure tax revenue leakages.
Nami used the platform to call for Nigeria “to make a bold paradigm shift by harmonizing the country’s tax system to optimize tax revenue collection”.
According to him, “recently, there has been a clamour for a holistic review of our tax system. Its proponents, including myself argue that if Nigeria must achieve its tax revenue potentials as the fulcrum of economic development, a harmonization of our tax system must be undertaken.
“Tax harmonisation for enhanced revenue generation, is needed by us as a nation to rethink the current tax system being operated”.
Nigeria he said “needs a transition to a unified tax administration as practised globally by most of the efficient and effective tax jurisdictions that have achieved optimum tax revenue collection.
“Certainly, there is no gainsaying that if Nigeria must be less dependent on external borrowing and buffer from the volatility and dwindling oil revenue, there should be a paradigm shift.
“Beyond politics and sentiment, the country should be willing to make those bold and hard but beneficial tax reforms and there is no better time than now, if we must avert the looming debt crisis.
He added that “the gains from a harmonised tax system far outweighs the fears expressed in some quarters, if dispassionately analysed.”