As a tax professional in corporate employment responsible for remitting employee taxes to the government, I often get “friendly fires” from some colleagues, for being the “agent of government” that cuts up to 20 percent of their gross pay and gives to the government in the name of tax compliance. Even when I tell them that I am, fortunately, or unfortunately, employed by our socially responsible employer to give to the government what belongs to the government, I feel the pain of my colleagues, just as I also bear in the pain.
The flak, even if light-hearted, is understandable. Who will cheer the taxman after paying up to one-fifth of his hard-earned income to the government and still finances basic public goods the government are meant to provide from his post-tax income?
Granted that it is globally acknowledged from time immemorial that human beings abhor paying taxes, all over the world, the peculiar situation in Nigeria, where income earners spend a large chunk of their disposable income to provide power, water, security, basic education and other public goods and services, makes the case here more difficult. As tax professionals, especially those of us in organisations that take tax compliance with the seriousness it deserves, we can do better in letting the government know the pains of our people.
The laws that mandate tax payment are entirely independent of those that mandate public accountability. In other words, even if you pay tax to the government and you have indisputable proof that your monies end up being used to finance the wedding of the governor’s son, for example, it, unfortunately, does not relieve you of the obligation of paying the taxes. This is the difficult defence I put up anytime I come under my non-tax friends’ crucible. The law is such an ass.
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While injudicious use of taxes does not discharge a taxpayer of his duty to pay taxes, I think a tax professional in corporate employment should not limit himself to the statutory obligation of getting government’s cut of employees’ income and giving same to government, he owes it a moral duty to let the government know that citizens are not happy. Obvious as it is, it can’t be overemphasised.
It is not that the perception among taxpayers that tax managers of tax-compliant companies are agents of governments who should have direct access to government itself is true. Tax professionals in employment and private practice deal with tax authorities, who are themselves, agents of the government, only for administration of the taxes, and not in charge of use of funds. So we may all be in the same boat, after all.
While personal income taxpayers groan about the use of their post-tax income on expenses that their taxes should have taken care of, the situation at the corporate level is even worse. In 2016, over 270 firms were shut down as they were not able to cope with the high cost of doing business, arising majorly from having to provide their own energy and infrastructure, in addition to the foreign exchange crisis that hit the Nigerian economy in the year. That was according to a report by the Manufacturers Association of Nigeria. Where government policies are not friendly to investment, it is a lose-lose situation as there is no profit for the government to cut from as tax. Dead companies don’t pay taxes.
The Federal Government recently came up with special tax relief for privately funded construction of federal roads. This is good, only that small companies that are constrained by cash from financing the federal roads that lead to their operational bases, may have to pray and fast until the government remembers the roads. A new company that finances such project from its capital may also have to wait for years before it benefits from this as the relief is on profits, which hardly come in the first few years of a company’s operations, especially given the many other challenges of doing business in this part of the world.
Again, while it is natural to want to avoid tax, the system in countries where things work effectively comforts the taxpayers. The public school system is effective in many countries, in addition to government-subsidised education. Here, the public education system is nothing to write home about. Private schools have made a fortune out of this. Income earners spend a substantial proportion of their post-tax income on paying school fees of their children and dependents. The public health system is not any better.
Yet, in the midst of all of these, the tax must be paid. Failure to pay tax is, rightly, a crime. The government should kindly make our job easier as advocates of tax compliance by letting citizens feel the impact of their taxes.
Suraj Oyewale, ACA
Oyewale, an accountant and public analyst, works in Nigeria’s oil and gas sector
