INTRODUCTION
"Though considered a civic duty, tax remittance is a significant source of revenue generation that helps the government to meet its statutory obligations. However, its multiplicity and duplication by government agencies has turned it into a clog in the wheel of progress for companies, micro, small and medium-scale businesses struggling to survive amid worsening economic conditions and unfriendly operating environment" -Damilola Olufemi.
The National Tax Policy 2012 has defined Tax as the monetary charge imposed by the Government on persons, entities, transactions, or properties to yield revenue. Multiplicity of taxes is said to occur where these taxes, fees, and rates are levied on the same person in respect of the same liability by more than one State or Local Government council. It is also seen in the various unlawful compulsory payments being collected by the local and state governments without appropriate legal backing through intimidation and harassment of the payers which characterised by the use of stickers, mounting of road blocks, use of revenue Agents/Consultants including motor park touts. It also refers to situations where a taxpayer is faced with demands from two or more different levels of government either for the same or similar taxes. A good example here is the administration of the Value Added Tax (VAT) and Sales Tax simultaneously. While double taxation deals with tax levied by one or more tax authorities. Appendix 3 of the National Tax Policy imposes a clear duty on the Government at all levels to not only ensure that the rights of all taxpayers are recognised whether they are Nigerian citizens or not but also to ensure that multiple taxations in all forms are eradicated at all levels of Government.
MULTIPLICITY OF TAXES
The multiplicity of taxes dates back to the 1980s when the revenue accruing to the State and Local Government from the Federal Government account suffered a great setback.
This was solely based on the reason that the States were highly dependent on the Federal Government for revenue and that they lacked functional Boards of Internal Revenue. This prompted the States to outsource tax administration to private consultants who reviewed the levies and fees payable for different government services outrageously and without legal basis.1 In a bid to curb the menace and proffer a solution to what was beginning to look like a problem of multiplicity of taxation, the Joint Tax Board introduced a list of taxes collectible by different tiers of Government.2 The Act allotted 8 taxes to be collected by the Federal Government, 11 taxes by the State Government, and 20 taxes by the Local Government. This begs the question of how many taxes exist in Nigeria and how well the different levels of Government have adhered to this allocation. There is no need to travel to town to answer these questions, a clear example of the flagrant non-adherence in the allocation made by the Taxes and Levies (Approved List for Collection Act (the Act) is evidenced by the taxation on Value Added Taxes (V.A.T) which according to the Act falls within the purview of the Federal Government of Nigeria. One would then wonder why the Lagos State House of Assembly on 9th September 2021, passed its Value Added Tax Law to impose and charge V.A.T on certain goods and services as well as making provision for the administration and collection of the tax.
The judgement of the Federal High Court in A.G Rivers State v. FIRS & A.G Federation3 which is to the effect that the power to charge and collect V.A.T resides with the State Government; is the reservoir from which the Value Added Tax Law of Lagos State draws its strength. Despite this judgement, the Federal Government has pitched its tent on the foundation laid by the Taxes and Levies (Approved List for Collection) Act by opposing the ruling of the Federal High Court4 and continuing to collect V.A.T through the Federal Inland Revenue Service (FIRS). Now, you may be wondering if a Nigerian resident, or who carries on business in Lagos is mandated to pay V.A.T to the Federal government and also the government of Lagos State on the same goods or services. Well, Your guess is as good as mine.
Interestingly, the Federal High Court in its Judgement also declared the Federal Inland Revenue Service (Establishment) Act, Personal Income Tax Act, Value Added Tax Act, and Taxes and Levies Approved List for Collection Act null and void being tax laws not specifically mentioned in items 58 and 59 of the Exclusive Legislative List of the Constitution of the Federal Republic of Nigeria 1999 (as amended). This judgement has received a lot of criticism, (with utmost respect to His Lordship) in that His Lordship limited the powers of the National Assembly to impose tax laws to items 58 and 59 of the Exclusive Legislative List in the constitution, without recourse to item 68 of that same list which gives room for any matter incidental or supplementary to any matter mentioned elsewhere in the list. Therefore declaring these laws null and void on the basis that they were not specially mentioned in the Exclusive Legislative List is a cause for concern.[1] Also going by the provision Section 4 (5) of the constitution which is the doctrine of covering the field; it provides that where there is a law validly enacted by the National Assembly on any subject matter, any Law made by the State House of Assembly which is inconsistent with the Federal Law shall be null and void to the extent of its inconsistency, that takes us to Section 25 of the Federal Inland Revenue Service (Establishment) Act which provides that the Service reserves the power to administer all the enactments listed in the first schedule to the Act which includes the V.A.T Act, Capital Gains Tax Act, and the Personal Income Tax Act. A juxtaposition of the Lagos State Revenue Law and Section 25 of the Federal Inland Revenue Service (Establishment) Act leaves us with one conclusion-multiplicity of laws. However, the PUNCH Newspaper in its report on 15th March 2023, stated that the Lagos State Internal Revenue Service and the Federal Inland Revenue Service have signed a Memorandum of Understanding to address the menace of Multiple Taxation in Lagos State by ensuring that no level of government collects more taxes than they are meant to collect as reported by Monsurat Amasa; an LIRS official.
CONCLUSION
It is quite a disappointment that the provision of Chapter 2 of the 1999 Constitution (as amended) makes it non-justiciable for Nigerians to challenge the Government on issues bothering on basic social amenities which is the very essence of this taxation because the evidence of these multiple taxes imposed by the Federal, State, and even the Local government without legal backing but through intimidation and harassment of the would-be taxpayers are still unaccounted for.
Many companies and entrepreneurs are hesitant to venture into new markets or expand their existing market presence because of the fear of multiple taxation which ultimately diminishes returns on investment, affects capital base, and more often, leads to the total collapse of businesses and companies.
It is therefore advised that there should be uniformity of taxation laws across various levels of government to curb the issue of multiplicity of tax laws or double taxation. All the tiers of government should also ensure adequate funding for their department and agencies to reduce aggressive revenue drives some of which are on the verge of illegality in the name of increasing their Internally Generated Revenue.
Footnotes
1. https://ijbssnet.com/journals/Vol_3_No_17_September_2012/26.pdf
2. The Taxes and Levies (Approved List for Collection Act) 1998 Act No.21 Capt T2 Laws of Federation 2004.
3. FHC/PH/CS/149/2020
4. Federal Inland Revenue Service V Attorney General of Rivers State & Attorney General of the Federation (CA/PA/282/2021)
https://www.linkedin.com/company/gresyndale-legal/
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.