Due to a rising issue on payment of tax and its importance to economic development, the Deputy Director on other taxes at the Internal Revenue Service of Oyo State, Mr Ogundiaro Rasaq, speaks with ANUOLUWA BABALOLA on various tax issues. Excerpt.

Tax is imposed by government, where exactly should tax be paid to avoid double taxation?

It should be paid through an appropriate agency of the government; we have Board of Internal Revenue, Federal Inland Revenue and local government rate officers. They all have the jurisdiction to collect tax, which is embedded in the constitution and they have legislative power to collect certain taxes and not all.

So, if you have a company and at the end of the year, whatever may be your profit will be accessible to Federal Inland Revenue, but state has the right to collect tax on the income of individual, which may be salary earned by individual and that is for government workers on the services rendered by the individual. Local government also collects some taxes from individuals within their tax jurisdiction.

If an organisation is not registered, how will tax collectors know about the organisation?

That is why it is important for every company, be it corporate or individual, to register at any tax office close to its office and a tax number is given. You know just of recent, we started issuing Tax Identification Number which organisations are to have. This helps in many ways. If you want to have transaction with a bank, the bank will request for it to carry on with your transaction and if you don’t have the number, the bank may not even transact with you and would refer you to register.

How should tax be paid?

Let me say this to you, payment of tax is compulsory, it is an obligation for individual and a responsible citizen. So, there is no excuse from anyone to ask, ‘‘Why should I pay tax?’’; it is in the constitution and anyone that fails to pay tax will face penalty.

Under the tax enabling law, for every corporate individual or body, the law says the first 30 days of every year you have to file annual returns with appropriate tax authority, which means you should not allow anybody to come to you before you do so. You need to analyse your profit, the numbers of your staff, the tax deducted from the income, and if you are to pay as you earn, you need to list the number of your staff, declare the income you are giving to them with other allowances and the amount of tax you deduct from each of them, alongside the receipt collected when the tax was paid and it should be submitted to the nearest tax office. That means you are now making compliance guarantee.

What are the advantages of paying tax?

There are many advantages; you use tax in discouraging consumption of certain goods; now we have some alcoholic drinks and if government does not want people to be consuming these items, especially if they are imported, they will pay a higher import duty on it, which will reflect on the price of that commodity and locally made goods will be promoted.

Payment of tax could also control inflation and protect infant industries to let them grow. With payment of tax, growth in the economy will be stimulated. Essential needs will be provided for citizens, talk of good road, health care, education, administrative purpose, among others. These are what we need from the government and government cannot provide this without getting income; people are complaining about social services and government can do that if they comply to pay tax. You know government doesn’t have 'money tree’ at the back of its office where it can pluck money, government doesn’t have licence to print money anyhow, but it will provide essential needs economically; it will make a budget and how money will be generated. As a result of this, essential commodity needs to be provided from the money generated from the people in form of tax.

Are you saying without payment of tax, development in the economy would stand still?

It could. Let me say this to you, if I am employing you and you are less effective, do you expect me to pay you anything? It is not reasonable; so, for government to improve on the economy, tax must be paid. Tax is an instrument used to develop economy and that is why it is necessary for everyone to pay tax either one likes it or not. It is through tax we can send amenities to the inhabitants. So, government doesn’t plant money not to talk of harvesting it, no tree is yielding money at its backyard; so, where do Nigerians want them to get money?

How can issue on harassment attached to tax payment be addressed?

It was in the olden days that we had an established harassment, but currently the harassment has been dropped to minimal level, because you know your right and what to do and what will bring harassment to you. If you do the right thing, you won’t be harassed.    

What are the penalties for neglect in payment of tax?

Like I told you the other time, every individual company is expected to file a return every 30 days of every year and submit it to the nearest tax office and failure to do so will be fined. For corporate individual, it is 500,000 and for individual, it is 50,000. You as a reasonable person need to sit down and think on what will profit you either not to comply and pay 500,000 or comply and save 500,000.

What are the challenges you are facing in Oyo State, are residents cooperative enough?

We have a lot of challenges; I need to tell you, the tax payers are not sincere to the government. You need to disclose all what you have been paying tax upon. Some tax payers have developed the culture of hiding vital information from the tax officers because they don’t want to pay. So, they dodge under the tax avoidance; they are avoiding paying the adequate tax, some will not even present themselves for tax payment. Now, instead of any corporate body to give the tax authority a correct address, they will give a fake address, the tax officer will now be going up and down and won’t see them, which won’t help in having accurate data. So, our data bank is not all adequate to guarantee us on what we are to collect as tax from the people. 

As to the part of the government, it should try to re-address tax administration in Oyo State; government should make provision for motivational items needed for the collection of tax; tax collectors should go anywhere without stress, well dressed so that when we go to any office, we would be given respect. Amenities to work with should be provided in order to avoid leakages. We need to be well paid, given a special salary. If government can be doing this, it will be motivating the tax administrators. Training should also be given to sharpen their knowledge. Government should also try to block the loopholes by treating tax collectors well to avoid too many leakages.

  What are the leakages?

(Smiles) it is when you collect tax on behalf of the government and you are supposed to pay the money into the bank, but when you are not well treated you know what will happen. If that person is lenient, he divides the whole thing, pay half to the government, and pockets the other half. If the person is not lenient, he will succeed in converting the whole collection into his own personal use. In Oyo State, we have been trying as much as possible to reduce the rate of that happening.

What step do you intend taking to enforce payment of tax in the state?

If I were to be fully in charge, I will motivate the staff because it will generate more revenue.