Illegal tax contractors still on the prowl

When the National Economic Council asked all the tiers of government to stop using tax contractors to collect taxes across the country a few weeks ago, many business owners heaved a sigh of relief. The huge multiple tax burdens on many small and medium scale enterprises had practically drained life out of them.

In the Federal Capital Territory, a lot of business owners have sour tales of tax consultants shutting down their offices and sites for not paying the huge rates slammed on them. Hired by the Area Councils, these tax consultants employ young men who ambush company vehicles on the road and seize them for not paying all manner of taxes. The folks working for the tax contractors are known to move around in groups, wielding clamps which they use to immobilise cars, as well as planks with nails.

No part of the city is sacred to these tax agents and they are willing to use their fists if necessary, to subdue anyone that dare challenge their operation. Thus, they could be found in Wuse, Maitama, Asokoro, Central Business District, Garki and even Kubwa, a satellite town. Their charges range from N50,000 to N200,000, depending on the size of the business.

So, when the Federal Government, on the advice of the Ministerial Implementation Committee of the National Economic Council, barred the three tiers of government from contracting its tax collection duties to contractors and non-revenue officials, it was widely seen as a sound decision.

The committee also suggested that the Inspector-General of Police should be asked to dismantle all road blocks mounted by such private tax collectors along the country’s highways. The NEC, which considered these and other recommendations at its meeting chaired by Vice-President Namadi Sambo at the State House, Abuja, however, asked the committee to fine-tune them in consultation with state attorneys-general and report back next month.

The NEC comprises state governors, Central Bank Governor, the national planning minister, minister of finance, and chief economic adviser to the President.

Giving details on decisions reached at the meeting were Governors Willie Obiano (Anambra); Aliyu Dankwambo (Gombe); Idris Wada (Kogi); and Minister of National Planning, Abubakar Suleiman.

The committee was set up following a report from the Manufacturers Association of Nigeria to NEC on the problem of multiple taxation, which pointed out that some taxes and levies administered by some states and local governments are not backed by appropriation legislation.

According to Obiano, the committee recommended the discontinuation of the practice of using non-revenue officials for collection of taxes and levies by states and federal agencies as this is contrary to Section 2 of the Taxes and Levies Act.

He said, “All state revenue boards should be empowered to automate their tax operations for effectiveness, process, accountability and reduce leakages.

“NEC is to direct the Inspector-General of Police to dismantle all ‘road blocks’ mounted on highways for revenue collection.”

NEC further resolved that the committee should work with the state attorneys-general representing the six geopolitical zones to incorporate the inputs and comments of the members of the Council and report in the follwing meeting.

The zonal representatives, according to Obaino, include Enugu for South-East; Lagos for South-West; Bayelsa for South-South; Plateau for North-Central; Kebbi for North-West and Borno for North-East.

But findings by our correspondent indicated that the illegal tax agents are still on the prowl in the city. Though they seem to have lost the brazen confidence with which they hitherto operated, the groups are very much in operation as they waylay unwary drivers of branded company vehicles on the road. For instance, the tax consultant working for the Abuja Municipal Area Council is still going around harassing business owners in flagrant disregard for the NEC directives.

As if the country is the proverbial animal farm – where all are equal but some are more equal than others, thanks to George Orwell’s classic, Animal Farms – a transport union, the Self-Employed Commercial Drivers Association, Abuja, has also transmuted into a tax collecting agency. The union, which claimed to be working with the Federal Capital Territory Administration, has been harassing vehicle owners and impounding cars in the city.

The union, in a notice dated April 4,2014, demanded N21,500 from Punch Nigeria Limited, as “licence permit” for its circulation bus. According to the notice received about a month ago, the company is to pay “N10,000 for registration, N5,000 for annual renewal, N1,500 for driver’s identity card and another N5,000 for vehicle data capturing (biometric).”

When contacted about the illegal activities of the union and other tax contractors, the Force Public Relations Officer, Emmanuel Ojukwu, said the police had begun to enforce the NEC directive, adding that “the activities of SECDAA and other tax-collecting agents should be reported to the nearest police station for action.”

A tax expert, Mark Abuh, said the use of consultants by different tiers of government to collect taxes and levies was illegal. Abuh, who is the tax adviser to the Growth and Empowerment in States, a Department for International Development-sponsored programme, made the disclosure in an interview with the News Agency of Nigeria in Abuja.

He said the use of consultants in tax collection had become a trend, but described it as an “aberration”, which was being done to the detriment of appropriate government officials. He added, “Decree 21 of 1998 prohibits the use of consultants for assessing and collecting taxes and levies by any tier of government.’’

Abuh also said that the use of consultants by some state and local governments was one of the factors that led to multiple taxation of citizens and organisations. Section 1(1) states that notwithstanding anything contained in the Constitution of the Federal Republic of Nigeria 1979, as amended, or in any other enactment or law, no person, other than the appropriate tax authority, shall assess or collect tax or levy.

He stressed that “nobody, other than appropriate government agency and officials, shall on behalf of government, collect tax or levy as listed in the Schedule to this decree.

Sub-section 2 states that no person, including a tax authority, shall mount a road block in any part of the federation for the purpose of collecting any tax or levy.’’

The tax expert pointed out that the Tax Act provides that the Board of Internal Revenue in a state could delegate some of its non-core functions to tax consultants “but not for the assessment and actual collection.

“The core functions of assessment, collection and enforcement of tax are functions you cannot delegate to consultants but many state governments have gone outside the law to do so. Revenue consultants are multi-disciplinary professionals with expertise and resources in revenue generation, financial, taxation, management and advisory services.’’

Abuh said that consultants had often used means other than what the law prescribed to collect taxes and levies in local government areas.

He observed that many state governments spent between 10 per cent and 50 per cent of their revenue on consultants and failed to improve the capacity of their revenue staff.

“Currently, the Personal Income Tax (Amendment) Act specifies that every Board of Internal Revenue is entitled to about five per cent of all collections to run its own activities but the states prefer to spend more on consultants,’’ he added.