Multiple Taxation: A Barrier to Nigeria’s Economic Growth
In a bid to address the critical issue of multiple taxation and its detrimental impact on Nigeria’s economic growth, the Nigerian Communications Commission (NCC) recently conducted a regional stakeholders workshop in Ibadan, the capital of Oyo State. The event brought together key figures such as Mr. Adeleke Adewolu, the Executive Commissioner (Stakeholder Management) of the NCC, Mr. Gbolahan Awonuga, Executive Secretary of the Association of Licensed Telephone Operators of Nigeria (ALTON), Mr. Temidayo Ashonibare, a respected law lecturer, as well as representatives of state governments, experts, and telecommunication companies.
The theme of the workshop, “Multiple Taxation: An Impediment to Economic Development,” underscores the profound challenges posed by multiple taxation in Nigeria’s economic landscape. Mr. Adewolu, during his presentation, shed light on the adverse effects of this issue and emphasized the urgency of finding a solution.
The Burden of Multiple Taxation
Multiple taxation, as Adewolu explained, has long been a stumbling block to Nigeria’s economic development. It is essential to recognize that taxation, when administered judiciously, can serve as a potent tool for fostering economic growth. However, the presence of multiple taxation paradoxically hinders the nation’s progress.
The National Tax Policy of 2017 underscores the necessity of eradicating multiple taxes at all levels of government. This policy explicitly states that taxes similar to those collected by one level of government should not be imposed by another level. This principle is fundamental to achieving a harmonious and effective tax system.
The Destructive Impact
The consequences of multiple taxation are far-reaching and detrimental to both businesses and the overall economy. These “nuisance taxes,” as labeled by the World Bank, have a series of adverse effects:
1. Erosion of the Tax Base
Multiple taxation fragments the tax base, making it less stable and reliable. This fragmentation occurs as different levels of government impose similar taxes, creating confusion and administrative burdens for taxpayers.
2. Incentive for Tax Evasion
When businesses face a barrage of taxes, including multiple taxes on the same income or activity, it becomes increasingly tempting for them to engage in tax evasion. This not only deprives the government of much-needed revenue but also undermines the fairness and integrity of the tax system.
3. Impediment to Ease of Doing Business
Multiple taxation complicates business operations and increases compliance costs. This results in a less favorable business environment, discouraging investment and hindering economic growth.
4. Unprofitable Businesses
One of the most crippling effects of multiple taxation is its capacity to turn otherwise profitable businesses into unprofitable ones. The burden of excessive taxation can push companies to the brink, leading to layoffs and reduced economic activity.
The Path Forward
In light of these challenges, it is imperative for Nigeria to address the issue of multiple taxation comprehensively. Collaboration among federal, state, and local governments is crucial in harmonizing and eliminating redundant taxes.
The NCC’s workshop serves as a pivotal step in this direction, providing a platform for stakeholders to engage in meaningful dialogue and propose solutions. Recognizing that taxation can be a powerful tool for economic development, it is essential to refine the tax system to ensure that it promotes rather than hinders growth.
In conclusion, the menace of multiple taxation in Nigeria cannot be overstated. It undermines economic growth, discourages investment, and fosters tax evasion. The National Tax Policy of 2017 offers a blueprint for reform, emphasizing the need to eliminate multiple taxation and promote a more efficient and equitable tax system.
As Nigeria strives for sustained economic growth, addressing the issue of multiple taxation must remain a top priority. Collaborative efforts between different levels of government and stakeholders are crucial in realizing this goal. By doing so, Nigeria can unlock its full economic potential and create a more favorable business environment for both local and foreign investors.