In this interview, Mr. Oseni Elamah, Executive Secretary, Joint Tax Board, speaks on the importance of tax in the development of a nation with emphasis on the Voluntary Assessment and Income Declaration Scheme (VAIDS), an amnesty programme for tax defaulters launched in July, 2017 to run through March 2018. SANYA ADEJOKUN brings excerpts:
WHAT is the essence of Voluntary Assets and Income Declaration Scheme (VAIDS)?
VAIDS was initiated by the Minister of Finance but it is a Federal Government project, as you can see that it was formally launched by the then Acing President, Professor Yemi Osinbajo and it is in line with the various provisions of the tax law. What it has only done is to ensure that there is more inclusiveness in tax administration and create ease of compliance by lot more Nigerians. It will also help to sensitise our people, enlighten them, know their rights under the law and take full advantage of it.
What types of taxes are covered by VAIDS?
All taxes are covered be VAIDS, whether they are corporate or individual. All taxes that are provided for under the law. As you are aware, we cannot raise taxes without the instrumentality of the law, so every tax you see is a creation of the law. What differs is who collects what. And we have taxes and levies collectible by various organs of government. Federal Inland Revenue will collect taxes relating to Petroleum Profit Tax, Company Income Tax, Education Tax, Value Added Tax, Technology Development Levy.
The states will collect Personal Income Tax, Property Tax, Consumption Tax.
Local governments also collect some form of taxes for birth registration, death registration, naming of streets and markets and motor parks.
What are the specific benefits of VAIDS for federal and state governments?
The specific benefit is that it will enable all tiers of government to bring more people into the tax net; ensure that all incomes that are subject to be taxed are brought to be assessed and taxed and it will enhance the revenue of various tiers of government.
It also creates a kind of social contract between government and the citizens because when you part with some of your income, you are demonstrating that you are a responsible citizen and there are certain basic social benefits and amenities that you expect government. You expect government to provide security, good roads and health facilities or generally good governance that will ensure that the welfare of citizens is taken of and that people can pursue their God-given talent and generate as much income as they in turn give what is due to government.
With the dearth of data in Nigeria, how do you hope to capture hidden income of citizens?
We are in the age of technology and ICT is an enabler for tax and revenue administration. But is it is very critical that for you to be able to bring people under the tax assessment, you must have a reliable data base that you can trust the integrity of information that you get from it. If you do not have a reliable data base, you cannot even assimilate the information from other platforms let alone mining that information to bring people to tax. That is very critical and it is one of the responsibilities that the Joint Tax Board is saddled with under the Tax Identification Number project and to ensure that there is universality of information that is available to all tax authorities. When somebody moves from Lagos to Sokoto, the person is identified through the system and that removes the incidence of double or multiple taxation.
Data is very critical and we are doing all that is possible for us to have that platform put in place. With that platform, you can extend information to various other platforms and interrogate information from those platforms to get additional information. The Bank Verification Number, for example, for those who have bank accounts, also capture information as to the true identity of owners. Before now, it would be humanly impossible to match tax payers with various bank accounts they maintain but with BVN and TIN Number, we can tell you every tax payer and where they operate accounts from. Also, if we link up with AGIS where you have properties that are documented, we would be able to trace who owns what property.
We have various tax treaties with other countries and we share information with the aid of technology and using the tax identification number too, we can also trace the assets and incomes of Nigerians worldwide. The law stipulates that you pay taxes where you reside irrespective of where those incomes were made.
What is the compliance level like so far?
The scheme came into being in July and it is supposed to end on March 31, 2018. We are still collating information as to who are those that have taken advantage of this scheme in filing their tax returns or coming forward to declare their income and assets. And we left Lagos yesterday (the interview was conducted on Thursday, January 25, 2018) where we had a retreat organised by Federal Inland Revenue Service (FIRS); we requested the states internal revenue services to give us feedbacks and I believe that by end of this week or early next week that will be done. We want the feedbacks we are getting, which are quite encouraging, to be backed up by statistics. VAIDS has created a window of opportunity for people to be able to come forward and voluntarily and truly declare their income and save them the hassle of penalties, interests and in some cases criminal prosecution.
There are fears that VAIDS is a trap for political opponents. Is this correct?
That is not correct. A taxman is not a political agent. The taxman by provisions of the law has access to so much information and has professional ethics guiding his conduct. Such insinuation came because of the way that VAIDS was initiated and kicked off; because we needed an Executive Order to create the window and make the various authorities having powers under the law, like the governor in states and the president in case of the country, to waive some portion of taxes to key into the scheme.
VAIDS is looking at previous non-compliance with the law because once you have failed to comply with the law, you are deemed a criminal. But we then said let’s create this window at this time, because we want to have a more inclusive governance. It doesn’t matter which government is in or out. If you check the provisions of the law, the taxman can carry out investigation backward for a period of six years. We did a similar amnesty programme when I was the chairman of the Edo State Board of Internal Revenue when Governor Godwin Obaseki became governor and a lot of people took advantage of the opportunity, because we drew the attention of the governor to the provisions of the law that he has power to waive some aspects of taxes or to entirely forgive tax evaders. But you must first be subjected to assessment. The tax evader must be assessed and it must be certain what he owed government before the governor can exercise the power of amnesty.
VAIDS is saying that you have previously evaded taxes but if you come out voluntarily to declare your assets, we will not apply the full weight of the law as appropriate; as we will waive the issue of penalties, waive the issues of interests and we will not press criminal charges against you. It is not a new law; VAIDS is riding on the provisions of various existing laws. But anybody that fails to take advantage of this window of opportunity will then face the law fully after the expiration on March 31, 2018.
Today, there are over 180 million Nigerians living in Nigeria but today, only about 14 million are captured in tax records. BVN reveals that individual account holders are more than 30.5 million, which means that they are economically active enough to have money to put in the accounts. The National Identity Management Company (NIMC) has a data base of 22 million Nigerians. You thus find that those who currently pay taxes are just a negligible few out of the entire working population. We believe that today, about 62 million Nigerians are gainfully employed in one form or another but all you see is that only those in the formal sector are paying taxes. For instance, in Edo State, every resident was subjected to tax. We got a court order to restrain a broadcast station. We garnishee its account to get N212 million. The owner approached the Appeal Court where he lost again. Our law says that it is the tax defaulter that should show cause why he is not paying correct taxes to government. Therefore, in Nigeria, if you don’t pay taxes you will even lose your fundamental human right as a citizen, because if the state doesn’t survive, it cannot guarantee anybody’s rights. There is no Nigerian that is above the law in terms of nonpayment of taxes. The difficulty we have is that we have been unable to identify who should pay what taxes. Every employee should insist on collecting his/her TIN Number and also tax clearance certificate from their employers. Very soon, we will enforce the no TIN, no salary rule. But we want the public to know that the taxman knows you beyond how you know yourself now. We have this information but we just want you to take advantage of this scheme, because after March 31, 2018, we will begin to serve some love letters such that those hidden assets and incomes you thought are protected will be brought out.
In terms of expectations, how much will VAIDS bring in?
From this and other similar exercises we are doing to ensure that we have a reliable data base, we expect that at the end of this exercise, we should have not less than 40million Nigerians in the tax net. And given the amount of assets and income we see, just yesterday the Federal Inland Revenue formally declared having collected taxes of N4.02 trillion, which is far beyond what was collected in 2016. In this year’s budget, they are anticipating to collect N6.4 trillion.
From this exercise- the VAIDS programme, we expect that $1billion, which translates to about N320billion will come in at the federal level; at the state level, the figures are just telling you that there is so much possibility that are there. We believe that there are states that can generate enough IGR to sustain themselves outside the Federal Government allocation. When we make available the figures from last year you will be able to have an insight into what we are looking at this year and the years ahead. So I believe that there is a lot to come in. In terms of the number of those that will come into the tax net, if we move from 14million to about 40million, even if every person is paying N1,000 per annum, you can imagine the kind of money that will come up as revenue; this is non-oil revenue.
In most of the suburbs of this country, citizens repair their roads, generate electricity because of the erratic supply of power, sink boreholes to provide their own water; do you think that this is not a justification for people not to pay tax?
In the place where you are, you don’t think the government is providing enough security, right? But is that a justification for you to take arms and start committing crime? That you do not have the roads or the water you expect and you are citizens that have rights, who put the government in place? So have you exercised your right of who does what? What we are saying as revenue administrators is that having put a government in place to exercise authority under law, we are also under law to ensure that you make your own contribution by paying your taxes. Now, having paid your tax, there is a social contract between the governed and the government; how do you now demand for accountability having taken ownership of that? You can now ask this question. If you don’t pay your tax, even your rights as a citizen are compromised. So, if you pay your taxes then you can now ask the question because you put those who are there in government. It is not for tax administrators to give you reasons why it didn’t happen; we are just playing our own role of ensuring that we do what we are meant to under the law.
and then