20th March, 2012
The Lagos State Government on Tuesday read the riot act to all the 5.3milion tax evading adults in the State that it has commenced enforcement of all applicable tax laws to ensure that such people fulfill their social responsibility to the State.
This was stated at a press conference on tax compliance held at the Bagauda Kaltho Press Centre at the Alausa Secretariat, Ikeja. The conference was addressed by the Special Adviser to the Governor on Revenue and Taxation, Mr Abimbola Shodipo, the Attorney General and Commissioner for Justice, Mr Ade Ipaiye,the Commissioner for Finance, Mr Tokunbo Abiru, the Commissioner for Physical Planning and Urban Development, Mr Toyin Ayinde and Chairman of the Lagos Internal Revenue Service, Mr Tunde Fowler.
Shodipo said out of the 20 million people resident in the state, eight million are engaged in one form of productive activity or the other but only 2.7 million of that number currently pay their taxes. He added that the State Government has been engaging in advocacy, enlightenment and persuasion but has not achieved a 100 percent tax payment target from those expected to pay.
He added that the State Government will embark upon various enforcement measures such as levying of distrainment and will not accept pleas of waivers for concession on penalties for evaders.
He said by virtue of the social contract entered into by the Governor of Lagos State, Mr Babatunde Fashola (SAN) when he assumed office, both the government and citizens have obligations to fulfill.
The Lagos State Government, he noted, has an economic thrust that is premised on poverty eradication and sustainable economic growth through infrastructural renewal and development.
Mr Shodipo explained that at the last State Tenders Board retreat meeting, a total of 156 projects were unloaded across several sectors like roads construction, agriculture, environment, housing and security and this has led to contractors engagement, job creation with multiplier effect and infrastructural renewal as well as security.
He said all the lofty projects will remain mere intents without the necessary funds to actualize the various projects, stating that the main challenge to implementing projects is paucity of funds.
He said now is the time for Lagos to take a step further in its distinction of not being a rent seeking economy and deepen its position as a fiscally disciplined economy, adding that all this while the major compliers with tax payment have been corporate organizations and the civil service with the larger number of people in the informal sector not complying.
The Special Adviser said it will be sheer irresponsibility for the State Government to continue to look away while the minority 2.7million people use their taxes to sustain 5.3 non-paying residents of Lagos State, adding that such people will no longer be tolerated in Lagos anymore.
The Attorney General and Commissioner for Justice, Mr Ade Ipaiye who was represented by the Senior Special Assistant on Justice, Mr Lanre Akinsola said it is an offence for any tax paying adult not to pay tax or violate the provision of applicable tax laws.
Mr Ade Ipaiye stated that the State will commence the prosecution of all tax defaulters and tax evaders, adding that ignorance of the existence of the law is not an excuse.
He informed that the Attorney General of the Federation has given his Lagos State counterpart, Mr Ade Ipaiye the fiat to prosecute tax offenders under the provisions of the Personal Income Tax as amended just as the State Attorney General will also enforce the provisions of the Revenue Administration Law of Lagos State.
He said it negates the principle of equity if every citizen and every tax payer is not treated equally; adding that if out of eight million taxable adults only 2.7million are paying their taxes, such taxation system is not equitable.
He said under the law, it is now an offence to fail to file tax return for a preceding year by the 31 March of the following year as provided for in the Personal Income Tax as amended just as it is also a criminal offence not to deduct or deduct and refuse to remit deducted taxes to applicable internal revenue service.
In his own submission, the Chairman of the Lagos Internal Revenue Service (LIRS), Mr Tunde Fowler warned that with the provisions in the Personal Income Tax Law as amended, most States may be close to bankruptcy.
He said with the new provisions of the law, every state may experience a reduction of over 50 percent in the revenue accruable to them from all sectors of the economy, adding that this calls for action from all concerned.
He explained that the new PITA law provides that for any employee who earn about N305,000 per annum, he pays one percent of that amount as tax and that means a reduction of what normally comes into the coffers of the States.
He said the informal sector which has not been forthcoming in payment of taxes can be divided into two with the first group made up of traders, market men and women and taxi drivers always paying their taxes regularly into the coffers of the State Government.
He reiterated that the other group is made up professionals in the informal sector who are supposed to be better informed, adding that through an arrangement which the LIRS had with the Ministry of Transportation to ensure that vehicles owners that are contravened for traffic offences are also asked to show their proof of tax compliance, over 10, 000 owners of cars arrested did not pay their taxes.
He said this becomes worrisome that these set of people who are definitely in the middle income class can afford to buy cars but are not willing to pay their taxes adding that this is one of the reasons why the government has decided to embark on enforcement of the law against evaders.
He informed that in Year 2010. A total of 340 companies were stopped from doing businesses for not paying their taxes and they paid a total sum of N952million as taxes into the coffers of the State Government afterwards, adding that in 2011, a total of 270 companies which did not pay their taxes were stopped and paid a sum of N382million into the State coffers which shows an improvement.
Mr Fowler said the State Government has also made the administration of the taxes very convenient for the tax payers so that they would not have any excuse.
Also speaking the Commissioner for Finance, Mr Tokunbo Abiru said it was very commendable that Lagos State’s reliance on the federation account has dropped significantly over the years, adding that the credit for this feat is traceable to tax payers.
“Lagos is the first to implement the minimum wage even before the Federal Government which initiated the programme, adding that this calls for an encouragement of those who are paying now while no effort should be spared to bring into the tax net those who are not paying .
He said the State Government has also ensured that it is judiciously utilizing the proceeds of the internally generated revenues, informing that Lagos spends less than 30percent of its budget on personnel cost which make the state very self reliant.
He appealed to those who have not been captured in the tax net to endeavour to become tax compliant so as to widen the tax net else the government might be forced to apply the full weight of the law.
The Commissioner for Physical Planning and Urban Development, Mr Toyin Ayinde who also spoke said there over 600 citizens with applications for building approvals with the Ministry that are yet to be approved because such people are defaulting in their tax payments.
Mr Ayinde also said the Ministry will publish names of defaulting citizens of Lagos State with pending building approvals so that they can come up and resolve their issues with the Ministries to perfect their title documents rather than giving the impression that the process is slow.
The representatives of the National Employers Consultative Assembly (NECA), Mr Timothy Olawale thanked the State Government for acknowledging the near total compliance of members of NECA to tax payment in the State, saying the body looks forward to more collaboration.
He also urged the State Government to ensure that it deepens its capacity to capture such people who are basically in the informal sector in the tax net.
Mr Niran Ade Onajobi who represented the Manufacturers Association of Nigeria while speaking said MAN will continue to encourage its members to support the State Government by paying its taxes regularly because of the judicious application of such taxes by the State Government.
Among the top government functionaries who attended the press conference were the Commissioner for Information and Strategy, Mr Lateef Ibirogba, Special Adviser to the Governor of Media, Mr Hakeem Bello, Special Adviser on Economic Planning and Budget, Mrs Iyabo Aluko, Permanent Secretary, Ministry of Physical Planning and Urban Development, Mrs Yetunde Ajayi and Permanent Secretary, Lands Bureau, Mr Hakeem Muri-Okunola.