AN APPRAISAL OF TAX POLICY REFORMS IN NIGERIA: THE IMPLEMENTATION OF AN EFFECTIVE ELECTRONIC TAX ADMINISTRATION.
“Technology is influencing our lives and continues to change the way we do things from the simple day to day activities to the complex and less routine tasks…An electronic system for filing and paying taxes, if implemented well and used by most tax payers, benefits both tax authorities and taxpayers. For tax authorities, electronic filing lightens the workload and reduces operational costs-such as the costs of processing, storing and handling tax returns… However, even with technology, you cannot build something on nothing”
Nigeria is governed by a Federal system and the government’s fiscal power is based on a three-tier tax structure divided among the Federal, State, and Local governments, each of which has different tax jurisdictions. The tax administration in Nigeria has been plagued with several limiting factors such as weak administrative lapses and weak administrative facilities like the evidence of manually complied database of tax payers. Information Communication Technology (ICT) is a solution which addresses most of the limiting issues of tax administration. The application of Information Technology is necessary in Nigeria’s tax administration as the it makes for fast, easy and accurate computation, storage and presentation/ retrieval of data/records. Specific computer programmes have been created to facilitate the computation of cumbersome data. Programmes such as Microsoft Excel (Electronic Spread Sheet), Microsoft Access (Database) are some of the commonest examples. Other database programmes and accounting packages which allow for easy calculation and computation of an individual or a company’s tax liabilities include Peachtree Accounting, PeopleSoft System, SQL Database, QuickBooks, Management Information Processing System, Quikens etc.
STATEMENT OF THE PROBLEM
There is no doubt that over the years, tax administration in Nigeria has been plagued with several problems such as weak administrative lapses and weak administrative facilities like the evidence of manually complied database of tax payers. Most of which can be attributed to the lack of an effective application of information technology in Nigeria tax system. In manual compilation of files, retrieval of such records may prove to be very difficult and this results in situations such as tax evasion, tax avoidance, lack of adequate records, corruption and mismanagement on the part of the tax officials, inability to identify all taxable persons and lack of effective mechanism in place to prosecute cases of tax evasion. Also records stored in such manual manner are prone to manipulations and are unreliable.
Another major issue is the method of tax collection. The tax officials are often aggressive as they use unfriendly methods in tax collection especially at the local government level. Furthermore, the identification of taxable and legal persons has proven to be a difficult task using the manual systems.
In 2015, Nigeria joined the trend of electronic taxation when Federal Inland Revenue Service (FIRS) in collaboration with Inter-Bank Settlement System (NIBBS) implemented technology in the Nigeria tax system. Electronic tax system was introduced by the Nigeria tax authority to increase financial collection, administration, render services to the tax payers at anytime and from anywhere, reduce costs of compliance and improve tax compliance. However, in spite of the adoption of IT as an institutional measure in the Nigeria tax administration, the problem of poor tax administration persists. In Adamwa State, corporate taxpayers have not fully embraced the use of information technology for tax administration and do not take advantage of the available IT platforms to remit their taxes. This brings about the major concern of the extent of computer literacy of Nigerians.
REFORMS OF THE ELECTRONIC TAXTATION SYSTEM IN NIGERIA
Nigeria is one of the countries with low rate of computer literacy. Technology is a major instrument for economic advancement in the global world and it is no denial that Nigeria is far from the status of a developed economic state. However, Nigeria can still reform its electronic tax system to ensure an effective tax administration by adopting the following;
There should be a massive awareness of electronic taxation system and its importance at the local government level system in indigenous states.
Proper management of the Integrated Tax Administration System (ITAS)
Availability of electronic taxation infrastructure in all states to ensure a proper taxation administration
Proper usage of electronic tax facilities by the tax officials
There should be a close gap of the divide between the tax legislation and its tax payers
The advent of technology in tax administration is the way forward for economic development in a country. Presently, the world has gradually become a global village and the nexus between Nigeria and the rest of the world is the effective use and literacy of technology in every sector of the economy. Thus, in order to improve the efficiency of taxation in Nigeria, there should be a proper structure on the advancement of the electronic taxation system in all indigenous states, towns and cities of Nigeria.
By Mary-Esther Anele
Mary-Esther is a 300 law level student from the University of Lagos and a published writer in various platforms . She has passion for gender equality, Arbitration, Tax, Maritime, human rights and international diplomacy. She has a flair for research and has written research articles for the Tax and Maritime society. She is currently the Vice chair of UNICEF committee for the Lagos Model United Nations 2020 and the Deputy Director of Climate change and Clean Water committee for YSDC 2020.