Following the recent suspension of the proposed cybersecurity levy by theFederal government, the president of Lagos Chamber of Commerce and Industry, LCCI, Gabriel Idahosa has urged caution in the implementation of such levies, emphasising the need for a thorough review of laws to avoid unintended consequences.
Speaking in an interview with ARISE NEWS on Tuesday, Idahosa pointed out that while it is possible that the Central Bank of Nigeria (CBN) conducted a detailed review of the law internally, there remains uncertainty about the extent of the review.
“It is very possible that a very detailed review of the law was not done in-house in CBN. It is possible they did that and are convinced that what they did is right, but they don’t want to react now.
“This is the time to slow down on legitimate additional pressure on Nigerians. Even if the cybersecurity law was legitimate or the way the CBN interpreted it was perfect, the argument is still correct that Nigerians are going through a lot now and perhaps, we should get some breathing space before you bring on more and more”
Idahosa further argued against the trend of introducing levies for various purposes, highlighting the challenges associated with managing public finance in the country.
He emphasised the role of the Federal Inland Revenue Service (FIRS) as the designated body responsible for revenue generation for all government services, calling for a concerted effort to strengthen its capacity.
He also stated that less than 40% of taxable persons are currently taxed in Nigeria, indicating a significant gap in revenue collection.
“The conversations are of two levels. There is a micro level of the cybersecurity act itself, then there is a macro level of how you fund government activities. It is not really possible to begin to raise money for every little thing in government. The whole approach in recent times of trying to draft levy for every little thing is simply not the way to manage public finance in any country. The business of raising revenue for the government is assigned to a specific organisation in government which is the federal inland revenue services in the case of Nigeria. It is the business of the FIRS, mandated to generate revenue for all the services of the government of Nigeria.
“It has been established, during the work of Taiwo Oyedele, tax reforms commission, that the number of levies and taxes that you create does not translate into significant increase in revenue. It doesn’t do so in any country and in any country, the agencies in charge of activities like this, whether it is high level intelligence, cybersecurity, are funded from the budget of the country and the way they are funded usually, is not a matter of public discussion.
“Nobody exposes the way the intelligence agencies of any country are funded. The big issues to address are if the government of Nigeria should encourage various agencies to be coming up with all manner of levies in everything. There must be a concerted effort to improve the capacity of the federal inland revenue service to do the job of revenue collection. As we speak, not up to 40% of taxable persons are taxed. The first thing to do is bring all the taxable people into the net, then tax them efficiently. You don’t even need to raise the tax. There are more than 60% of taxable organisations, corporate bodies that are not paying tax. That is where the conversation should focus on.”
The LCCI president also spoke about the challenges associated with tax collection by the FIRS, highlighting the need to identify tax payers in remote villages in the country and collecting taxes from them.
“The primary challenge is that for many years, thanks to the oil boom, the government did not pay real attention to taxation in the way it is organised, because the first level of taxation is identifying economic actors at all levels, right to the remotest village. That is the first thing. The capacity of the FIRS to reach taxpayers across the country was not built over time. In recent years, with the dwindling of oil revenues, that capacity has increased significantly. The government has invested in expanding the FIRS capacity. You are beginning to see FIRS offices in the urban areas, state capitals. But more than 60% of the businesses are not in the urban areas, nor the state capitals. They are in towns and villages.
“Every country that wants to collect tax, you have to go very granular. Every business that exists in every village must have to pay tax and that is where FIRS is moving now. If we can get at least 80% of every taxable organisation and individuals in Nigeria paying taxes, we would have enough revenues to address what we want to do.”
Chioma Kalu
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