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How Government Can Create Efficient Tax Management System

Experts have underscored the need for the tax authority to streamline tax activities, especially the collection process and make it more flexible in order to achieve the objective of taxation.

Besides, they urged tax authorities and taxpayers to adopt the concept of Alternative Dispute Resolution (ADR), where disputes on tax issues can be resolved.

The stakeholders, who gathered at the second symposium of the Issuers and Investors Alternative Dispute Resolution Initiative (IIADRI) held in Lagos recently, maintained that a tax system must be simple and conform to the canons of taxation in order to aid compliance as well as enhance economic growth.

They pointed out that the tax managers have pursued aggressive tax management and enforcement policy over the years, thereby compelling some large corporate entities to move their operations to neighboring countries.

Therefore, they posited that time was ripe for Nigeria to institute a good tax system that would stimulate investment, create wealth, and by implication offers an atmosphere that is business-friendly.

Specifically, the Executive Secretary and Chief Executive Officer (CEO), Financial Reporting Council of Nigeria (FRC), Daniel Asapokhai, stated categorically that a complex tax system increases the cost of administration for government, cost of compliance and encourages tax avoidance for the taxpayers.

Therefore, he urged tax authorities to streamline the tax process to enhance efficiency and ease compliance so as to achieve the main objective of taxation.

“Regulatory authorities charged with the sole responsibility of collecting tax should be strengthened to enforce compliance by taxpayers. Most of all, the tax revenues should also be properly channeled so that economic growth can be harnessed especially in providing basic social amenities as well as infrastructural developments in Nigeria.

“There is a need to rebrand our laws, organs, and image, and this rebranding should start from individual perception and orientation about taxation in particular and morals in general.

“There is need to support this government in the fight against corruption as it has become cancerous that has eaten into all spheres of Nigerian society and if we do not address this menace urgently, Nigeria will continue to descend into the quandary of underdevelopment.”

The Lead, International Tax, and Regulatory Services Deloitte, Asiata Agboluaje, said aggressive tax collection process may generate more revenue in the short run but, however, noted that it may cause long-term damage in businesses.

She said the government could achieve zero tax evasion through simplifying the laws by making it simpler and clear, adding that regular review of tax laws should also be adopted to enhance efficiency.

“As the government seeks to raise revenue principally through taxes, the question as to whether it has built sufficient ‘trust capital’ whereby the taxpayers can see their tax in action becomes relevant.

“Also, the social contract between the government and the taxpayer should be cordial. An unusually aggressive tax collection process may provide more revenue in the short run but may cause long term damage for businesses.”

Also speaking, the Vice-Chairman, ICMR, Chidi Lasbrey, said informal and ADR processes must be deployed by tax administrators in the resolution of tax disputes.

He insisted that FIRS was in dire need of an ADR center managed by properly trained personnel to enhance the cordial relationship between tax administrators and payers.

“By ADR, we are looking at a flexible tax policy that will take into consideration the peculiarities of each sector of the economy and deal with them with understanding for the benefit of all.

“The tax authorities and the Nigerian taxpayers, especially the corporate entities to embrace the concept of alternative dispute resolution to resolve any tax misunderstanding.

“This is because, in Alternative Dispute Resolution, the needs of both parties will be taken into consideration, while the outcome is more likely to suit the needs of everyone involved. This will, therefore, help to preserve the existing cordial relationships between the tax authorities and the Nigerian taxpayers reduce the pressure on our currently overcrowded courts.”


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