Chetanne Chinelo, Enugu
The Executive Chairman of Enugu State Internal Revenue Service, Mr. Emmanuel Ekene Nnamani has stated that contrary to speculations, the Enugu State government did not increase taxes in the state but simply used a “penetration methodology” to collect taxes in the informal sector.
Nnamani who spoke to Pacesetter during an interview explained that the state government also activated the collection of some taxes which were passed into law by previous administrations of the state but left dormant, stating that it was impossible for the state government to unilaterally increase taxes when most of the payable taxes fell within the exclusive legislative list.
In his words: “We have been able to activate new revenue areas or new revenue lines. For instance, when we came on board, there was no purchase tax in the state. We activated purchase tax and capital gain tax because they were actually provided for in our laws but were never activated all these while, and revenue is coming in from there. We have also tried to expand the net of who pays our PAYE -Pay As You Earn and Withholding taxes.
“The tax did not increase beyond levels and if you watch what is being collected, there is actually less that the state can do in terms of increasing tax. They don’t actually have much of the powers to increase taxes, because the personal income tax is a federal law, and you don’t have unilateral powers to increase it.
“The withholding tax, capital gain tax, stamp duty tax, these are federal laws. What the state has power to do is the Land Use Charge, which the state, instead of increasing it, reduced the rate because we are much more interested in covering a wider net than restricting it to people and asking them to pay unrealistic amounts.
“So, we crashed the rate by less than half to ensure that people actually pay. The only thing in our Land Use Charge is that people who are seen to be the rich, who live in areas that are regarded as high-reserved areas, have to pay exactly what is worth the value of the property because Land Use Charge is calibrated on the value of the property. Like somebody who lives at Abakpa or Emene pays around N38,000 a year as Land Use Charge while someone in 9th Mile pays around N15,000. Can’t you see that it’s actually reduced by more than half? But if you live in Zoo estate and it’s residential, you are going to pay N266,000.
“In the informal sector where you hear all sorts of noise, I think what we did is actually a penetration methodology because we asked the market to pay N21,000 a year and it includes the tax, ESWAMA levy, local government stallage, the business premise. You can imagine that, all of them consolidated to pay N21,000”.
When asked what his office was doing to sensitize the people, especially in the informal sector, since he explained that the issue of tax increment was a mere speculation, he lamented that the average Igbo man finds it difficult to pay taxes.
“I don’t think the challenge is sensitization, it might be part of it, but the challenge is that an average Igbo does not see tax payment as a contribution towards the building of the state. We have had a lot of sentimental analysis about tax. We also had a lot of bad orientation about tax.
“Some people see tax as payment we give to the government official to go and eat. They are not seeing it as their own contribution to grow their economy. If you remember that even in the 60s, in the coming of the whites into Nigeria, when you ask an Igbo man to pay tax, it’s like you are removing blood from his system and that is actually why the first riot we had in Nigeria was in Igbo land, in Aba, because they were asked to pay tax.
“Some will even come here and tell me, why not go to the United Nations and ask them to give us money to develop? Why not go to the World Bank and ask them to give us money to develop? Why not go to the federal government to collect FAAC and develop the state? What they don’t actually understand is that the development of a state is by the citizens or residents of those states.
“What we asked them to pay is N21,000 a year and you have an opportunity to pay monthly, quarterly, half yearly or yearly. I don’t think anywhere in the world where you asked somebody to pay N21,000 for a whole year to include tax and levies, you have killed them”.