A recent study conducted by Stakeholder Democracy Network (SDN), Youth and Environmental Advocacy Center, and another NGO, has shed light on the debilitating effects of multiple taxation on businesses in Rivers State.
At the unveiling of the report at the weekend, Alexander Sewell, Research and Policy Manager for Stakeholder Democracy Network (SDN), said the research, carried out in March 2024, reveals a staggering 75 official charges applicable to businesses, with 17 of these appearing to be multiple taxes.
Sewell explained that the comprehensive study was based on a robust methodology, including a survey of 1,200 business owners, providing a representative sample of the business community.
He said a focus group discussion with tax collection officials and civil society groups, offering insight into the perspectives of key stakeholders, as well as Interviews with several informal business associations, illegal collection agents, and their bosses, exposing the illicit practices perpetuating the multiple taxation menace.
The study’s findings paint a grim picture, with 65% of businesses believing they pay multiple taxes, resulting in financial strain and operational difficulties. The situation is further exacerbated by the aggressive tactics employed by tax collectors, with 57% of businesses reporting personal harm, including one-fifth of reported physical attacks, one-fourth of claimed property seizures, and one-sixth of business shutdowns.
The study revealed that young people and women are disproportionately impacted, showing Two-thirds of businesses in the state report paying multiple taxes, but the burden falls heavier on younger entrepreneurs and female business owners.
The survey shows that businesses run by individuals below 35 years are more likely to be forced into paying multiple taxes (64%) compared to those run by older individuals (55.6%).
Similarly, female-owned businesses are slightly more likely to pay multiple taxes (67%) than male-owned ones (64%).
Sewell noted that more young people spend over 31% of their income on taxes compared to those over 36 years old (16% versus 7% of the sample population).
This means that young entrepreneurs are allocating a significant portion of their hard-earned income towards taxes, leaving limited resources for growth and development.
The study’s findings suggest that multiple taxation is not only a barrier to entrepreneurship but also a regressive policy that disproportionately affects vulnerable groups.
Despite successive federal and state government administrations pledging to address the issue, the study reveals a lack of tangible progress.
Committees established to assess the situation and make recommendations have failed to yield meaningful reforms, while taskforces and consultants have been dissolved for abusing their powers, only to be replaced by new ones with the same problems.
In 2019, the Rivers State Government attempted to digitize the tax system, but a paltry 8% of businesses report using the platform. Meanwhile, the Federal Government established a committee in 2023 to streamline the number of taxes to fewer than 10, but the promised new national tax policy remains elusive.
However, in a bid to alleviate the suffering of businesses and citizens, stakeholders are calling on the Rivers State government to harmonize the state and local government tax collection system.
The move, they said, is expected to streamline the tax process, reduce confusion, and eliminate multiple taxation.
To achieve this study recommends the Harmonization of Tax System, saying the state government should establish a clear, unified tax collection system, communicated effectively through the Rivers Internal Revenue Service (RIRS).
Also, Criminalize Multiple Taxation; it explained that a state law should be enacted to prohibit tax collection outside the harmonized system, with clear prosecuting powers for courts to act.
Establish a Complaints Mechanism, which is a dedicated office and an online portal should be set up for citizens and businesses to report cases of illegal taxation.
The study also recommended an improved digital Tax Payment Platform that will Enhance user-friendliness, develop mobile applications, and increase publicity to boost the uptake of the RIVTAMIS platform.
Register Informal Businesses, Partner with business associations like PILLAR to register informal businesses, expanding the tax net and increasing revenues.
Professionalize Tax Collection End the practice of awarding tax collection contracts as political or financial rewards. Only official government bodies (RIRS or FIRS) should be licensed to collect tax, with trained staff and strict monitoring.