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About 73% of Nigerian adults and nearly 70% of businesses believe that it is not wrong or understandable to evade tax. Watch my @channelsTv interview on #BetterTax advocacy & findings of @officialNESG study on why many Nigerians don't want to pay #tax pwc.smh.re/05lW
Despite the ‘record’ tax collections by FIRS, States IRS, and the Nigeria Customs Service, Nigeria’s Tax to GDP ratio was 6.1% at the end of 2018 - one of the lowest in the world - but that doesn’t tell the full story.
Major reason for low tax compliance is citizens tax morale. A recent ‘Tax Perception Survey’ by NESG shows that tax morale (the willingness to pay tax and the belief that tax evasion is wrong) is very low among Nigerians.
Generally, tax morale is affected by the likelihood of detection and penalties, knowledge and complexity of the system, social services in exchange for taxes paid, social norms, trust and fairness, participation and voice in governance
Majority of Nigerians don’t pay tax and many of those who pay don’t pay the correct amount.
Only 20% (about 14m) of the 70m economically active citizens are registered for personal income tax. Ironically, more people (25% of adults) pay informal or protection taxes to non-state actors than those (about 20%) who pay formal taxes to government.
Factors responsible for the low tax moral include (1) limited knowledge about the tax system (2) little or no consequence for non compliance (3) inefficient, opaque, unprofessional and sometimes corrupt tax collection process
Other reasons for low tax morale is lack of trust in government and tax officials. Two in every 3 adults don’t trust the federal government, and they trust states and LG even less. Worst still is that 3 in every 4 adults don’t trust tax officials
Nigerians feel they get little or nothing in form of social goods and services for the taxes they pay with electricity, security and road maintenance being their top priorities
Interestingly Nigerians are willing to pay their taxes if government will use the money to provide social services for the people
Tax officials say their job is difficult with challenges cited ranging from unclear laws and policies, lack of resources, inadequate training and threats to their personal safety
Recommendations from the study include (1) government to harmonise and simplify tax requirements (2) communicate frequently and more effectively - publish reports, not just seminars in cities ...
... (3) improve tax admin processes using technology and depersonalize compliance (4) improve social services and link to tax.
