With the window of opportunity for taxpayers to regularize their tax status Under VAIDS set to close today, the 31st of March, 2018, there is a need to answer some pertinent questions of the necessity and significance of tax amnesty in a country like Nigeria.
On the 29th of June 2017, the Federal government formally launched the Voluntary Assets and Income Declaration Scheme (VAIDS) to commence on the 1st of July 2017 and last for a period of 9 months. VAIDS is an initiative designed to encourage voluntary disclosure of previously undisclosed assets and income for the purpose of payment of all outstanding tax liabilities without facing punishment for previous default.
The progress of the FIRS and various state IRS in recent years in achieving improved tax compliance gladens the heart. We should however know that Nigeria is a peculiar economy and cannot be compared to some other established tax based economies. Hence, the need to embark on approaches like tax amnesty to achieve greater voluntary compliance. If not amnesty which makes people declare voluntarily, the government doesn’t have the access to necessary information to expose the alarming number of tax defaulters. Even if the government has the access to information needed (let’s assume we have access to everybody’s data), the lack/inadequacy of human and technological resources is another gridlock. Government cannot boast of reliable man power to go after about 50million potential tax payers to see that they duly fulfil their fiscal duty. The better approach rather is to create a personal sense of responsibilty in them through programmes like Amnesty which allows them to declare defaults and regularise their dealings without punishment by the Law.
Another perspective that cannot be ignored is that though it may be totally Unjustifiable, people still have VERY VALID reasons to feel angry to drop their money even though the law mandates it. This is not to say i’m in any way sanctioning tax default but in reality, people have very serious reasons to say; “the government does not deserve my money”. As if the lack of transparency and accountability for the revenues received is not enough reason, the poor state of social amenities provision is bemoaning. Individual citizens practically run a Local government of their own. They provide electricity, security, water for their own self. Some people even have to build their own roads. When the Taxman comes, the question then arises; If these are the things i am paying for, then why pay when i have been providing them for myself.
The situation results into the philosophical dilemma of chicken and egg. While citizens feel the government lacks the moral right to ask them to pay. I mean when you have historically failed on your promise based on which tou get something from me, why should i keep giving you that same thing. The government on the other hand says; that’s why you should pay to allow us have enough money to deliver on our promises.
The middle ground needed to solve this dilemma is what VAIDS has brought. The said tax defaulters even though are not right at law have not been historically treated fairly by the system. Like in the manner of the carrot and stick, there is a necessity for a model where regularisation can be done on a basis of mutual understanding rather than force. The success rate recorded in the past 9 months of VAIDS is a clear testimony.
In conclusion, the VAIDS idea by the Nigerian government is very laudable and worthy of emulation. Countries like Ghana have emulated it using the same 9 months frame work. As the window closes today, there have been calls from various angles for an extension of the deadline. It is my Opinion that government should listen to business owners and tax payers and extend the door of mercy by 3 Months to make the 9 months scheme last a whole year and allow more people regularise their tax affairs. Beyond voluntary compliance, there are other problems we need to address in our tax system like age worn tax legislation, multiplicity of taxes among others etc. We can always do better.