Reps alarmed over $60bn illicit financial flow in Nigeria, Africa 

Ongoing efforts to tackle corruption in Nigeria gained a boost as the House of Representatives passed through Second Reading, a bill which seeks to establish the office of National Inspector General for Tax Crime Commission.

The lawmakers expressed their support for the passage of the proposed private member bill sponsored by Hon Benjamin Kalu and were alarmed at Thabo Mbeki’s report which linked over $40.9 billion illicit financial flow to Nigeria out of an estimated $60 billion illicit financial flow in Africa.

According to Hon Kalu, the thrust of the Bill was to establish a system for the independent oversight of revenue collection authorities in Nigeria with the aim of promoting the economy, efficiency and effectiveness in the administration of revenue laws, increasing revenue generation through plugging leakages, expansion of the tax net, ensuring fair and transparent tax system as well as protecting the rights of the taxpayers.

He added that the bill seeks to address revenue leakages emanating from non-payment and underpayment of taxes, irregularities in the assessment, reporting and remittances of taxes with a view to prevent and combat tax-related crimes.

The bill also seeks to plug all leakages in the tax administration and ensure the protection of taxpayers’ rights and for related matters.

In his lead debate, Hon Kalu explained that the proposed Bill which focuses on the supervision and oversight of an efficient, fair and appropriate tax system, expansion of the tax net, and the protection of taxpayers’ rights, was read the first reading on Thursday, December 20, 2019.

He observed that the “amount of revenue available to any government determines the extent to which such government may be able to provide public goods and services. It is a pointer to how far a nation can ensure its growth and development.

“While taxation is the most important means of generating public revenue, it is worthy of note that nations that strive to develop aim at putting in place a fair, just, efficient and simplified tax administration system which builds confidence amongst the citizens and as well motivate and encourage citizens to pay their taxes.

“Mr Speaker, Honourable Colleagues, while it is one thing to fix the amount of taxes to be paid, it is another for tax collection authorities and assessors to determine the right amount of taxes to be paid in accordance with the provisions of extant tax laws.

“Leakages occur where unscrupulous staff and agents of tax authorities collude with citizens to under assess the tax-payer thereby resulting in underpayment. Leakages also occur in the form of tax evasion, especially such that is encouraged and condoned by the tax collector and more especially among multinational companies operating within the country.

“Leakages also occur where there are non-remittance of collected taxes, that is to say where the government does not have access to the total amount of taxes collected because of revenue diversion by the fraudulent staff of tax authorities. The list is endless.

“On the other hand, some citizens, especially small businesses bear the twin burden of either over assessment or multiple taxations. This stifles the business environment and it does not allow small businesses that are ordinarily the engine of growth to survive.

“While our tax laws are not very friendly to small businesses, small businesses suffer more from the activities of tax collectors. There is a need to put in place an effective system which oversights tax administration in Nigeria, a system which can address taxpayers’ grievances and complaints promptly and without hassles, a system which will be so friendly and that can encourage and make the people willing to pay their taxes.

“To effectively combat as well prevent international tax evasion and other transnational organised crimes and abuses of the nation’s financial system, there is need to establish a Tax Crimes Commission which will have adequate capacity to investigate, prevent and combat tax-related crimes.

“This will definitely contribute to our national security through the prevention of tax-related crimes, prevention of illicit financial flow derived from tax evasion, international tax schemes, cybercrime, etc.

“Mr Speaker, Honourable Colleagues, may I draw your attention to a report of Illicit Financial Flows from Africa, compiled by an AU panel led by former South African President Thabo Mbeki, said Africa loses an estimated $60 billion annually through such transfers. The report which was presented in Addis Ababa in 2015 stirred massive concerns in Nigeria which was said to account for over $40.9 billion or 68 per cent of the total figure.

“The Tax Crimes Commission will not function as a law court, it will not duplicate the functions of the Tax Appeal Tribunals established in accordance with section 59(1) of the Federal Inland Revenue Service (Establishment) Act, 2007 and it will not have quasi-judicial functions.

“The Commission shall primarily focus on the oversight of the tax administration system, ensuring that the tax authorities discharge their duties within the laws, protecting, promoting and guaranteeing tax payers’ rights, where necessary ensuring the prosecution of corrupt and fraudulent tax officials, ensuring the complete remittances of all public revenues, ensuring the increase of public revenue not through increased taxation but through friendly and appropriate taxation, among other things.

“The Commission will ultimately ensure that the five basic qualities of a good tax system, which include fairness, adequacy, simplicity, transparency and administrative ease, are entrenched in the Nigerian tax system,” he stated.

According to him, similar independent tax auditing and investigating organisations exist in other countries. In the United States of America, it is the Treasury Inspector General for Tax Administration (TIGTA); in the United Kingdom, the Tax Ombudsman of the United Kingdom. In Australia, it is the Inspector-General of Taxation (IGT) and the Tax Ombudsman. Similar organisations exist in Ghana, Kenya, South Africa, etc. Importantly, also, the Commission will be reporting to the National Assembly.

He expressed optimism that the passage of this Bill will be of immense benefit to the government and its citizens, as well as the entire nation, will be the better for it.

After the debate, the Deputy Speaker, Hon Idris Wase, referred the bill to the House Committee on Finance for further legislative action. (Nigerian Tribune)