Executive Chairman of the Anambra State Internal Revenue Service (AIRS) Mr Achike Emejulu recently said only 200,000 people pay tax on the state. For a state with an estimated population of 4 million renowned for commerce and industry, the figure should be much higher. The revenue body has its work cut out. Hence the recent clamp down on corporate bodies that are owing taxes.
Many states in the country are heavily dependent on FAAC allocations composed mainly of crude oil proceeds and VAT collections. A drop in both crude oil prices and the volume of oil produced in the country, led to a drop in FAAC allocations. Many states were left stranded, unable to pay salaries or execute capital projects, resulting in the Federal Government bailing them out. Anambra seems keen on moving away from that.
In order to increase tax revenue, the AIRS has to make the process of paying easier. It can follow the footsteps of the Federal government which has made tax payment electronic and has created a portal in the Corporate Affairs Commission (CAC) website so such payments can be made directly.
The government should also consider waivers for those with large arrears. That will encourage debtors to come forward. Shutting down tax defaulters is an extreme measure that punishes the junior employees who live on daily wages. The harsh economic climate in the country has left many companies struggling to stay afloat. The state can also embark on enlightenment campaigns using popular celebrities on the need to pay taxes.
Above all, the government must be transparent in how it uses revenue from tax. How much was collected as taxes last year and what was the money spent on? People shy away from paying taxes because they believe tax revenues are not well spent.