TAXATION IN THE INFORMAL SECTOR IN DELTA STATE INTRODUCTION
This research project was undertaken citizenry, facilitate service delivery by between January and February, 2017 the government, as well as trust by Int'l centre for women between the letter and citizens. It was empowerment and child development. sponsored by OXFAM NOVIB of the (ICWECD) in collaboration with Civil Netherlands, a consortium which seeks Society Legislative Advocacy Centre as an overall objective to end poverty (CSLAC) an Abuja based non- as well as empower people to know governmental and non-prot their rights. organization founded on the vision of a ICWECD in its capacity as a member of The nancing for Nigeria where citizens are participating “Delta State Tax Justice and Development Project has in governance; the government is Governance Platform” had participated as its principal objective to safeguarding the rights and welfare of in the implementation of a project for the people; and non-State actors are Tax Justice Advocacy and Awareness empower Civil Society and providing space for citizens to demand Creation in Delta State. In the non State actors to accountability. Its mission -“to implementation of the project titled undertake a strengthen Civil Society and the undertaken by the platform in 2015 campaign/research and legislature through advocacy and and which was also sponsored by advocacy to promote fair capacity building for Civil Society Oxfam. “In the implementation of the and progressive taxation groups and policy makers on legislative project titled” Awareness Creation and by engaging governments processes and governance issues”. Mobilization of Citizens in Delta State”, at all the levels to the state Tax Justice Platform carried inuence tax policies and The research project was undertaken out advocacy visits to key stakeholders, practices to address unfair under “The Financing for Development held consultative meetings with the tax practices, inequality Project (F4D)”. The nancing for State Board of Internal Revenue (DBIR) Development Project has as its and notable operators of the informal and protect the rights of principal objective to empower Civil sector, as well as organized town hall citizens, especially Society and non State actors to meetings, a colloquium and electronic impoverished informal undertake a campaign/research and and print media campaigns to promote sector players, including advocacy to promote fair and for transparent and progressive women. progressive taxation by engaging taxation as it performs to the informal governments at all the levels to sector. inuence tax policies and practices to address unfair tax practices, inequality The Delta State Tax Justice and and protect the rights of citizens, Governance Platform is led by Barr. especially impoverished informal Bridget Anyafulu the founder of sector players, including women. ICWECD and comprises of Civil Society Organization including faith based and The project also seeks to engender community based groups professional support for taxation from the general groups market women, trade unions
Taxation in the informal sector in Delta State 1 The platform is and the media. the goal is to make taxation an committed to carrying out instrument for the protection and research work, advocacy The platform is committed to carrying empowerment of the poor and engagement, out research work, advocacy marginalized members of the society, sensitization and engagement, sensitization and and thereby a vehicle for sustainable awareness creation activities to development in the state. The focus awareness creation achieve maximum impact on tax and scope of the research work has activities to achieve matters in the State. The creation of already been dened for us. To restate maximum impact on tax the platform was facilitated by CISLAC for the avoidance of any doubt: To matters in the State. in 2015 with the support of OXFAM to conduct a research on the current serve as the vehicle to effectively status of the tax system for the awareness drive creation and informal sector in Delta State with mobilization of citizens in the Delta emphasis on existing policies and State. practices on going reforms and its impacts on poverty and inequality as This research project by ICWECD can well as sustainable livelihoods of small be therefore said to be a follow-up on scale businesses (artisans, traders) etc the 2015 Advocacy and Sensitization and improving the system in terms of Project. But while the Advocacy and drive for revenue, sustainable Sensitization Project was undertaken livelihoods for the tax payers and over in Oshimili South and Warri South all development of the state. Local Government Areas, the research The work comprises of two sections of Project is based on studies carried out three chapters each. The rst chapter in Oshimili South, (Delta North Zone) of the rst section examines the Warri South (Delta South Zone) and concept of taxation, historical including Uvwie (Delta South Zone) Local features of taxation as it pertains to the Government Areas. formal and informal sectors. A history of taxation is also briey The selection of the three local discussed in this chapter. In addition, government areas was necessitated the role and importance of taxation are by the need to widen the scope of the examined in the chapter. The denition coverage, and ensure that the all the of the informal sector viz-a-viz the three geo-political Zones in the Delta formal sector is examined in the second State are covered and represented in chapter. The weight and importance of the research work. taxation in the informal sector viz-a-viz Let it be emphasized that this research the formal sector is also to highlighted. is mainly directed at studying taxation Furthermore, presented and discussed in the informal sector of Delta State in this chapter are the following:- with a view to making it fairer and Ÿ The legally approved taxes in the more transparent; while at the same state. time using it to address poverty, Ÿ Existing tax types and rates. inequality and the enhancement of disadvantaged groups. In a nutshell, Recent reforms on taxation in Delta
Taxation in the informal sector in Delta State 1 State especially as it pertains to the This chapter also examines how recent informal sector. and on-going reform has attempted to address the challenges of taxation in In the last chapter of the rst section, the informal sector. The last chapter of three local government areas, one this section makes recommendations selected from each of the three geo- based on ndings from informal sector political zones of the state are used as tax payers, government officials and case studies to examine our subject i.e. experts on the way forward i.e. how to taxation in the informal sector in Delta achieve effective, fair, and sustainable State. The three local government taxation system in the informal sector areas used for case studies are in Delta State. This chapter also Oshimili South (Delta North Zone), examines the implementation of new Warri South (Delta South Zone), and reforms of the taxation system in Delta Uvwie (Delta Central Zone). The State, specically as it performs to the treatment of the 'three case studies' is informal sector. based on a survey of informal sector operators in the three local METHODOLOGY government areas. The procedures or methods employed The rst chapter of the second section in undertaking this research work are discussed and analysed the impact of essentially four-eld. These are as taxation in the informal sector based follows: on the following parameters: Ÿ Library research Ÿ Business enterprises Ÿ Engagement with Delta State Board Ÿ Poverty and sustainable livelihood of Internal Revenue (DBIR) for tax payers Ÿ Survey Ÿ Tax compliance and sustainability Ÿ Interview with an expert on taxation Ÿ Overall development of the State. and several operators in the informal sector in Delta State. The problems and challenges First, studies were undertaken in the associated with taxation in the library on the concept of taxation informal sector are examined in the history and importance of taxation in second chapter of this section. The Nigeria; the state of taxation in the examination is undertaken from two formal and informal sectors as well as major perspectives. the impacts, the challenges and how to In the rst part of the chapter, the improve the administration and problems and challenges are discussed collection of taxes in the informal from the perspective of the sector. government; while the second part Second, we engaged some officials of discusses the problems and challenges the Delta State Board of Internal from the perspective of the taxpayers Revenue (DRIR), Oshimili South, Warri i.e. the challenges faced by the tax South and Uvwie Local Government payer in the payment of taxes. Areas to discuss taxation, obtain and
Taxation in the informal sector in Delta State 1 examine relevant documents and among the twenty-ve local materials on taxation and especially government areas in the State. taxation in the informal sector as it Some of the questions in the pertains to their respective areas of questionnaire for the survey include:- jurisdiction. Ÿ Do you pay tax(es) Ÿ Are you familiar with the System of Our interest in the engagement was taxation in the Delta State. focused on nding out the following: Ÿ The types and rates of tax(es) you Ÿ The legal and policy frame-works of pay. taxation in the informal sector. Ÿ The impact of taxes on the business Ÿ The legally approved taxes (as operations and lives applicable to their institutions) Ÿ The challenges they face in meeting including enabling law establishing their tax obligations them either by the State government or bye-law in the local (see table ii for the questionnaire). government areas. The survey was directed at a wide- Ÿ Tax types and rates as applicable to range of operators in the informal their institutions. sectors. These include: Ÿ Other levies, rates and charges paid Ÿ General traders by the informal sector Ÿ Artisans Ÿ The types of taxes, levies and rates Ÿ Transporters and providers of other collected illegally from informal services such as food/canteen/bars, sector players in Delta State. dry-cleaning, barbing, hair dressing Ÿ Recent reforms on taxation, etc. operators, twenty-ve. especially taxation in the informal In all, a total of seventy-ve in each of sector in Delta State. the three local government areas were surveyed. Third, we conducted a survey of Lastly, we interviewed a lecturer in the informal sector operators in three local Department of Management Sciences government areas of the state; one at the Anwai Campus of the Delta State each from the three geo-political zones University, Abraka (DELSU). who is an of the state. The selection of the three expert on taxation on the theme of the local government areas for the survey research project? Some of the was made to enable as have a state- questions addressed by the expert are: wide perspective of the problem. Ÿ It should also be noted that Oshimili The challenges of tax administration South and Warrri South where Asaba and collection in the informal sector the State Capital and Warri the in Delta State. economic power house of the state are Ÿ The implication of the recession on located are the highest of tax revenue
Taxation in the informal sector in Delta State 1 taxation in the informal sector in the State. Ÿ The impact of informal sector taxation in its prevailing system on entrepreneurship and over all development of the State. Ÿ The measures that are needed to improve the administration of taxes and increase tax compliance in the informal sector. (SEE TABLE III FOR QUESTIONS FOR THE EXPERT) It should be pointed out that the lecturer we interviewed at Anwai Campus requested that his name should not be disclosed.
Taxation in the informal sector in Delta State 1 TAXATION IN NIGERIA: AN OVERVIEW
At a time Nigeria is grappling with the imposition of which involved a direct vicissitudes of a mono-culture form of taxation was levied and economy the harshness and collected at the local level through unsalutary effects blatantly well traditional rulers. Building on the evident, in the better part of the past Colonial legacy, in the years, following two years, result sharp fall in the its independence, a veritable Nigerian global oil price, the mainstay of the tax system can be said to have evolved. It is therefore not nation economy, the topicality of the The Nigerian tax system, according to surprising that taxation subject (taxation) and the need to experts consists of three basic has began to acquire revisit, mobilize, harness and fashion it elements namely: new relevance and towards the sustenance and economic Ÿ Tax Policies Ÿ importance in the development of the country can hardly Tax Statutes be over-emphasized. Ÿ Tax Administration priorities of How functional, how efficient, how governments Federal, It is therefore not surprising that transparent is all together a different taxation has began to acquire new matter. relevance and importance in the priorities of governments Federal, Tax policies are overall plan or State and Local Councils in the recent measures the government wants to past. As it is generally seen, tax justice take over a dened period regarding campaign spearheaded by CISLAC and taxation. It is formulated by the OXFAM in Nigeria which is directed executive branch of government but towards the improvement of tax has to be vetted and approved by the policies and practices so as to make legislature to become law (statutes) them (the tax policies and practices) and thereby binding on it citizens. The 'fair, just, transparent, facilitate service legislation (i.e. the tax legislation) which delivery address poverty and derives from tax policies is the Tax policies are overall inequality, as well as enhance the instrument that enables the legal plan or measures the rights of disadvantaged groups' is not imposition of various types of taxes government wants to only a step in the right direction, it will approved by them on the citizenry. take over a dened go a long way to in helping to address period regarding the prevailing economic crisis in the In effect, liability for tax in Nigeria arises taxation. country. from the taxing statutes or Acts according to their true meaning and not In Nigeria, taxation in its modern Form from any extraneous principles. As is a creation of British Colonial rule. As examples some of the main tax statues an important nancial basis of the or Acts currently in force in Nigeria British System of indirect rule include: (Phillipson 1946) income tax the Ÿ Personal Income Tax Act (PITA) No.
Taxation in the informal sector in Delta State 1 104, 1993. It repeals the Income Federal Taxes in Nigeria. Among Tax Management Act 1961 and the several others, these include Income Tax Armed Forces and other Companies Income Tax, Petroleum persons (Special Provisions) Act No. Prots Tax and Capital Gains Tax. 51, 1972. Ÿ Each State has its own Tax Ÿ Companies Income Tax Act (CITA) Authority. The Board of Internal CAP 60 LFN 1990. Revenue in each State is the Tax Ÿ Petroleum Prots Tax Act (PPTA) Authority of the State. It is CAP 354 LFN 1990. responsible for the administration Ÿ Capital Gains Tax Act (CGTA) CAP 42 and collection of State taxes which LFN 1990. include Personal Income Tax and Capital Gains Tax (for individuals) Industrial Development Income Tax among many others. Many experts believe Relief Act (IDA) CAP 179 LFN 1990. Ÿ The local Government Revenue that this on and off, and Ÿ Value Added Tax Act Committee is the Tax Authority in haphazard interest of Ÿ (VATA) No. 102,1993. each Local Government Council. The Ÿ Education Tax Act (ETA) No. 7 1993. Committee is responsible for the the government Ÿ Stamp Duties Act (SDA) CAP 411 administration and collection of towards taxation largely LFN 1990. taxes or levies for shops and kiosks, explains the personnel Tax Administration, the third tenement rates, slaughter slab fees, weaknesses, disorder, component of the trio (Tax Policies, market/motor park fees e.t.c. and disorganization Statutes and Administration) that make that characterizes the up the tax system is undertaken by Over the years since independence, each of the three tiers of government – governments in Nigeria have nation's tax system and Federal, State and Local Governments formulated and adopted tax policies in consequence the respectively. Each of the tiers of and legislations. The importance and poor returns i.e. lean government has its own tax authority level of priority attached to taxation by revenue realized from that undertakes the function of governments tended to depend on the taxation. managing tax matters (i.e. economic health and viability of the administration of taxes) on its behalf. nation at the given time. In general, The tax authorities at all the three tiers during times of prosperity, of government, it is necessary to point governments have tended to neglect, out, derive their existence from Federal ignore or overlook taxation. On the Laws. Each of the three tax authorities other-hand, they have emphasized and in Nigeria has roles which are shall now attached more importance to taxation proceed to discusses. during lean periods (i.e. times of economic crisis). TAX AUTHORITIES IN NIGERIA Ÿ Federal Tax Authority known by the Many experts believe that this on and name Federal Board of Inland off, and haphazard interest of the Revenue is responsible for the government towards taxation largely administration and collection of all explains the personnel weaknesses, disorder, and disorganization that
Taxation in the informal sector in Delta State 1 characterizes the nation's tax system Fact is that it has not always been very and in consequence the poor returns easy to dene taxation even by experts. i.e. lean revenue realized from taxation. It will help however to examine some of All available studies and evidenced, the notions of taxation as dened by have in fact shown that Nigeria is not some experts in the recent past. fully utilizing her taxable capacity. Tax, according to Dandago and Alabede, At the present time, when there is a is a compulsory contribution made by At the present time, renewed effort to diversify the individuals and organizations towards when there is a economy and broaden the resource defraying government expenditure renewed effort to base and the country's sources of (Dandago and Alabede 2000). diversify the economy revenue in order to be able to Oweisana goes further to provide a and broaden the adequately address our growing little more comprehensive denition of challenges of development which the term. He denes tax as a levy resource base and the includes rising unemployment, imposed by the government on the country's sources of endemic poverty and inequality, dearth incomes, prot and wealth of revenue in order to be of infrastructures, ination etc, it has individuals, partnerships and business able to adequately thus become imperative to take organizations to raise money to nance address our growing necessary steps to develop a functional public expenditure (Oweisana 2009). system of taxation in the country. The denition provided by Black's Law challenges of Before proceeding further it is however Dictionary goes even further. The development which pertinent to dene and understand dictionary denes tax as “a pecuniary includes rising taxation. burden laid upon individuals or property unemployment, owners to support the government or a endemic poverty and THE CONCEPT AND PRINCIPLES OF payment exacted by legislative inequality, dearth of TAXATION authority. Some informal sector operators in infrastructures, ination response to the questionnaire for the Tax the dictionary further State is “not a etc, it has thus become survey conducted for this work listed voluntary payment or donation but an imperative to take “Police” electricity and water among enforced contribution exacted pursuant necessary steps to the types of taxes they pay. to legislative authority” that includes develop a functional None of these can actually correctly be “any tillage, gabelle, impost, duty, regarded as tax. But it goes to show custom excise, subsidy and supply or system of taxation in the erroneous view that many people other name” (Black's Law Dictionary, the country. have of taxation which in the past 1979). explains the problem of tax collection compliance and enforcement in the The above denition however does not country. satisfy economists who have a different denition of taxation. Unlike the It is therefore important that we should denition of Black's Law Dictionary, dene taxation properly in order to economists do not consider many have a clean perspective and a good transfers to governments to be taxes. understanding of means what is tax?
Taxation in the informal sector in Delta State 1 They regard some transfer to the government. Among other purposes, public sector (government) as the tax revenue (i.e. revenue generated equivalent of prices and not as taxes. from taxation) are used by government These for example include tuition at to provide essential economic and Perhaps the most Public Universities and fees charged by social amenities such as schools, roads, apparent and popularly utilities provided by governments. water medical services and other acknowledged role is In the same vein, resources obtained infrastructures as well as security that taxation provides by through voluntary gifts like services. contributions made to Public substantial revenue to Universities and Museums; imposition As one of its vital functions, taxation is the government. of penalties (traffic nes) borrowing also used as an agent of wealth and conscation of wealth are not distribution in the society. In this considered by economists as tax. In a respect, one of the fundamental nutshell, tax according to economists, principles of taxation (i.e. equity) is that is a non-penal yet compulsory transfer tax charged should as much as possible of resources from private to the public be proportionate to the tax payer's sector on a basis of pre-determined ability to pay. The result of this, is that criteria and without reference to the rich pay more and in so doing specic benets received (Wikipedia, contributes more towards the provision 2011). of socio-economic amenities funded by tax revenue. There is thus less In effect, whereas the payment made inequality in the society because more for utilities such as electricity and money is taken from the rich and used water will not qualify for tax in the to provide some vital socio-economic In a nutshell, tax denition of the economists, they services including education health and according to (charges) for utilities i.e. electricity and security services that the poor economists, is a non- water) are well captured as tax in the ordinarily would not have been able to denition provided by Black's Law penal yet compulsory afford. Dictionary. transfer of resources In addition taxation helps in the from private to the THE ROLE AND IMPORTANCE OF management of economy. As we have public sector on a basis TAXATION just seen, taxation plays a strong role in of pre-determined Unlike the denition of taxation, there the distribution of wealth. It is also a criteria and without is hardly any disagreement among powerful tool for encouraging savings scholars and experts about the role and investment as well as curbing reference to specic and importance of taxation. On the social ills. It is important to point out at benets received contrary, experts are unanimous that this stage that the general, the (Wikipedia, 2011). taxation is a vital tool of socio- economy of a Nation or State comprises economic development. Perhaps the of the formal and the informal sectors. most apparent and popularly It should also be noted that the acknowledged role is that taxation administration and collection of taxes in provides substantial revenue to the the two sub-economics (i.e. the formal and informal sectors) are varied and
Taxation in the informal sector in Delta State 1 challenging in different ways. In the next chapter we shall be examining in details taxation as it pertains to the informal sector in Delta State which is also the theme of this research project. This is to say that we have made an entrance into the heart of our subject-matter.
Taxation in the informal sector in Delta State 1 TAXATION IN THE INFORMAL SECTOR IN DELTA STATE
As example recent As one of its man functions, taxation 2012 but generates about 20% or less studies carried out as we have already seen, contributes of the total amount of money realized across the country has substantial revenue to the from taxation. In Delta State, according government. This is however truer for to a recent official report, the informal shown that the amount the advanced nations of North America Sector Constitutes about 40 percent of of tax revenue and Western Europe where tax the State economy and contributes generated from the compliance level by citizens is very about 15 percent of the total tax informal sector of the high. revenue of the State; while the Formal economy is far less Sector on the other hand, represents In general, taxation in Delta State and about 60 percent of the State economy disproportionate to the indeed Nigeria as whole is bedeviled and contributes over 80 percent of tax weight of economic with a lot of difficulties. These include: revenue generated in the State. It is activities carried out in maladministration, corruption weak therefore not surprising that the Delta the sector. enforcement, poor, cruel and inhuman State Government like its counterparts methods employed against tax payers across the country now place increased by collectors, high level of tax evasion emphasis on the informal sector of the and avoidance etc. The result is that economy in its effort to reform the revenue generated from taxes falls far taxation system. short of the potentials. While this is so for taxation both in the formal and Speaking recently at a colloquium held informal sectors of the economy, the in Asaba to discuss the problems of situation with the informal Sector is far taxation in Delta State, Sir Monday more problematic and disappointing Onyeme the current chairman Delta and now the source of growing State Board of Internal Revenue (DBIR) concern among policy-makers, stressed the need for Deltans especially It is therefore not scholars and observers. those in the informal sector to pay their surprising that the Delta taxes so that the State can have the As example recent studies carried out required resources for accelerated State Government like across the country has shown that the development. The DBIR chairman said its counterparts across amount of tax revenue generated from the payment of taxes has become even the country now place the informal sector of the economy is more crucial and pronounced in the face increased emphasis on far less disproportionate to the weight of the deteriorating economic fortunes the informal sector of of economic activities carried out in the of the country created by the dwindling sector. revenue from oil. the economy in its effort to reform the taxation It is reported that the sector (i.e. THE INFORMAL SECTOR OF THE system. Informal Sector) constitutes about 58% of the GDP in Nigeria after the ECONOMY rebasing in 2014, up from 35% as at Before going further in this discussion, it
Taxation in the informal sector in Delta State 1 is perhaps pertinent at this point to handicraft. The Informal Sector in Delta dene what we mean by “Informal State has been growing at a rapid rate Sector of the Economy”. This is in the recent past. And it is projected necessary for a good understanding of that the sector will grow even faster in The widespread poverty the subject-matter of this research the State in the near future. and joblessness, the work. increasing rarity of Public What do we mean by “Informal Sector? The widespread poverty and Sector jobs; lack of It will be difficult to understand the joblessness, the increasing rarity of formalities and ease of term – 'Informal Sector' without an Public Sector jobs; lack of formalities entry into the sector understanding of its opposite i.e. the and ease of entry into the sector deindustrialization shrinking number of d e i n d u st r i a l i z at i o n 'Formal Sector' since both of them represent difficult sides of a com. In medium and large scale enterprises shrinking number of other words, they represent different (both foreign and indigenous). medium and large scale sides of an economy. In consequence of its general features enterprises (both foreign and modus Operandi (i.e. often no and indigenous). With this in mind, the Formal Sector business name, no xed address, no which is also known as the official or regular pattern of work, no records of visible economy is made up of a range transaction), the collection and of entities that includes government, administration of taxation in the its departments and associated Informal Sector is in the main agencies as well as big private (foreign disorderly and dysfunctional and indigenous) businesses. characterized by poor returns (i.e. revenue), arbitrary cruel and inhuman They are ineffect officially known and collection method. captured economic activities in the State. On the other hand, the Informal For instance while some operators in Sector, known also as underground the sector are subjected to multiple The widespread poverty economy, refers to low level economic taxation, many of the operators are not and joblessness, the activities which are usually outside captured in the tax act; furthermore tax avoidance and evasion are high among increasing rarity of Public official purview. Informal Sector operators the sector. Sector jobs; lack of operators are generally not registered; usually without meaningful structures; formalities and ease of without registration or even business The massive arbitrariness, impurity, entry into the sector names; and in many cases usually abuses and general disorder which is d e i n d u st r i a l i z at i o n without records of transactions and usually the hallmark of the shrinking number of regular pattern of operation in terms of administration and collection of taxes in the Informal Sector have thrived not medium and large scale working period (hours of work) regular business premises i.e. business in the least it seems because of the enterprises (both foreign address. high level of ignorance and lack of and indigenous). awareness among the operators in the They include cottage industries, petty sector regarding then tax obligations trade and services as well as (i.e. the tax types and rates to which they are eligible to pay), their
Taxation in the informal sector in Delta State 1 unfamiliarity with State tax procedure Personal Income Tax using the including how and where to pay following is determined. the using the tax(es). formular:
It is rather perplexing level that such a Ÿ Those whose earn income of high of ignorance and unfamiliarity N200,000 and above but less than with the State tax procedures exist N300,000 are exempted from tax. Types and rates of the whereas there are appropriate statutes One percent of income is paid as tax existing taxes in Delta and bye laws on taxation for the State for income of N300,000 per annum State applicable to the and some of the local government areas respectively. Types and rates of and below. formal and informal the existing taxes in Delta State sectors are contained in applicable to the formal and informal Ÿ 7 percent of income is paid as tax for Act, CAP, 12 LFN, 2004. sectors are contained in Act, CAP, 12 the rst N300,000 earned. LFN, 2004. They are listed (without any classication to indicate the taxes that Ÿ 11 percent of income is paid as tax apply exclusively to the formal sector; for the second N300,000 earned. those that apply exclusively to the informal sector, and those that apply Ÿ 15 percent of income is paid as tax conjointly to the formal and informal for the next N500,000 earned. sectors. Ÿ 19 percent of income is paid as tax The taxes as contained in the Act are for the next N500,000 earned . as follows: 1. Personal Income Tax: This is a tax Ÿ 21 percent of income is paid as tax on income i.e. personal income of the for the next N16m income earned. y, it is based on self – individual and it applies to people who are on payroll notably public servants Ÿ 24 percent of income is paid as tax assessment. Usually at and other big establishments including or all income above N3.2million. the beginning of every companies. The tax paid is determined year they are required to on the basis of the principle of Pay As 2. Withholding Tax: This applies to declare their assets and You Earn (PAYE). individual professionals. They include indicate their income. audit fees (auditors) legal fees (lawyers) In the case of private sector people consultancy fees (consultants) etc. 10 who fall under this category, it is based on self – assessment. Usually at the percent of the fee is paid as tax after beginning of every year they are deducting all expenses. required to declare their assets and indicate their income. The income is 3. Stamp Duties: This applies to derived from sales or the sum total of properties of individuals. 5 percent of their earnings as the case maybe the transaction is paid as tax after minus all expenses (.i.e. costs) incurred deducting all expenses.
Taxation in the informal sector in Delta State 1 4. Road Taxes: This applies to motor 11. Market Taxes And Levies: The licenses, drivers' license, road amount paid in respect of the above is worthiness for vehicles etc. the rates usually also xed by the government. are usually xed by the government. Of the eleven types of tax listed, about ve are applicable to the informal 5. Capital Gains Tax: This applies to sector operators. They include road disposed xed assets such as land and taxes, tax for registration of business vehicles. 10 percent is paid as tax after premises, development levy, right of deducting allowable expenses. occupancy fees of State Government owned land as well as market taxes 6. Pool Betting And Lotteries, Gaming and levies. Machine: This applies to the activities mentioned above. The rates are usually SEE TABLE VI AND VII xed by the government. The tables show the tax types, rates It is appointing the 7. Registration of Business Premises: and base for State and local picture for LGAs. It is This applies to fees in respect of government. We have used Warri South difficult to verify the business premises registration. In the as example for LGAs. Among the types legality of the taxes, paid case of urban areas (as dened by each of taxes administered by local State) a maximum of N10,000 is paid by informal sector government council where a large for registration and N5,000 per annum majority of the economic activities are operators because in the for renewal of registration. In the case carried out informally are shop and large majority of the of rival areas the sum of N2,000 is paid kiosk fees. Motor park charges, building case they (the operators) for registration and N1,000 per annum permit, right of occupancy could not name exactly for renewal of registration. advertisement and boarding, dry the types of taxes they cleaning and laundry fees, commercial 8. Development Levy: This applies to vehicle operational/sticker fee, market pay. all taxable individuals. The sum of not stallage fee, liquor license fees, and more than N1,000 per annum is paid butcher's fee/animal rate etc as tax. SEE TABLE VIII 9. Registration Fees For Naming Streets: This applies only to the State The types administered by Warri South Capital. The amount paid is usually LGA as contained in Warri South Local xed by each individual State Government Council Miscellaneous government. revenue bye-law 2016. It is appointing the picture for LGAs. It is difficult to 10. Right of Occupancy Fees on State verify the legality of the taxes, paid by Government Owned Land: This applies informal sector operators because in mainly in the urban areas of the State. the large majority of the case they (the The amount paid is usually xed by operators) could not name exactly the individual State government. types of taxes they pay. Many of the operators described the taxes they pay
Taxation in the informal sector in Delta State 1 so vaguely in a way that made it objective of the exercise is the difficult to recoginse the tax(es); while harmonization to taxes to lighten the many others described the taxes by burden for those subjected to multiple reference to the name of the offices or taxation, a hopeful sign that the the officials they paid to. In both cases ongoing reform will produce a the response of the operators did not meaningful result is that the local correspond to the official names of the government councils are involved in the taxes as contained in the appropriate process. The informal sector in Delta statutes and bye laws. State has been growing at a rapid rate in the recent past. And it is projected A close look at the tax types contained that the sector will grow even faster in in the relevant State law and the bye the State in the near further. law of Warri South LGA government area which largely reects the situation The widespread poverty and of the rest of the LGAs, bears out the joblessness, the increasing Varity of complaints of majority of the informal public sector jobs, lack of formalities Indeed early in the life of sector operators that they are and ease of entry into the sector, subjected to multiple taxation. deindustrialization and shrinking this administration, the number of medium and large scale Governor Senator Dr. For example: both the State law and enterprises (both foreign and Ifeanyi Arthur Okowa Warri South, bye law have provisions indigenous) occasioned by insecurity has indicated that tax for road taxes, market taxes and levies and inhospitable business environment. reform will feature as right of occupancy and several The which i.e. determine investment taxes/levies related to business one of his governments and development new emphasis by ownership, government owned land recent governments in the State for top policy priorities. and registration of business premises. private sector driven development In the circumstances, many experts expressed variously in the form of strongly believe that the government growing investment towards the must brace up and take urgent steps to development of micro enterprises, skill put in place appropriate machineries acquisition, entrepreneurship and and system for tax collection and vocational education are all pointers to administration in the informal sector the anticipated of the informal sector. that all be fair, transparent humane and efficient. A hopeful tax payers sign that the on- going reform will produce a meaningful Indeed early in the life of this result is that the local governments administration, the Governor Senator councils are involved in the process Dr. Dr. Ifeanyi Arthur Okowa has indicated Emmanuel Eweta Uduaghan had also that tax reform will feature as one of carried out reform of the State taxation his governments top policy priorities. system during his tenure with some The process of reforming the taxation impressive good result although it is system of the State has since apparent that much more still needs to commenced. It is currently one of the be done. The reform which was
Taxation in the informal sector in Delta State 1 In the aftermath of the commenced with the appointment of In the next chapter subject “Taxation in reform, the tax revenue Hon. Joel Onowakpo Thomas the informal sector in Delta State” shall Ewomazino as the Executive be examine the light of the experience generated from Delta Chairman, Delta State Board of Internal of the operators (i.e. informal sector State increased Revenue in 2009 was largely focused operators) in Oshimili South, Warri Soul astronomically from on issue of infrastructure and and Uvwie local government council. less than N1billion to institutional development. about N4.5billion monthly during a Specically the reforms ranged from training and retraining of work force, greater Hon. Joel improvement of staff welfare and Onowakpo's tenure in extensive infrastructural development. office which ended in Among the infrastructures provided 2015. are 6 – storey Ultra-modern office for DBIR, Headquarters in Warri and the Headquarters annex in Asaba; ve regional offices in Asaba, Warri, Agbor, Oleh and Ughelli and ten zonal offices in Sapele, Effurun, Burutu Ozoro, Ogwashi-Uku, Issele-Uku, Patani, Ogbe-Ijoh, Ovwian and Ashaka, as well as data recovering centre in koko and the installation of up to data ICT equipment in the offices.
In the aftermath of the reform, the tax revenue generated from Delta State increased astronomically from less than N1billion to about N4.5billion monthly during a greater Hon. Joel Onowakpo's tenure in office which ended in 2015.
The current effort by Dr. Okowa's administration to reform the tax system is still ongoing and we have scanty information about the exercise. However,. The expectation of Deltans is that it will be a far – reaching and comprehensive exercise that addresses all aspects of the deciencies of the State tax system.
Taxation in the informal sector in Delta State 1 TAXATION IN THE INFORMAL SECTOR IN DELTA STATE: IMPACT
It is projected, as we have already seen struggling under the crushing weight of in a previous chapter, that the informal over-taxation that comes in the form of sector in Delta State will grow faster in multiple taxes and sundry levies the the years ahead. It is however unlikely legality of which cannot be ascertained that the potential of the sector vigor in some of the cases. and capacity to impact meaningfully and positively on the socio-economic They complain that the burden of tax is It is however unlikely life of the State can be attained if the heavy and detrimental to the survival, that the potential of the taxation system in the sector remains development and sustainability of their sector vigor and capacity as it is now unorganized arbitrary and business enterprises. to impact meaningfully taxes collected with reckless impunity and positively on the and high handed method without Our survey of the informal sector regard to system – the administration operators this position is most socio-economic life of and collection of taxes in the informal prominent among the operators in the State can be attained sector according to experts will Oshimili South. According to the survey, if the taxation system in virtually make or mar the sector. sixteen out of the twenty ve the sector remains as it Indeed, it is already doing a great harm respondents in Oshimili South said the is now unorganized to the sector as we shall see shortly. impact of taxation on their business arbitrary and taxes activities is negative and destructive. It is pertinent to restate that this collected with reckless chapter we shall be examining the Some of the respondents in this impunity and high impact of taxation in the informal category said the impact is such that handed method without sector from four perspectives as sometimes after paying tax which they regard to system – the instead below: must do whenever the collector calls administration and Ÿ Business enterprises for fear of being beaten or losing their Ÿ Poverty and sustainable livelihood goods, they start looking for money to collection of taxes in the for informal sector operators borrow and go back to the market. informal sector Ÿ Tax compliance and sustainability On the other hand, three of the according to experts will Ÿ Over all compliance and respondents said taxation has not virtually make or mar sustainability affected their business enterprises the sector. Ÿ Over all development of the State negatively. They believe that the taxes Let us consider then on after the they pay is alright and is not other detrimental to their businesses. It is worth noting that six of the twenty ve BUSINESS ENTERPRISES: respondents in Oshimili South who by It is somehow paradoxical that while their own admission do not pay tax experts are predicting a bumper future understandably did not consider (rapid growth) for the informal sector taxation to be detrimental to their are reaching and gasping for breath, business organizations.
Taxation in the informal sector in Delta State 1 In Warri South, the gap between the areas notwithstanding, the survey informal sector operators who believe considered together clearly shows that that taxation has a negative impact on taxation negatively affects informal their enterprises and those who sector operators and represents a believe otherwise is much closer. It is serious threat to the survival, liability infact a difference of one only person. and growth of then businesses. The current economic recession will not According to the survey, thirteen of the make the situation better. As many of twenty ve respondents in Warri South the respondents indicated, it is said taxation undermines the growth worsening. of their enterprises money that should have been used to develop the POVERTY AND SUSTAINABLE According to the survey, enterprises, while the remaining twelve LIVELIHOOD thirteen of the twenty respondents said it (taxation) does not In what is perhaps the most succinct have adverse effect on their expression of the impact of taxation on ve respondents in businesses. the operators of the informal sector Warri South said one the operators in Oshimili South taxation undermines The survey in Uvwie, presents a said because the income realized from the growth of their different picture on the impact of his business fees not justify the enterprises money that taxation on business enterprises in the amount of tax demanded from him, he informal sector sixteen of the twenty sometimes has to go without food and should have been used ve operators surveyed, said taxation pay the tax in order to save himself to develop the has no impact on the enterprises; ve from the harassment of the collectors enterprises, while the did not answer the question, and one and the disruption of his business. remaining twelve said 'Don't know'. Only three of the respondents said it operators surveyed described the In another pathetic case a woman who (taxation) does not have impact of taxation on the business refused to participate in the survey enterprises as negative. claiming that he has bee involved in adverse effect on their several similar exercises to no avail businesses. At a closer look, however, the send sometimes she buys garri for sale difference may not be as signicant as with the prospect of making some it seems. This is because only ve prot but ends up Incurring heavy among the sixteen respondents who losses because of the taxes and levies said taxation has no impact on their she is compelled to pay within a few businesses pay tax. The remaining days that it takes to sell the garri. eleven of them by them own admission in the survey do not pay tax. Furthermore, two of the operators In the same vein, one of the ve surveyed confessed that in past three respondents who did not answer the years have been they eagerly looking question is a none taxpaying informal for paid employment in order to sector operator. The differences over jettasson the business enterprises said. the impact of taxation on businesses The two operators said they are still between these three local government paid shop because put to be seen to be
Taxation in the informal sector in Delta State 1 doing something. According to them society. they pay a lot of taxes for a business that is bringing little income. It is clear TAX COMPLIANCE AND from the above narratives that the SUSTAINABILITY present tax system is further Several recent studies have shown that impoverishing many of the operators the present system of taxation as it of the informal sector. The Informal applies to the informal sector sector operators, in large number of encourages tax evasion and tax cases are poor. avoidance. Tax evasion i.e. the dishonest declarations to tax Their economic enterprises are usually authorities to reduce the amount of tax their economic activities usually one should pay and tax avoidance i.e. involve low capital with low out put the refusal to pay tax at all cause and at and prot. They are mainly survival this lend to be same time aggravate driven. In effect unbridled and and perspective low tax availability in a excessive taxation can easily push society where there is low normality them out of the market and aggravate about i.e. tax and unwillingness to pay the poverty of the operators. tax where a large number of operators are not captured in the tax net. This is Furthermore, to the extent that the because many operators tend to operators taxation denies the informal imitate the evaders and avoiders taking sector operator. In addition, the court their immoral behaviours as the norm present system of taxation in the rather than a vice. informal sector which is characterized by multiple taxation, disorderliness, The excessive weight of tax, high handedness in general, arbutriness, unfairness and lack of discourages entrepreneurship as many transparency of the present system of potential entrepreneur who want to taxation are also known to discourage operate them own enterprises in the of the operators do not feel any need to informal sector can be disaggrate by for compliance so as a revolt. what they see happening to operators In revolt against the injustice of the in the system. system many operators do not feel any need to comply and fulll their tax This will only go further to undermine obligations. the economy and exacerbates poverty in the system the money that should OVERALL DEVELOPMENT OF THE have been ploughed back to develop STATE and expand their business enterprises Well employed and administered and thereby re-invigorating in taxation as we have seen in chapter 1 economy by creating more job can be a powerful tool of development. opportunities tax, and wealth in the In this wise taxation can provide society, it (taxation) serves to revenue for the development of the aggravate poverty and penury in the State in terms of socio-economic
Taxation in the informal sector in Delta State 1 Taxation in the informal amenities and infrastructures. It can be sector in Delta State to used to combat poverty and inequality in the society. It can also serve as an some extent. It is incentive for savings, investment and however failing in its job creation. present form in Delta State of helping to Taxation in the informal sector in Delta combat poverty and State to some extent. It is however inequality as well as failing in its present form in Delta State of helping to combat poverty and serving as an incentive inequality as well as serving as an for savings investment incentive for savings investment and and job creation. job creation. Excessive tax burden arising from multiple taxation as testied by some of the operators undermines the viability of their business enterprises and aggravates poverty of the operators it is of course virtually impossible to save under this situation.
On the other hand, by denying the informal sector operators the nd they need to invest for the growth of their enterprises, it (taxation) becomes a disincentive to investment wealth and job creation in the society.
Taxation in the informal sector in Delta State 1 TAXATION IN THE INFORMAL SECTOR IN DELTA STATE: CHALLENGES
In general, taxation has never been of taxes in post-independent Nigeria is popular in Nigeria. It is a civic obligation believed by many observers to be a that a great many Nigerians (the high bye-product of the anti-tax attitude of and the low alike) over the years have the Colonial era. found and continue to nd difficult to willingly fulll. Many have traced this This is especially so among Nigerians general hostility and disregard if not who see post-independent Nigeria as a disdain shown by Nigerians towards ineo-colonial set up, with Nigerian taxation to colonialism. leaders as front men or ag Taxation in some forms independence as it is also known) was part of pre-colonial Taxation in some forms was part of state; and the immediate post life in Nigeria. But in its pre-colonial life in Nigeria. But in its independent era did not in any modern sense and modern sense and nature, signicant way charge this negative nature, (characteristic) it (characteristic) it came with British disposition of the average Nigerian Colonial rule. While it played its towards taxation. In the rst place, all came with British customary role as source of revenue over Africa the ex-nationalists the Colonial rule. While it for the maintenance of government came to power at independence had played its customary and the provision of socio-economic campaigned on the premises that black role as source of services to the local population it was, power will bring not just dignity and revenue for the seen by the generality of the people as honour but also good life to the a symbol of their subjugation, maintenance of people. domination, oppression and government and the exploitation by the colonial master. In Their popular refrain – the motherland provision of socio- other words, it was regard as a tribute valuable resources which the man was economic services to the to a foreign power imposed to mercilessly white for his own benet local population humiliate, dengrade and degrade the taxation was perhaps not an idea of Colonial subjects. the good life preached by the nationalist leader and it did not feature The dictate taxation according to this as a policy priority in their tune in mistakes of Nigerian for as a matter of office. But that era was also the he facts this viewpoint stems from there days of the providential state (i.e. the were indeed several recorded cases of State as father's Christmas) that hold in violent resistance and uprisings the aftermath of the post-second against taxation in the colonial era. world war prosperity. These include notably the roots in Aba (South West of Nigeria) in the South That period for Nigeria leaders and the East of Nigeria as well as Iseigin and generality of its people was a time to Abcokuta in the South West of Nigeria. paraphrase the famous words of The large scale evasion and avoidance president John F Kennedy it was a time
Taxation in the informal sector in Delta State 1 that period was a time when like most The still is seen by the latter as an other African countries Nigerian eyeing and alien which believe to the leaders and the generality of its people ethnic group in power should that be to paraphrase the famous words of head with destroy. It was only in the make president John F Kennedy were asking This which is town colony non of the acute economic what the country will do for them and cooperation and lack of support can be not what they will do for the country. expressed in various forms including crisis that the country in refused do pay tax by operators for the the 1980s that taxation It was only in the make of the acute informal sector among ethnic groups begin to assume an economic crisis that the country in the that are not as well as human rights important position in 1980s that taxation begin to assume abuses, corruption endemic poverty government policy. an important position in government and unemployment and crisis of the policy. Even so it tended to uctuate, justice system as well as pertinence in surging up or down according in the the areas of justice and human rights, scale of printing to the prevailing corruption, job creation etc cabbaged economic fortune of the country which anti tax sentient any Nigeria were for was largely a function of whether Nigerians to be fulll the tax presently petroleum was selling well or not in obligations willingly. International Market. It is contour place ocumbuce for The disappointments and frustrations Nigerian and boldly assert without any arising from the failures of the nation's quailing or scruple for anyone who post – independent era in terms of cares to hear that they are not ready to service delivery of public utilities and pay tax why? They will tills you that the The disappointments socio-economic amenities like water government has nothing to show to and frustrations arising and sanitation, power and energy convince them that public revenue is from the failures of the roads health education; security being utilized for the good of all in the nation's post – services. The ethnicity driven politics society. that has been in vogue since In the circumstances it is not surprise independent era in independence has not mode matters that the administration and collection terms of service delivery easier as it continues to stie all rms of taxes in Nigeria continues to be an of public utilities and national consciousness and engender uphold tax has been a major challenge socio-economic the rejection and contempt the for government areas independence. amenities like water and modern state in practice this often sanitation, power and means that the head of government at In entry this assertion the formal any level of government (Federal, sector; much of the challenges as we energy roads health State or Local Government Council) have seen of taxation in the informal education; security the government in power considered sector stem from the nature and services. to belong to the ethnic group of the characteristic feature of the sector. person at the head of the government (unregistered, without perhemit adding and by the same token demand the and without business real of hence cooperation and support of the other trade etc). the informal sector players ethnic groups. usually operate outside official purview.
Taxation in the informal sector in Delta State 1 They are generally not registered, administration of Sir Joel usually without structures preeminent Onawakpo as chairman. But this address, and business names; and effort obviously did not go far without records of transaction. They as enough the effort in tandem with result, administration and collection of some other reforms carried out at and taxes in the sector are very difficult the time produced some result (see and tasking what are the challenges of chapter). But is obvious that it (the taxation in the informal sector in Delta effort) did not go far enough State? The subject shall be examined because our studies have shown from two any perspective namely: that the system is still crying for greater attention, riddled with many Ÿ The perspective of the State respects. It is apparent from all Government. available indications that the Ÿ The perspective of the players (i.e. training effort has not been informal sector operators) sustained since the departure of the former chairman. There is a strong THE PERSPECTIVE OF THE need to reactivate, restore or re- GOVERNMENT introduce the capacity building here is a strong need to program for staff. The availability of reactivate, restore or re- On the side of the government the skilled manpower is one of the most challenges are manifold. Among decisive means of transforming the introduce the capacity several other they are death of skilled Board and setting it on the path of building program for power at the State Board of Internal maximum result. staff. Revenue corruption, inadequate death of relevant equipment, lack of well 1. INADEQUATE ADMINISTRATIVE dened policy and strategy for MACHINERY administration and collection of tax in the informal sector weak enforcement This is surely lacking in the State Board mechanism lack of political will etc. let of Internal Revenue. It is a major us discuss the challenges one after the requirement for an effective and good other. tax administration. It was not one Ÿ Death of skilled manpower lack of unfortunately not one of the issues skilled manpower across the Board addressed in the reforms carried out by and especially in the critical areas of Sir Onowakpo functional and effective tax administration and policy machinery will especially given the management, research and data nature and made of operation of the analysis is considered to be among informal sector players (usually without the major problems of the Delta business name, permanent address, State Board of Internal Revenue without registration and without record some efforts were made during the of transactions) a functional and dune of ex-chairman Sir Joel effective machinery will be needed to Onawakpo at training and retraining track and carry out prefer assessment of staff members of the Board of the business activities of the
Taxation in the informal sector in Delta State 1 operators in the sector. The machinery chairman of her Board from all will also be needed to orgainse and indications so far it appears that the collate data as well as monitor tax authorities have not given meaningful compliance in the sector. It is attention to the problem of necessary to take urgent steps to set administration and collection of taxes in There is need to up such a machinery. the informal sector. Necessary efforts formulated a clear cut should be undertaken to redress this policy and strategy for 2. CORRUPTION situation. There is need to formulated a collection and clear cut policy and strategy for The Board of inter economy officials collection and management of taxation management of and the agents corruption represents in the informal sector. taxation in the informal another major threat to the system of sector. taxation in the informal sector. Until now the government has one Allegations of bribery and corruption general be the efforts and energy of by tax – prayer in the informal sector the government seen to be mainly are rife across the State. Corruption is directed towards the formal sector. The a major institutional sickness in Delta informal section as we have already State and Nigeria as a whole and seen has special features that requires unless it is properly addressed no unique approach and measures to effort undertaken to reform the tax address. system will yield signicant result. 4. INADEUATE FUNDING OF THE STATE How well the ght against corruption BOARD OF INTERNAL REVENUE succeeds in the large society an Some efforts have been employ leadership to transparent and This is not an insignicant challenge it made in this regard in open system of tax collect requires a good amount of money to the reform carried out administration a well paid and implement an effective staff motivated workforce, a strict and by ex-chairman Sir development programme; establish functional internal control system, and enough offices to cover all parts of the Onowapo measures a credible system of enforcement with State; equip the offices adequately; as were limited and did not well dened rules and procedure for well pay staff well enough to motivate go for enough the staff punishment of offenders will go a long them for maximum productivity and development way in helping to address the problem commitment to the board. Presently, programme should be of corruption as it applies to taxation in this is far from being the case at the the informal sector. Delta State Board of Internal Revenue. continued. 3. LACK OF WELL DEFINED POLICY Some efforts have been made in this AND STRATEGY FOR ADMINISTRATION regard in the reform carried out by ex- AND COLLECTION OF TAXES) IN THE chairman Sir Onowapo measures were INFORMAL SECTOR limited and did not go for enough the staff development programme should This is also clearly missing in the be continued. All the existing there as reforms carried out by the ex- need offices of the Board for adequate
Taxation in the informal sector in Delta State 1 equipment of the State should be of all i.e. suit on this. It is hoped that this the offices of Board well equipped with interest will not designate once the the requisite telecommunications and economic situation of the state brightens. More offices should be information, communication and technology (ICT) facilities. In addition, established to ensure more offices should be established to 6. CONFLICT OVER TAXING POWERS that the Board is in the ensure that the Board is in the position AND JURISDICTIONS BETWEEN STATE position to carry out its to carry out its task effectively in all AND LOCAL GOVERNMENT COUNCILS task effectively in all parts of the State. parts of the State. This is a big part of the problems of the It is not a mere coincidence that Warri taxation system in the informal sector South local government area and in Delta State. There is an urgent need oshimili South local council where the a lot of confusion on the taxing powers headquarter of the State Board of and jurisdiction of the State and local Internal Revenue and the headquarter government authorities, resulting in a annex are located respectively great deal of abuses of the system of according to on survey, have the high taxation including illegal and multiple levels of tax compliance compared to taxation. Uvwie. The strong presence of the In Delta State this is the case now with Board in Warri South and Oshimili respect to tenement rate, road changes South is a major factor in this. and market changes and levies some operators in the informal sector said This staccato attitude to 5. LACK OF POLITICAL WILL officials of the State and local government come to demand for these tax by the governments This is a major of the system of taxes/changes thereby making then to is believed to be one of taxation in Nigeria. Governments in pay the same taxes/changes twice. the reasons that Nigeria tends to take tax matters explains the lack of seriously only during times of nancial 7. WEAK ENFORCEMENT awareness of a great meltdown and quickly forget about tax According to experts, this is one of the many citizens for tax once the economy improves. This staccato attitude to tax by the major challenges of the system of and the letters weak governments is believed to be one of taxation in the informal section commitment to fulll the reasons that explains the lack of corruption is believed to be a major their tax obligations. awareness of a great many citizens for obstacle applying enforcement tax and the letters weak commitment measures, many viable of informal to fulll their tax obligations. sector operators are not captured in the tax act and therefore do not pay This is very much true of Delta State. tax. It is believed that officials prefer to The State Government has never had take bribe than to sanction violators. the political will to maintain a sustained And for many of the enterprises that interest on tax matters the interest it pay tax(es), collection and enforcement showed on tax matters had depended are weakly carried out because of on the economic fortune of the State corruption.
Taxation in the informal sector in Delta State 1 There is also the opinion by experts faced by them in fullling their tax that there is need to create an obligation (i.e. in the payment of taxes) enforcement mechanism that is are as follows: specically tailored to the informal Ÿ Lack of money sector operators. A functional system Ÿ How to be sure that they are making of punishment and other enforcement Ÿ payment to genuine officials Several studies have measures it is believed should be that Ÿ Irregularity in the period of payment shown that the use of are well attuned to the informal sector and lack of notice for payment. consultants or agents to should be developed. for collection of taxes in Here again one shall examine these the informal sector is a 8. USE OF CONSULTANTS FOR challenges one after the other. COLLECTION OF TAXES major challenge. 10. LACK OF MONEY Several studies have shown that the use of consultants or agents to for This perhaps the biggest challenge of collection of taxes in the informal the tax payers towards meeting the tax sector is a major challenge. While the obligations in Delta State. Majority of consultant have in most cases made the informal sector operators surveyed good nancial returns, meeting or in Warri South, Oshimili South local exceeding targets set for them their government areas named lack of methods are condense questionable. money as their major challenge. The dracoman methods they use in According to these operators they do collecting the taxes does not take into not make enough income from their consideration the human rights of the business enterprises to be able to meet tax payers. The biggest challenge of up with the bills of the tax officials. the tax payers towards In the process the tax payers are Seventeen of the twenty ve operators meeting the tax beaten and brutalized; and sometime surveyed in Warri South local obligations in Delta then goods are conscated or government area among these are State. destroyed where they cannot make seventeen of the twenty ve operators payment immediately. Some tax surveyed in Warri South; nineteen of payers are even known to have last the twenty ve surveyed in Oshimili their life in the process. This is counters South; and ten of the thirteen productive because it make and tax Operators who answered the question unpopular, encouraging evasion and in Uvwie local council. On the other avoidance; people from undertaking hand, only seven of the respondents in business activities at that level. Warri South; and one respondent in Uvwie said they have no challenges in 9. THE PERSPECTIVE OF THE TAX paying the taxes. PAYER There is no respondent in Oshimili As identies by informal sector South in this latter category. All the operators in Delta State, the challenges nineteen respondents in Oshimili South
Taxation in the informal sector in Delta State 1 who said they do not make enough money to and meeting with the payment of taxes are the only surveyed operators in the local government area who pay tax. The remaining six operators surveyed in the local government i.e. Oshimili South do not pay taxes, for the businesses by the own admission.
11. HOW TO BE SURE THAT THEY ARE MAKING PAYMENT TO THE GENUINE OFFICIALS
This is also another major challenge faced by informal sector players towards the payment of their taxes. A good number of the operators said they are visited by many tax collector who do not carry any identication documents. As a result, the operators claim they are always in difficulty trying to gure out whether the officials are genuine or impostors who just want to extort money from them.
12. IRREGULARITY IN THE PERIOD OF PAYMENT AND LACK OF NOTICE FOR PAYMENT
The informal sector players also named as a major challenge the absence of planned schedule for the collection of taxes). As a result, according to the operators, the tax collectors appear without notice and most often when they are often they are not yet in the position to be able.
Taxation in the informal sector in Delta State 1 TOWARDS A FAIR, TRANSPARENT, SUSTAINABLE AND EFFECTIVE TAXATION SYSTEM IN THE INFORMAL SECTOR IN DELTA STATE: THE WAY FORWARD
Estimated at about 40 Estimated at about 40 percent of the administration and collection in the percent of the economy economy of Delta State, the informal sector; arbitrariness and high handed sector, as we have already seen method of tax collection resulting from of Delta State, the represent not an insignicant massive abuse of the rights of the tax informal sector, as we proportion of the economic activities in payers, large member of operators who have already seen the state. Moreover, it is according to are not captured in the tax net, poor represent not an several recent studies, growing at a enforcement systems etc is fraught insignicant proportion very fast rate and is projected to grow with danger. According to experts, it at even faster rate in the near future. undermines tax morality and can of the economic further engenders tax evasion and activities in the state. It is therefore imperative in the light of avoidance even among the operators in the growing importance of the informal the formal sector. sector that the relevant authorities should begin to record far greater Many experts further believe that interest and attention to the taxation taxation in the informal sector can be a system in the sector than ever before. useful tool for responsibility operators Actually importance of taxation in the in the sector. According to the informal sector cannot be over proponents of this view point, those emphasized as we have seen already in who pay their taxes are likelier to take respect of taxation in general (see interest and participate willingly in the chapter ), taxation in the informal governance of the State; and thereby According to the system can help to boost revenue and become better citizens who are able to proponents of this view strengthen the capacity of the State discharge their rights and duties to the point, those who pay government to provide its citizens with state. vital socio-economic utilities like their taxes are likelier to hospitals, schools, electricity, roads, Taking necessary steps to accord take interest and security services etc. It is can also serve greater importance to taxation in the participate willingly in tool as for economic development, informal sector with a view to the governance of the serving to encourage savings and addressing the problems of the State; and thereby investment. taxation system in the sector, therefore become better citizens believed to be a major challenge facing It can equally help to create an tax authorities in the State. egalitarian society. Furthermore, many experts believe that the passive To State the challenge differently “HOW interest and lack of political by the CAN TAXATION IN THE INFORMAL government towards administration SECTOR IN DELTA STATE BE FAIR, and collection it taxes (taxation) in the TRANSPARENT SUSTAINABLE AND informal sector as evident, in lack of a EFFICIENT”. well dened policy and strategy for tax In his seminal work 'the wealth of
Taxation in the informal sector in Delta State 1 It appears to hence been nations' published in 1776 the State however is from satisfying these principles of a good taxation system. On formulated mainly for classical economist Adam smith identied the principles of a good the contrary it is unfair, transparency the formal sector and taxation system as equity, certainty, inefficient, unsustainable and lacks does not sufficiently convenience and economy. Over the transparency. take into consideration years other economists have added the peculiarities of the principles any which are simplicity and How can we change the system for the informal sector. productivity. better?
As propounded by Adam Smith equity The measures required to address the demands that the proportion of the problem are manifold, they drawn from tax changed should be as proportion research as well on several other as possible to the tax payers ability to studies carried out on the subject pay; while certainty requires that the matter in the recent past. Among these amount of tax payable by the tax are the necessity to develop and payer should be exact i.e. certain in strengthen the institutional machinery terms of the amount, time, place and for tax collection and administration; manner of payment. formulate appropriate policy and strategy that is specically tailored for The principles of economy or the administration and collection of productivity and requires that the taxes in the State informal sector; take revenue realized from taxation should steps to end double and multiple be more than the cost of taxation, promote tax education; administration and collection; and the strengthen seven better suited for the principle commerce enable and that formal sector. commence of the tax payer should be an importer respected consideration in It appears to hence been formulated The policy and strategy the administration and collection of mainly for the formal sector and does will entail among other tax(es) of the remaining two of not sufficiently take into consideration proponent, feasibility according to the peculiarities of the informal sector. elements registration demands that the amount payment This will include dening and developing and data base of should be subject of period reviews to appropriate policy and strategy for informal sector reect the situation of the tax payer; administration and collection of taxes in operators as well as while simplicity means that the tax the informal sector. stipulating how to code should be simple to encourage tax compliance present The policy and strategy will entail assess the operators misinterpretation, encourage among other elements registration and appropriately for compliance and discourage double or data base of informal sector operators payment of taxes multiple taxation and other. as well as stipulating how to assess the operators appropriately for payment of However, based abuses of the tax- taxes. This is important in order to payer funding this research work begin to accord adequate effort and taxation in the informal sector in Delta resources to the matters of taxation in
Taxation in the informal sector in Delta State 1 the informal sector. transactions is generally believed to be the major challenge faced by the Ÿ DEVELOPING AND STRENGTHENING authorities in the administration and INSTITUTIONAL MACHINERY FOR collection of taxes in the sector. No It is pertinent to point TAX ADMINISTRATION AND meaningful result can be achieved in out that strengthening COLLECTION IN THE INFORMAL respect of taxation in the sector the machinery for SECTOR without credible official record of some administration of fundamental data about the informal taxation in the informal Together with the formulation of sector operators such as: informal sector specic policy and Ÿ Business address sector will necessarily strategy, developing and strengthening Ÿ Business activity involve acting in the machinery for tax administration Ÿ Scale of business different direction. and collection in the formal sector are Ÿ Business performance (determined according to many experts should be in terms of business volume, turn the centre piece of the effort to achieve over, sales revenue, prots etc). just, transparent and efficient system It must therefore be of utmost of taxation in the informal sector in importance that necessary mechanism Delta State. should be put in place for the registration of operators in the informal It is pertinent to point out that sector with a view to capturing the strengthening the machinery for afore mentioned data. administration of taxation in the Many experts have informal sector will necessarily involve Many experts have suggested that a acting in different direction. These will data bank should be created to stored suggested that a data include undertake to the registration of the date obtained and that the data bank should be created informal sector operators and set up a should be updated periodically so as to to stored the date data bank establishing as many offices align available information with the obtained and that the as to be able to effectively cover every current (actual) situation informal data should be updated part of the state; adequate equipment sector enterprises. Some have periodically so as to of the offices; availability of competent suggested that as a starting point the staff and well motivated personnel, State should conduct a census of the align available and strengthening tax collection businesses in the informal sector. information with the enforcement mechanism, let us briey current (actual) situation look at each of these elements. Ÿ ESTABLISH MORE OFFICES informal sector Ÿ enterprises. REGISTRATION OF INFORMAL This is considered to be a very SECTOR OPERATORS important step. The need to establish as many offices as necessary to be able The fact that informal sector operators to cover all parts of the state effectively comprise mainly of unregistered is considered to be a very important businesses that very often operate step. Some increase of success has without a business name, permanent been attained recently in the expansion structures or address and record of of office network regard across the
Taxation in the informal sector in Delta State 1 state was part of the reforms carried equipped. out by Sir Joel Onowapo. But much It is apparent from all more still needs to be done in this Ÿ AVAILABILITY OF COMPETENT AND indications that the direction. It is not a mere coincidence WELL MOTIVATED STAFF training effort has not that Warri South and Oshimili South local government areas where the It is apparent from all indications that been sustained since the headquarters of the State Board of the training effort has not been departure of the former Internal Revenue and the headquarter sustained since the departure of the chairman who annex are located respectively, former chairman who reportedly reportedly carried some according to our survey, have high carried some considerable manpower considerable manpower levels of tax compliance compared to development programme as part of his Uvwie. The strong presence of the reform initiatives. There is therefore a development Board in Warri South and Oshimili strong need to re-activate restore, or programme as part of South is certainly a determining factor re-introduce the capacity building his reform initiatives. in this. programme for staff. The availability of skilled manpower is believed by Ÿ ADEQUATE EQUIPMENT OF THE experts to be one of the most decision OFFICES means of transforming the Board and setting it on the parts of maximum Presently, many of the offices of the result. State Board of Internal Revenue lack Many also believe that it is important vital equipments that are necessary that the staff of the Board should be for efficient and effective performance well motivated with the right incentives Lack of vital data arising such as telecommunications and and general conditions of work. information, communication and from the fact that many technology (ICT) facilities. This need to Ÿ FUNCTIONAL COLLECTION AND of the operators are not be addressed urgently. For instance, ENFORCEMENT MECHANISM formally registered with many experts believe that the the authorities, high application of information Technology Lack of vital data arising from the fact level of corruption will help in large measure to facilitate that many of the operators are not compilation of a data base for tax formally registered with the among officials of the payers and thereby enhance the authorities, high level of corruption Board and lack of will on effective assessment of payable taxes among officials of the Board and lack the part of the Board are as well as monitoring and of will on the part of the Board are among the main enforcement of payment by the among the main reasons for weak reasons for weak authorities. enforcement for tax evader and enforcement for tax avoiders. In the reforms carried out under this evader and avoiders. tenure the ex-chairman made some However some of the measures efforts in this regard which did not go suggested above such as formal far enough. Necessary efforts should registration of informal sector be taken to ensure that all the office of operators, formulation of policy and the Board in the State are well strategy specically tailored to the
Taxation in the informal sector in Delta State 1 Corruption is a major needs of the informal sector, collection and administration, a well institutional sickness competent and well motivated remunerated and motivated workforce, a strict and functional internal control generally, and unless it personnel etc if implemented will go a long way in addressing the problem system, and a credible system of is properly addressed no many experts also believe that there is enforcement with well dened rules other effort undertaken need to create an enforcement and procedures for punishment of to reform the tax system mechanism that is specically tailored offenders will go a long way in helping will yield signicant to suit the informal sector. This they to address the problem of corruption as result. believe will include to develop a it applies to taxation in the informal functional system of punishment and sector. other enforcement measures that are well attuned to the informal sector. Ÿ IN ADEQUATE FUNDING OF THE Of course, for there to be a functional BOARD enforcement mechanism, it will be necessary to address the problem if All over the country, poor funding is rampant corruption among officials in believed generally to be a major the Board as well as inadequacy of constraint tax offices across the funds. country shortage of office accommodation and inadequate CORRUPTION equipment of the offices; death of well Many of informal sector qualied manpower and in terms of tax operators are reluctant Corruption is a major institutional collection, it is believed that a system and an willing to pay sickness generally, and unless it is with clearly dened procedure and tax. Their reason: properly addressed no other effort done for tax collection as well as the authorized body to do the collection because they cannot see undertaken to reform the tax system will yield signicant result. would be useful. They mainly system or what the government is A great many of informal sector non-system. The system It is also doing with the tax operators are reluctant and an willing believed should be well publicized for revenue in terms of the to pay tax. Their reason: because they the tax payers to be awareness of its of performance of public cannot see what the government is the tax payer. utilities and death of doing with the tax revenue in terms of the performance of public utilities and The prevailing system where collector socio-economic death of socio-economic amenities can call for tax at anytime without any amenities provided by provided by the government to notice and without in most cases the government to citizens. Good governance that delivers without an official identication card is citizens. efficient services and vital amenities to seen to be inconvenient to the tax citizens free of all forms of corruption, payers and contradicts the principle of will also help in addressing the certainty for a good system of taxation problem. which requires that the amount of tax How well the ght against corruption payable by the tax payer should be succeed in the larger society, an exact i.e. certain in amount, time, place exemplary Board leadership, a and manner of payment inability of the transparent and open system of tax Board to embark on an aggressive and
Taxation in the informal sector in Delta State 1 sustained staff development taxation (made it more important) and programme; as well as provide if left unchecked can irreparably adequate incentives to motivate the damage the system of taxation. personnel are some of the bye government should products of inadequate funding of It is therefore their opinion that restrict the role of Delta State Board of Internal Revenue government should restrict the role of consultants in the adequate tending of the Board is consultants in the system of taxation to system of taxation to critically important. In fact no research, training and ICT development, research, training and meaningful result can be achieved leaving assessment and actual without adequate funding. It is ICT development, collection to the Board of Internal therefore critically important that the Revenue. They behave that the board leaving assessment and Board should be adequately funded. can train. In this regard it has been actual collection to the suggested in recent past that there is Board of Internal Ÿ ABOLISH USE OF CONSULTANTS an urgent need for tax authorities to Revenue. FOR COLLECTION OF TAXES prepare and present annual tax reports for the general public and other We have seen that while consultants stakeholders. This international best or lured agents (i.e. who are not staff practice is not upheld presently in Delta of the Board or government officials State. Many behave that if it is upheld it authorized to collect taxes) appear to will serve in no small measure to have been successful in terms of enhance the openness and meeting and even sometimes transparency of the Board. exceeding the revenue target set for them, the methods are questionable It is the opinion of experts that the undermining the human rights of tax State Board of Internal Revenue, will be It is the opinion of payers, who are usually beaten and better able to handle its challenges and experts that the State the goods ceased and conscated if discharge its responsibilities effectively Board of Internal they are unable to pay; as well as if it is allowed to operate Revenue, will be better encouraging tax evasion and autonomously. The experts fear that able to handle its avoidance and discouraging people excessive political interference will from undertaking business activities in challenges and undermine the capacity of the Board to the informal sector. achieve function several recent studies discharge its have indeed shown that members of responsibilities Because of this, there are now many honest, tax paying community often effectively if it is allowed experts who feel that there is need to increase where tax authorities are seen to operate reconsider the use of consultants or to be fair and just in carrying out their autonomously. external agents for the purpose of tax statutory functions. collection the experts believe that the excessive pre-occupation of the Ÿ CONFLICT OVER TAXING POWERS consultants with how much they can AND JURISDICTIONS BETWEEN raise without any regard for civilized STATE AND LOCAL GOVERNMENT conduct and the human rights of the COUNCILS tax payers has further darkened Not a few experts on taxation believe
Taxation in the informal sector in Delta State 1 that there is need for clear cut collection of taxes by impostors in the demarcation of the powers and name of an authorities tax collecting jurisdiction of the state government body. It has the same effect on and the local government councils over business and operators as multiple taxes. The lack of well delineated taxation. Experts behave that boundary separating the tax powers harmonization of taxes is necessary as and jurisdictions of the state and local anti-data to multiple taxation. governments is known to be largely responsible for several abuses in the It is also believed that simplication of system of taxation in the informal the tax procedures that includes sector in Delta State. Notable among demarcating tax powers and It is also believed that these are the inglorious and nefarious jurisdictions of the State and local simplication of the tax practices of illegal, and multiple government councils respectively as taxations. well as widely publicising the tax procedures that includes procedures, and the respective tax demarcating tax powers A great many of the informal sector powers and jurisdictions of State and and jurisdictions of the operators consider the two unholy local governments will go long way to State and local practices together as the most effectively address the problems of government councils burdensome and troubling problems illegal and multiple taxation. faced by them in respect of the taxation respectively as well as system. Many have also multiple taxation widely publicising the Multiple taxation can be dened in two suggested as away of eliminating tax procedures, and the different dimensions. It can be dened illegal and that it should be made respective tax powers in terms of double taxation where the mandatory for all tax collectors to carry and jurisdictions of State same activity is taxed many times in and identity card or any other genuine and local governments different taxing jurisdictions. It can on document of identication such a policy the other hand, be viewed in terms of should enable tax pays to refuse to pay will go long way to what is generally referred to as tax to officials who cannot produce effectively address the 'nuisance taxes' which connotes the identity card or any other to justify the problems of illegal and prevalence of multiplicity of small taxes claim to be tax collectors. multiple taxation. within and between taxing jurisdictions. Multiple, taxation, according to experts Ÿ POOR PUBLIC AWARENESS ABOUT has the effect of burdening economic TAXATION and business performance by reducing the competitiveness of business It was clear from the survey carried out enterprises. for this project that virtually all the operators in the informal sector knew Many informal sector operators in Delta practically nothing about taxation in State complain that multiple taxation is Delta State and especially as it applies threatening the survival of their to their sector. They knew practically enterprises and impoverishing as them. nothing about the types of taxes, the On its part illegal taxation virtually rates, the authorized bodies for amounts to extortion it refers to collection of taxes and the procedures.
Taxation in the informal sector in Delta State 1 In the circumstances it was easy for campaign according to experts multiple taxation to thrive and for should be implemented by the state imposter to take advantage of their board of internal revenue in ignorance to intimidate and extort collaboration with the local money from then in the name of one government councils using tax or other. This lack of awareness television, radio and the print media. about tax matters also partly accounts for high level of tax evasion and Ÿ TAX EDUCATION avoidance in the informal sector. It was not easy to quantify the number The authorities, experts believe should of people who do not in this category also embark on a massive tax education This lack of awareness because as I said pointed out earlier a and enlightenment programme on the signicance and role of taxes. Part of about tax matters also great way of the refused to take the questionnaire from us saying they do the public tax education and partly accounts for high not pay tax and do not know anything enlightenment campaign, according to level of tax evasion and about taxation. some experts, will be to shared avoidance in the Experts believe that a well planned advertise what they are doing with tax informal sector. It was programme of public relations revenue. Many believe that the tax education and enlightenment campaign not easy to quantify the campaign, tax education areas for members of the public and tax should be extended to students of number of people who counseling services will help primary, secondary and tertiary do not in this category signicantly in addressing the problem institutions who are the future because as I said pointed let us examine them briey. generations of tax payer as a medium out earlier a great way and long term strategy of promoting of the refused to take Ÿ PUBLIC RELATIONS CAMPAIGN tax conscienceless. the questionnaire from The public relations campaign, Ÿ TAX COUNSELLING SERVICES us saying they do not according to experts, should be pay tax and do not know undertaken in-order to build a tax Ÿ This, according to experts should be anything about taxation. conscious environment not only provided by the State Board of among tax payers but also among the Internal Revenue in collaboration general public with a view to achieving with non-governmental the following objectives: organizations and tax experts in Ÿ To diffuse and enhance public tertiary institutions of learning with knowledge on taxation. the aim of promoting tax Ÿ To improve mutual understanding consciousness among the general and trust between tax payers and public and enhancing tax payer tax authorities and obtain the compliance. The counseling service, understanding and trust between experts behave, should serve as a tax payer and tax authorities. platform to assist tax payers on Ÿ To obtain the understanding and procedures for lling tax returns and co-operation from the mass media applications; provide the counseling for tax administration. The services on interpretation and
Taxation in the informal sector in Delta State 1 application of tax laws; as well as Of course some of the all other matters related to the recommendations made earlier payment of tax(es) especially with regards to illegal and multiple taxation will also help in Ÿ LACK OF MONEY resolving the problem. The concerns of the operators that the tax demanded is A large majority of the operators in the more than what they can afford to pay informal sector would be contented if given the amount of money realized the amount they pay as tax is from their enterprises is legitimate if we considerably reduced to a level they bear in mind the principle of equity can afford to pay considering the (which holds that the tax charged revenue or income they make from should be as proportionate as possible their business enterprises. Not to the tax payers' ability to pay) one of In the opinion of a good surprisingly however the level of the three principles of Adam Smith's number of the operators education recommended differed from good system of taxation. the government can one operators to the other. In the opinion of a good number of the also assist in Some recommended a reduction of operators the government can also strengthening their about 80 percent, some 50 percent, assist in strengthening their enterprises enterprises and thereby some 50 percent, some 20 percent. and thereby enhancing the viability of enhancing the viability There were a few who argued that their enterprises and income that will of their enterprises and they should not be taxed at all because earn them by supporting them with soft they were getting little enterprises. income that will earn loans or providing business or market Many and experts believe that the opportunities for their services or them by supporting problem steins basically from the fact goods. They said they will only be too them with soft loans or that the operators are taxed without happy to the pay tax if they are providing business or assessment based on data i.e. the supported by the government to market opportunities for taxed are xed arbitrarily without increase the income realized from their their services or goods. recourse to or reference to a pre- enterprises. Fundamentally, (it appears determined objective criteria it is that) taxation in the informal sector in believed that the suggestion made Delta State (appears to be) trapped in a earlier on the necessity to register all conundrum. operators and set up a data bank that will contain vital information about the On the one hand, some operators in the operators based on which they can be sector are known to be over-burdened, properly assessed and taxed will go subjected to multiple taxation enforced help signicantly in addressing the (collected) more often with reckless and problem. Many of the operators nd brutal force and in a dehumanizing the burden of tax too much to bear, manner which sometimes results loss according to experts, because the of goods, bodily harm or even death of taxes are arbitrarily imposed without the tax payer. consider taking into consideration the ability of the operators to pay. On the other hand, a great many
Taxation in the informal sector in Delta State 1 If the tax burden is too informal sector operators are not On the contrary the revenue generated heavy for an operator captured in the tax system and thereby from taxation in the sector will increase. the operator may be operate without paying taxes. If the tax It is our earnest hope that out ndings burden is too heavy for an operator the in this research project has helped to forced to close shop operator may be forced to close shop elucidate if not provide the answer to with unsalutory with unsalutory consequences that will the problem. consequences that will include discouraging entrepreneurship, include discouraging rise of unemployment, poverty and entrepreneurship, rise of inequality. In addition, it will discourage unemployment, poverty voluntary tax compliance, erosion of the tax base, reduction in the amount and inequality. of revenue realized from taxation and its attendant effects on social services, overall development of the society and among the citizens.
In effect, achieving a fair, transparent sustainable and efficient system of taxation in the informal sector will entail not just enlarging the tax net to capture more operators. It will also include to device measures that will make it possible for operators to be assessed at their true value and thereby eliminate the problem of under taxation and over taxation with t is our earnest hope illegal and multiple taxation sector; and adopting methods of tax that out ndings in this administration and collection system research project has that is open, transparent, fair and helped to elucidate if accountable which is devoid of not provide the answer arbitrariness and brutal force as well to the problem. as respects the humanity and dignity of the tax payer; as well as only illegal and multiple taxation the elimination of over taxation multiple and illegal taxation will not lead to a reduction in the amount of tax revenue derived from the large pool of taxable operators in the sector who are currently not being taxed are brought into the tax net.
Taxation in the informal sector in Delta State 1