The Executive Chairman, Federal Inland Revenue Service (FIRS), Muhammad Nami, says tax dialogue is a tool for engendering tax compliance as well as means of strengthening tax systems.
Nami said this at the 2022 Kaduna State Tax Dialogue, held in Kaduna on Saturday.
In a statement issued by Mr Johannes Wojuola, the Special Assistant, Media and Communication to Nami, the FIRS boss said that tax dialogues provided a platform for exchange of diverse ideas on taxation.
According to him, dialoguing on tax is very necessary for inclusivity, fairness and pooling expert ideas to aid tax policy formulation, which ultimately strengthens tax administration.
“Dialoguing on tax is very important for many reasons.
“Tax dialogue is a multi-sided communication channel that enables every view to taxation be aired and considered.
“By so doing, it lends itself to inclusiveness in the design and implementation of the tax system, thereby, engendering the spirit of collective ownership which, ultimately promotes voluntary tax compliance,’’ Nami said.
He also emphasised that dialoguing on tax prevents destructive conflicts as no one feels cheated or unfairly treated.
“Examples from history are rife on the importance of engagements on tax issues.
“For instance, the then British Parliament passed the Tea Act which constrained Americans to buy tea on which duty had been paid without dialoguing with the people.
“Consequently, the Act was rejected. According to Richard Murphy in his book — the “Joy of Tax”, one of the complaints cited by those who signed the Declaration of Independence in 1776 was ‘The King which was imposing taxes on us without our consent’,’’ he said.
Nami further explained that when governments do not dialogue with the people on the taxes they wish to impose, they create room for conflict and even rebuff.
“Crucially, tax dialogue provides the platform for pooling expert ideas to aid tax policy formulation, review of tax laws and ultimately the strengthening of tax administration,” he said.
On the concept of social contract that exists between the government and the citizens, Nami explained that for the government to provide public goods, citizens have the duty to provide government with the needed resources to do so by paying their taxes.
“As much as individuals running the apparatus of government are liable to satisfy the yearnings of citizens for public goods, it is the duty of the citizens to supply the resources required and this is the social contract.
“The social contract is two-sided, it involves the duty of government to provide public goods for the enjoyment of citizens and on the one hand the duty of citizens to provide government with the resources needed to provide those public goods.
“Citizens fulfil their side of the social contract by paying taxes with minimal prompting,” Nami said.
He further said that the two key drivers of voluntary tax compliance were effective communication and trust.
“Tax authorities must develop effective tax communications strategies while governments at all levels must ensure taxpayers receive value for taxes paid,” Nami said.
The FIRS boss urged tax authorities to implement data-driven tax administrations, noting that “modern and efficient tax administration is run with data”.
“The time is ripe for Nigerian tax authorities to start using data to identify all taxable persons, track all economic activities and determine tax payable.
“Nigeria needs appropriate statutory framework for a centralised data sourcing, warehousing, analysis and retrieval system that every tax authority can plug into.” He said
Nami also called for the harmonisation at all levels of government, of all revenue generating functions into a single platform under the administration of one revenue authority.
The aim he said was o reduce cases of uncertainty and instability in the economy.
