The Burden of Corruption on COVID-19 Tax Holiday in Akwa Ibom State
Arising from State Executive Council meeting held on Friday, July 3, the Akwa Ibom State government announced approval of a tax holiday for all categories of tax payers in the state.
The State government said the decision was in line with the World Bank requirements for giving out grants and support to state governments as well as a decision taken at the Governors’ forum for grants and reward to cushion the effects of COVID-19 pandemic in the country.
That singular news made entrepreneurs among other citizens of Akwa Ibom State heave a sigh of relief.
It gave a signal of hope that businesses operating in the State can wriggle itself out of the negative impact experienced during the lockdown coupled with other challenges of COVID-19 on the economy.
Days later, the Akwa Ibom state Internal Revenue Service announced modalities for the immediate implementation of the Tax Relief.
According to the Tax Authority, the reliefs include: extension of deadline for filing of individual income tax return for 2019 from March 31, 2020 to September 30, 2020; waiver of penalty and interest charged for late payment/remittances of taxes for 2020 tax year; waiver of business premises levy and Economic Development levy respectively for small and medium enterprises (SME) with maximum annual turnover of N5million for 2020 tax year ending December 31, 2020.
Others are: suspension of specific road levies to include daily ticketing, stickers and emblems and haulage fees for 2020 tax year; granting of 25% discount on performance income tax for traders in all the markets for 2020 tax year.
After the announcement, are businesses really enjoying the tax holiday granted by the Governor? Come with us let’s meet our business persons.
Experiences over Level of Implementation
There have been relative compliance with the tax holiday in the transport sector. Most of the tricycle operators interviewed in Uyo report that since the Governor announced tax relief, they have not paid for daily ticketing. However, few reveal that enforcement officers still design ways of exploiting them with renewal of MOT and payment for sanitation levy.
According to Ubongabasi John who ply Ukana Offot route ” Since tax relief was announced, these people have used various subheads to extort money from us. They threaten that if you don’t pay, they will impound your tricycle. When they overpower you, you have to simply oblige else you waste the time you would have used to make money”.
Another commercial transporter who operate a vehicle that transport goods reports that a team which puts on Green Shirt with State Government identity Card still charge them Sanitation levy. He said these persons go beyond the levy to look for other things they can use to extort.
For traders, it is a worrisome story. Levies are still collected from market women. The story is the same across the State.
When this reporter visited daily Akpan Andem Market in Uyo Local Government Area, traders reported that they still pay for daily ticket levies.
According to them, they spend not less than N400 a day depending on the kind of wares they sell.
The traders reveal that ticket levies are usually paid twice a day. They note that the first payment starts from noon down to 4pm while another set of collectors get money from them from 4pm till the market retires.
A Widow, Affiong Usungurua who sells pepper in the Market notes that after spending N400 daily on ticketing, she rarely make meaningful profit. ” By the time you calculate your transport and daily ticket of N400, the gain I get is not enough to even take care of my four children not to mention progressing in the business”, She explains.
At the daily Etaha Itam Market in ITU Local Government Area, groundnut sellers pay N200 in the afternoon and N200 again in the evening totaling N400 on a market day.
Fresh fish sellers who carry out their sells mostly in the evening report that they are charged arbitrarily depending on the quantity and size of their fishes. They mention that the least collected from any fresh fish seller is N500.
For Idaraabasi Jackson who sells clothing materials at the market, she says she spends N700 for ticket daily.
She points out that the cost of what they spend daily has impacted on the price she sells and the gain made.
Jackson explains ” When you hear that things are costly in Uyo, these high cost of tickets are the reason. You can’t expect us to bear all the burden. We share it to customers too. But we still do that reasonably and it affects the gain we should make”.
The traders report that anytime they refuse to cooperate with the ticket collectors who are brusque in appearance, their market wares are usually seized or disposed among waste.
While describing the tax holiday as a political hoax designed to make the government appear as caring, the traders challenged the government to step in and stop the daily ticketing if government’s plan is sincere.
One trader in Etaha Itam Market notes ” When we heard that the Governor said we should not pay tax again, we were happy and we prayed for blessings upon him. But sadly, since it was announced till date, we are still paying.
” We have reported this severally to the market Committee and they said they will look into it. Government cannot claim that they do not know what is happening. If Government is sincere about us not paying levy again, they would intervene. Nothing is too difficult for them.”
With the counter actions against the declaration by the State government, one really wonders what is behind the daily ticketing despite the tax holiday?
Stakeholders/ Council Chairmen Give Reasons for Non Compliance
A Stakeholder ( Name withheld) in the ticketing business has identified ticketing contracts awarded by Council Chairmen as the albatross to the success of tax holiday declared by the State government.
He mentions that most Council Chairmen awarded ticketing contracts to cronies who have already paid money in advance into the coffers of the council.
The source notes ” These ticket contractors have already paid Millions of naira to the council in anticipation of what they will generate. They simply have to recoup the money they paid.
” It is an investment. The council does not care how you get your return in investment. Hence, the tax holiday is not good for their investment. So, for them not to lose out in investment, they have to continue the daily ticketing.”
Contacted, the Chairman of Uyo and ITU Local Government Area dismissed the claim of such contracts as untrue. They note that such does not happen in their domain.
The Chairman of Uyo Local Government Area, Elder Imoh Okon however admitted that the local government still get levy from traders in the market.
He explains that the money received from traders are not taxes but levies for services rendered to them.
The Council Chairman says the levies are for sanitation, electricity and security of the market.
When asked the amount of the approved levies designed by Local Government, the Council boss said this reporter should investigate from the Market Committee.
He adds “Local government are not collecting taxes for general ticket. Traders are paying for services that is rendered to them. Is the market not suppose to be secured? Who pays the electricity bill for them? What happens to sanitation? Who evacuates the waste?
” Any trader that does not want his product to be protected should not pay. Any trader that does not want the market to be clean and other logistics provided should not pay. These are charges that I’m aware.”
Elder Okon further identifies another practice that may cause the bastardization of the tax relief. He says traders who sell along roadsides are on their own thus are prone to exploitation from those he described as touts.
Elucidating, the Council Chairman notes “The Local Government does not operate street trading. Anybody that trade there is doing so illegally. When they meet touts who also get money from them for doing illegal trading, that is not our business.
” Some people come out in the night to do evening market. The Local Government does not operate evening market. If people come out to operate night market, who is providing security for them? ”
The Chairman however insists that approved levy collectors often carry out their task with their identify card and would never exploit the traders.
He said to address the concerns which have been raised, he had visited the market twice recently and has discussed too with the Secretary to the State Government.
On his part, the Chairman of ITU Local Government Area, Barr Etetim Onuk through his Press Secretary, Patrick Antia notes that the only levy collected from traders in Etaha Itam market is N50 for sanitation levy. He insists that anyone who gets more is a tout.
He adds ” Any trader with grievance knows that he should either report to Chairman of Market Committee or Chairman Market Welfare Committee or the police. Without a formal complaint, how would the market Committee act?
When the Market Chairman, Emmanuel Tom was contacted, he collaborated the stance of the Council Chairman. He stressed that besides the N50 collected for sanitation levy, he is not aware of other charges. What then is the way forward out of this situation?
Contacted, the Special Assistant to the Governor on Trade and Market Matters, Idorenyin Raphael admits that he has heard the complaints. He says he is currently liaising with various stakeholders and would soon send people to markets on enforcement to stop the arbitrary tax collection.
During a recent online meeting organized by Policy Alert, a civil society organization working to promote economic and environmental justice in Nigeria, representatives of market women, tricycle operators, taxi drivers, small business players, government officials from the Commerce, Transportation and Internal Revenue sectors, legislators, civil society and journalists discussed the way forward.
In their separate interventions, the Permanent Secretary of the Akwa Ibom State Ministry of Transportation, Mr. Nse Edem, and the representative of the Akwa Ibom State Internal Revenue Service, Mr. Kufre Ibokette, both blamed the activities of unscrupulous elements who parade as revenue collectors for the observed lapses and expressed government commitment to arrest and prosecute offenders.
The Executive Director of Policy Alert, Tijah Bolton-Akpan posited that the waiver, which granted among other things, a 25 percent discount on Personal Income Tax for traders in all markets for 2020 tax year, was based on a faulty assumption that these categories of targeted individuals were already in the tax net.
He noted that by their estimation, more than 90 percent of the players in the state’s informal sector are not captured in the tax net for Personal Income Tax, although they are paying other sundry taxes.
The Executive Director added “This implies that any tax holiday policy targeting them must necessarily address the burden of market tolls by other names that they had been paying all along. The excuse that those tolls are controlled by the local government councils is not tenable in light of the provisions of the Akwa Ibom State Revenue Administration Law 2016.
“Our view is that there must be coordination between the state tax authorities and the local government councils. There must also be a clear grievance redress mechanism if this well-intentioned policy must succeed.”
For the Coordinator of the Akwa Ibom State Tax Justice Network, Harry Udoh, the state government needs to amend the policy to waive those micro-taxes that are borne by those at the bottom of the economic pyramid stressing that corruption in the tax system often affects the poor disproportionately.
From the complaints and recommendations, it is the hope of Akwa Ibom people that the State government will not only stop at mere pronouncement of tax relief policies but will put machineries in place to monitor the level of its implementation thus assist businesses to squirm out from the impact of COVID-19 and most importantly place the State on a favourable pedestal to meet up with World bank’s conditions for grants and support.