. . Tax Office Reacts
By Jude Atupulazi and Uche Amunike
It was like any other day for Abubakar Suleiman, a private security/gate man in one of the compounds in Fizel Zone, Ozalla Obosi Community. Having successfully ensured that no harm came to those he was protecting, the night before, he was probably readying himself to face other personal matters. But it was not to be as he ended up inside a police cell later in the day. He had to pay N20, 000 to be granted bail. He was among many other people that day who were arrested by the agents of the Anambra State Internal Revenue Service, AIRS, for defaulting in tax payment. But the problem was that many of those arrested that morning were not landlords in the area who were being targeted, report Jude Atupulazi and Uche Amunike.
The arrests of those people, deemed innocent by members of Ozalla Obosi Central Landlords Association, was the culmination of the clamp down on landlords in the area over tax issues by officials of AIRS, using OCHA Brigade, the police and officials of the National Security and Civil Defence Corps, NSCDC, according to the landlords.
Worried by what they deem incessant arrests of their members and over taxation, extortion and intimidation of their members, the group stormed Fides premises last Monday, December 9, calling for the intervention of the Governor of the state, Chief Willie Obiano, on the matter before it caused a breach of the peace.
But the chairman and chief executive of the Anambra State Internal Revenue Service, Dr David Nzekwu, insisting that the landlords are ignorant of tax administration, has promised to increase the tempo.
Speaking to Fides, however, the leader of the landlords association, Sir Emeka Esotu, regretted that after they had personally invited AIRS to be collecting tax from them in their area in order for the area to be developed, and even after allowing them to use their office, what the landlords were getting in return left much to be desired.
According to Esotu, Nzekwu had been happy over the decision of the landlords to voluntarily subject themselves to be taxed and asked to be allowed to use the office of the association in the area to conduct their operations which was obliged.
But soon, according to Esotu, despite all monies paid to AIRS, they kept increasing it, with one person being taxed for upwards of N2m, N4m and above.
‘When we wanted to know why and went to him, Nzekwu, he there and then taxed me N32m for leading a delegation to protest the anomaly,’ Esotu stated.
He lamented that his members were being intimidated and harassed by the issuance of bench warrant, even to unknown persons.
‘We have come therefore to beg our governor, Obiano, to look into this matter and call the tax people to order before they spoil his image. We supported Obiano in his re-election, but see what we are getting now, he lamented.
‘In one instance, they came in six Hilux vans containing OCHA Brigade, Civil Defence, and police, all armed, and they made arbitrary arrests of people, including passers-by,’ Esotu said.
He alleged that those arrested were summarily tried in court on behalf of the landlords. He said they were told to hire lawyers from the court premises at the cost of Five thousand Naira each. He said those who were granted bail were asked to pay N20, 000 without receipt after which the monies were shared by the government agents.
The landlords who said they were ready to provide evidence of what they paid as tax and what was reflected in their receipts, said they had made moves to meet with Gov Obiano and the Secretary to the State Government, SSG, in order to seek a peaceful solution to the problem and even asked for a period of grace to see if the matter could be amicably solved.
Now the landlords are asking the government to come and fix roads in their area with monies already collected from the residents as tax, failing which they would stop paying tax. They claimed to have paid over N1B without any visible development in their area.
They also accused the tax officer in the area, one Christy Ike, of fuelling the crisis, alleging that she went after those who did not bribe her, despite those people paying their taxes.
They alleged further that Christy usually took their money to go and pay for them, only to give a receipt of N20, 000, even after some people had paid up to N70, 000. They therefore urged the governor to look into the activities of Christy, whom they equally accused of running a one-man show. They said it was after the landlords discovered her treachery that she resorted to harassing them with security agents.
He said that ordinarily, they paid personal income tax in the range of N2m and N4m, but he was taxed N32m, pointing out that buildings were being taxed, rather than individuals.
To make matters worse, he alleged that the tax people now collected ten percent of rent from landlords, alleging that much of the money collected did not enter into government’s coffers but into private pockets.
They therefore prayed the governor to intervene and not only save them from harassment but fish out those depriving government of revenue.
When Fides contacted the Chairman/CEO of Anambra State Internal Revenue Service, AIRS, Dr David Nzekwu, on the allegations against his office, he began by clarifying the functions of the State Revenue Service and the roles of the tax payer.
According to him, the responsibility to pay tax was that of the tax payer, while the function of the State Inland Revenue Service was to administer the revenue laws of the state.
‘We have provided a serious process for people to pay their taxes and other levies to the government. The law expects every individual to present themselves for tax assessment. The tax authorities will use the information provided by the tax payer to assess them. The tax law says that before the 31st of March, 2020, every individual must have done this after which we will compute it and tell you the amount of tax that you are meant to pay. Where an individual is unable to do that, the revenue service steps in and ensures that it is paid. It is the responsibility of the individual to pay up without being coerced. For somebody to say, ‘we are supposed to pay this or that amount’, it is wrong. If you are working for somebody or company, you pay what we call the Pay as You Earn tax (PAYE). When you are doing business, you are supposed to do self-assessment,’ he explained.
He continued, ‘I expected you to have asked them to show you their self-assessment which is the basis of the tax. So, assuming you’re presenting them before me, it will be clear that they have done that and they have basis for saying that they are paying too much or too little. The tax law provided a way that the tax authority can compute tax where the tax payer has failed to do the needful. There is a clause in the law that empowers the tax authorities to do what we call BoJA, (Based on Judgement Assessment) the law empowers the assessment authorities to rely on what is known to determine that.
‘So, in a situation where people have not done their tax returns by not providing the tax authorities with information, the tax authorities can use any basis that is systematic. So, if we don’t have information about the individual, but know that the individual has a five storey building and the rent there is N500, 000 per flat and there are ten flats on that property, we can estimate that the person makes an income of N5m and that is a correct estimation. On the basis of that, we can derive the tax that the individual is supposed to pay. We are also at liberty to add other variables – do their children go to school? Where do they go to school? Etc. Then, we can arrive on the tax that they should pay.
Nzekwu absolved Christy Ike of blame, noting that he posted her there because the former people that worked there were under investigation for conniving with the residents of the area to deprive the government of revenue.
He hailed Christy for doing an excellent job, which, he said, showed in the number of people that now came to pay their taxes.
He said there had been a gang up before then by some people who wanted to determine by themselves, what they would be paying as tax.
‘That is not acceptable. It is not the way to calculate taxes. And then, when our staff give them the right advice and tell them to pay the correct tax, they refuse. But as a responsible organisation, we have followed the process since December last year and we call our team to make sure that they do the right thing, assess people as they can; then if they are not able to do the needful, go through the court process to obtain judgement.
‘In several cases the court has given the revenue service bench warrants, which will also go to levy execution. He insisted that they had been following the legally stipulated process for revenue recovery and would continue to do that, to see that everybody paid their taxes.
‘In order to see that things are done properly, we have engaged the residents of Ozalla. They have visited our office, we have visited them. We have educated them. Part of the problem I see here is a lack of knowledge of taxation and it is wrong for people to try to present somebody that is doing her job to be their problem because they are not having what they want,’ Nzekwu said.
He said that when the landlords visited him, they had agreed to submit themselves for tax assessment.
He said some people had submitted themselves for tax assessment and had paid their taxes. He however said some were being deceived by people that did not understand the process of tax administration.
‘That is not good and I’m happy that you people are here. Hopefully, you will be able to convey the message and tell them that it is a very simple thing: submit yourselves for tax assessment so that you will be assessed. We don’t want to take you to court. If you have paid your tax, all you will need to do is to show your tax certificate. Let me show you mine. (He brought out his tax certificate) This is my own tax certificate. If anyone comes to you, show them yours. We simply administer the tax laws which we are authorized to do. It’s unfortunate to know that the people that should pay that tax in Anambra should not be less than one million, but only about four thousand and something people have paid. So, even when we get to 2020, we will ensure that everybody pays their tax, no matter how much it is. When we pool the resources, we can have a better society.
On the allegation of over taxing, he retorted, ‘How do you determine outrageous amounts? We have in our records, some individuals who have 5 storey buildings and come to my office to say they want to pay N5, 000 tax. How did they determine that they should pay N5, 000 cash? Let them show you their tax statement on the basis that they arrived at the amount they want to pay.’
On the allegation of his office collecting 10% of their rents, he said he did not know what they were talking about, but insisted that the tax authority had the right to do so.
‘If you don’t tell me your income and I know you’re an importer or trader, I can use any basis and the basis that is unique to the group is what they are trying to use to collect their tax. What is wrong with that? Is that not what the law says? In any case, we are even going to give them additional tax when we find out that what they have paid is less than what they should pay,’ he vowed.
Reacting to the allegation of some people paying between N100, 000 and N80, 000 but given receipt reading only N20, 000, with the rest of the money shared, he said the Anambra State Internal Revenue Service did not give manual receipts.
‘Our system and processes are fully automated. I want to clarify that it is an allegation because Christy has now been able to get them to pay what some of them should pay. They were paying N10, 000. But I want to clarify that it is a flimsy allegation because the Anambra State Internal Revenue process of tax collection is automated. You will first obtain an ANSSID number, then you pay the right amount which is not in the system, then you must pay that amount once it’s logged in the system, then go to the bank and pay with your ANSSID number. You don’t give anybody cash. We have done this sensitization on air and told people that you don’t pay cash to anyone for tax. Pay at the bank. The system only issues receipt or certificate when it has received the money. They can’t pay 10, 000 and receive the receipt of a lesser amount because it’s not done manually. These are flimsy excuses that cannot be substantiated. Otherwise they should bring their certificates and tax receipts,’ Nzekwu challenged.
On arbitrary arrests of not just landlords, but even passers-by, visitors and in a particular situation, a security man, Nzekwu said, ‘First of all, let’s not start pointing fingers at OCHA brigade. We need to understand the functions of OCHA Brigade. The government set up OCHA Brigade to do exactly what they are doing. For us to levy an execution of a court order, what is wrong with it? Before we go anywhere to enforce any defaulter of revenue, we must go to the court. If the court orders us to take an action, what is wrong in doing that? This is a problem of ignorance and people not wanting to pay their taxes.
He however said he was unaware that the wrong people were arrested and said if anyone was arrested wrongly, his office would make amends.
On the claim by the landlords that they were ready to produce their receipts where they were short-changed, Nzekwu asked if they paid with their ANSSID numbers in the banks, there was no way they would have lesser figures from what they paid in their receipts.
He said the issue of trusting their agents or not did not arise as they did not use agents for administration of taxes.
On the issue of about 400 people being arrested so far, he said they had taken more than 500 people to court and that they would continue to levy the execution and obtain judgment from the court.
On complaints by the Ozalla landlords that their area had not been developed, Nzekwu said if they had truly paid, they should present their receipts to AIRS.
‘Someone may pay N10, 000 and it’s so much money to him. Another may pay N1m and it is not so much money to him. You see, the principle of taxation is that the bigger person pays more and the smaller person pays less. Why would a tenant be paying more tax, assuming all things are equal, than the landlord?
‘We encourage them to pay because it is the money they pay that will be used for development. The government, as you can see, is doing its best to provide more facilities, street lights, etc. Tax money paid is used to pay salaries, build infrastructure. There are some bad roads there but the government is fixing them. But remember the principle of taxation which says that tax is a compulsory payment that an individual makes without necessarily deriving direct benefits. You put your taxes into a pool, then the system takes from the pool to manage it in the best interest of all. Government is doing a lot of road works, including in Ozalla.
On whether there could be a meeting point between the Ozalla Community and the tax office, he said his job was to administer the revenue law.
He said the job of the tax payer was to carry out the civic responsibility of paying taxes. He said they would be happy to have more meetings with the landlords to engage them in carrying out their civic responsibilities.
‘I believe that the more people understand the rudiments of this tax, the more things will get easier for everyone concerned. I advise them to submit themselves and be assessed so we can assess them before March 2020 so that the meeting point can be achieved,’ Nzekwu said.
But the ordeal of the Landlords appeared not to have abated as on the morning of last Wednesday, more of their members were arrested.