Chairman of UBA Plc, Mr Tony Elumelu, has blamed multiple taxes and levies from government for the collapse of about 95 per cent of Small and Medium Enterprises (SMEs) within their first one year of operation in Nigeria.
He revealed this on Thursday at the Lagos Business School Alumni Association (LBSAA) “2017 Alumni Day” in Lagos with the theme, “The Effects of Multiple Government Regulations and Taxation on Business Growth in Nigeria”.
The UBA Plc Chairman said that multiple business regulation, multiple taxation and inconsistent government policies affect SMEs’ competitiveness. According to him, multiple levies by the government and its agencies affect small businesses’ ability to attract capital in their investment climate.
Elumelu said 5 percent of the small businesses that survive after one year were a big disincentive to the nation in terms of employment creation.
He urged government to create a more conducive environment that would encourage survival of SMEs in order to reduce unemployment rate.
“It seems we have a big problem with high taxation and multiple levies; it is expected we should have very high tax revenue,’’ he said. According to him, government should find out the reason for the discrepancy for desired growth and development.
“Governments don’t create jobs, it is the right enabling environment for SMEs that create jobs,’’ he said, adding that public and private sector partnership was necessary to tackle the challenges facing the country.
“Issue of multiple taxation is enormous and must be addressed to achieve the desired growth,’’ Elumelu stated.
What government must do
- Government should streamline all taxation and levies across the three tiers of government to avoid collapse of SMEs.
- Government must leverage technology to foster automation in tax collection to reduce tax leakages, stating further that government should ensure greater awareness to approved taxes and levies to avoid extortion as well as introduce tax incentives.
- The provision of comprehensive review of tax laws in the country to improve revenue and check excesses at the nation’s ports to improve foreign exchange earnings.
- Those who pay taxes should be recognised and encouraged for people to embrace and pay taxes without being forced. According to him, government should go beyond focus on operational approach of collecting taxes and find a way of encouraging people to pay taxes.