The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has disclosed that traders in the pure water (sachet water) business in Nigeria pay at least six to seven taxes a day.
Oyedele shared this information during an interview with TVC’s Deji 360 on Monday.
Oyedele said these levies on the pure water sellers are often referred to as ‘stickers’, which they pay daily to their local government as well as other agencies in their local communities.
The committee head said the burden of taxes on the informal sectors such as traders, artisans, and others contributed to the closure of these small businesses within a short amount of time after establishment.
According to him, the committee is advocating to the National Assembly for the suspension of these levies as they only stifle economic growth in the country.
“We have various data about the size and number of the formal sector which is really to be honest, you are talking about micro, nano, small businesses in the region of about 30 to 40 million.
“If you take the conservative number of 30 million, the approach we have adopted is to try and go after every single person in that bracket up to the people who are hawking pure water.
“The market trader association said to us that those who are selling pure water have to pay like 6 to 7 taxes every day. They call them stickers. You are going to ask yourself is there any country where they have been very successful with their tax system by chasing everyone? The answer is no.
“You can’t find anyone like that. You cannot become wealthy by taxing poverty,” Oyedele said.
95% of informal sectors to be exempted from taxes
Speaking further, Oyedele said the committee’s proposal to the federal government includes a provision that 95% of the informal sectors be exempted from all forms of tax payment.
He said this would help encourage economic growth and development in the country, adding that their analysis showed that only 5% of the informal sector can afford the taxes imposed on them.
In addition, Oyedele said the informal sector contributes significantly to the nation’s GDP, employment rate and the economy at large, and they should be encouraged through fiscal incentives.
“We did our analysis and we concluded that the percentage of our informal sector that you actually tax who have the ability to pay is between 3 to 5%.
“On that basis, we believe that we can be able to get enough data and intelligence to identify the bottom 95% and then legitimately exempt them from all tax obligations whether it is the company’s income tax, PAYU or VAT and even withholding tax on whatever payment they need to make.
“The idea is we want to support the very important segment of our economy to be able to grow. They contribute a lot to our employment and our GDP, but they struggle. Many of them cannot survive 3 to 4 years so they set up those businesses then they go under. In large part, taxes are accountable for many of those reasons,” Oyedele added.
What you should know
Small businesses across Nigeria have been plagued by the problem of multiple taxation either from different agencies of the federal government or similar kinds of taxes from different levels of government (federal, state and local government).
Oyedele recently said that the committee was making recommendations to the state and local governments across the country to suspend “nuisance taxes” that don’t add value to the state’s coffers.
While many of the committee’s proposals seem to be in favour of small businesses and the informal sector to drive growth in economic activities, the implementation is still at the discretion of the government.
