Research diary and reflective practice

166 section 38(b), amend, vary or modify the list set out in the first schedule to this Act. This provision did not in any way or by any means empower the Minister of Finance to amend the rate of tax from 5% as stated by virtue of the Decree No. 31 of 1996.

Another area of concern about the political interference is on indiscriminate grant of Tax Holidays and incentives. Nigeria is one of the few countries in the world where it is fashionable to evade taxes and one factor that is largely responsible for this is the lack of coordination among relevant ministries, agencies and departments. Osemene commenting on tax waivers and exemptions disclosures by the Minister that about 30 percent of those that received tax waivers from government, especially under the pioneer status scheme now abuse the system, said:

Instead of encouraging tourism, agriculture and other sectors to boost Foreign Direct Investment (FDI), focus has rather been on granting indiscriminate incentives and tax holidays to foreign investors.⁴⁸⁸

Nigeria economy will not grow where the business operators who are the major contributors are groaning and tax issues are left in the hands of politicians to use as a tool for overburdening the people or use it in pacifying their kit and kins.

4.9 Delegating Tax Administration and Collection to Tax Consultants and Agents

167 simplify the tax compliance process, properly advice taxpayers on

compliance requirements and also provide necessary insight and assistance to tax authorities. It is expected that tax practitioners and consultants shall discharge their duties with integrity and patriotism at all times and shall not be party to wilful or negligent non-compliance with tax laws.

By the provisions, the tax professionals are expected to partner with tax authority and other stakeholders to enhance the effectiveness and efficiency of the tax system and ensure that they open and maintain effective communication lines with tax authorities at all times. In the interpretation of “tax authority” the Taxes and Levies Act⁴⁸⁹ means:

(a) the Federal Board of Inland Revenue (Federal Inland Revenue Service), the State Board of Internal Revenue or the local government revenue committee; or

(b) a ministry, government department or any other government body charged with responsibility for assessing or collecting the particular tax.

However, in a sharp contrast with other tax laws; the Taxes and Levies Act⁴⁹⁰ provides:

Notwithstanding anything contained in the constitution of the Federal Republic of Nigeria 1979 as amended, or in any other enactment or law, no person, other than the appropriate tax authority, shall assess or collect, on behalf of the government any tax or levy listed in the schedule to this Act, and members of the Nigeria Police Force shall only be used in accordance with the provisions of the tax laws.

489 Taxes and Levies (Approved list for collection) Act, S. 4.

490 Ibid, S. 2(1).

168 It is worthy to comment that the expression or wordings of this provision of the Act is contrary to the provision of the constitution itself. An act of the National Assembly cannot be used to amend the Constitution.⁴⁹¹ The Constitution provides that if any other law is inconsistent with the provision of the Constitution, the Constitution shall prevail and that other law shall to the extent of the inconsistency be void.⁴⁹² The National Assembly should be blamed for not amending this provision of an Act⁴⁹³ made during the military era at the commencement of democratic rule in 1999. It is to be mentioned that the law expressly prohibits the assessment and collection of tax by any person or body on behalf of government. Again, to cap it up, the Act⁴⁹⁴ makes it an offence for any other person except the specified tier of government to collect taxes and levies. It out-laws delegation of the duties of tax collection by government to consultants and agents. The section provides:

A person who;

(a) collects or levies any tax or levy; or

(b) mounts a road block or causes a road block to be mounted for the purposes of collecting any tax or levy in contravention of section of this Act is guilty of an offence and liable on conviction to a fine of N50,000 or imprisonment for three years or to both such fine and imprisonment.

In line with the above provision, the FIRS Act⁴⁹⁵ provides:

The service may appoint and employ such consultants, including tax consultants or accountants and agents to transact any business or do any act required to be transacted or done in the execution of its functions under this Act provided that such consultants shall not

491 1999 Constitution op. cit. S. 1(1) & (3).

492 Ibid, S. 1(3).

493 Taxes and Levies (Approved list for collection) Act.

494 Ibid, S. 3.

495 Federal Inland Revenue Service (Establishment) Act 2007, S. 12(4).

169 carry out duties of assessing and collecting tax or routine

responsibilities of tax officials.

The above provision is in tandem with the powers granted to the Service by the Act⁴⁹⁶ to undertake exchange of personnel or other experts with complementary agencies for purposes of comparative experience and capacity building. It is however, noted that contrary to the above provision the Personal Income Tax Act⁴⁹⁷ provides:

Subject to subsection (4) of this section, the Board may, by notice in the gazette or in writing; authorise any person to

(a) perform or exercise on behalf of the State Board, any function, duty or power conferred on the State Board; and

(b) receive any notice or other document to be given or delivered to or in consequence of this Act and any subsidiary legislation made under it.

The Act⁴⁹⁸ in contradistinction to the above provisions said that notwithstanding the provisions of subsection (3) of this section, the State Board shall not delegate any power conferred on it under sections 2, 6, 7, 17, 46, 47, 50, 53, 54, 55, 57, 78, 86, 99, 102, 103 and 104 of the Act to any person. The import of section 88(3) and (4) of the PITA 2011 is to apparently delegitimize the delegation of the powers of the State Board of Internal Revenue.⁴⁹⁹ It is clear from the state of the law presently that no tax authority or tier of government conferred with power, duty and function of assessment and collection of taxes can delegate this power and function to any other person or body. The only slight exception is the provisions that allowed the tax authority⁵⁰⁰ to by a directive in writing addressed to an employer or be published in the state gazette. The Board shall specify the emolument of an

496 Ibid, S. 8(1)(j).

497 Personal Income Tax (Amendment) Act, 2011 S. 88, 1(3).

498 Ibid S. 88(4).

499M N Umenweke, Tax Law and its Implications for Foreign Investments in Nigeria, op. cit p. 73.

500 Personal Income Tax op. cit. S. 81(5).

170 employee or class of employees to which it refers and the amount or amounts of income tax to be deducted, whether by reference to tax tables issued by the relevant tax authority or otherwise. This provision did not offend the provisions of the law prohibiting the use of consultants and agents. It is to be noted that despite the provisions of the law, once taxes are assessed and they are not paid on time, they become overdue, thereby occasioning huge revenue loss to government. Most State Boards resort to the use of tax consultants for tax collections which is generally frowned at by the law. The proponents of the practice argue that the use of consultants results to higher yields in tax revenue for the government. It must however be pointed out that this argument cannot be right as the use of consultants in carrying out assessment and collection is illegal.

The function of assessment, collection and accounting for revenues which form the core of tax administration are assigned by law to the tax authorities. They include, Federal Inland Revenue Service at the Federal level; State Boards of Internal Revenue Service at the State level and Local Government Revenue Committees at the local government level. It is beyond doubt that issue of tax administration is a legal duty, the power of taxation is an index of sovereignty and the government as the custodian of the sovereign status must not cede it to another party. In IBL v MILAD, Osun State,⁵⁰¹ the court determining the validity of the state governor‟s delegation of the functions of the State Board of Internal Revenue, considered the provision of section 85A and 85B of PITA; 1993⁵⁰² and said:

The words used in the subsection are, there is hereby established for each State Board to be known as the State Board of Internal Revenue.⁵⁰³ It is clear from the word used that the process of establishing the Board has already been completed by means of the

501 (2000) 1 NRLR 86, 107.

502 Now Personal Income Tax (Amendment) Act, S. 87(1) and 88(1)(3).

503 Personal Income Tax Act 1993, S. 87 (now Personal Income Tax (Amendment) Act, S. 87(1).

171 Decree and there is no other role to be played by the Military

Administration or any other person, for that matter, in this respect.

It is therefore, understandable that the word “shall” was not used in this subsection because there was no need for it. The Military Administration therefore has no discretion whatsoever as to whether to establish the Board or not, as was submitted by the learned counsel for the defendants because the board has already been established…

The court further analysing the statutory provisions said that it is clear from the provisions of the Edict No. 2 of 1997 that the Agency established under section 3 has been made under section 5(e) and (f) to take over and perform the functions of the State Board of Internal Revenue as provided for under sections 85A and 85B of Decree No. 4 of 1993. Mr.

Sanni insisted that the Military Administrator could delegate these functions to any other body. He did not refer to the provisions of the Decree which support his submissions. The functions enumerated in section 85B(1) of the Decree have been exclusively vested in the Board. One is reinforced in this view by the provisions of section 85B(2) which state that the Board shall be autonomous in the day-to-day running of the technical, professional and administrative affairs of the State Service.⁵⁰⁴ It is therefore difficult to see how the military administrator could validly purport to delegate the functions which are not vested in him. As the saying goes “Nemod at quod non habet”. Nobody can give out what he does not have.⁵⁰⁵

The import of the decision is that it is illegal for Governors and local Government Chairman to set up another body other than the tax authority to perform the functions of the State Board. In Government of Akwa-Ibom State v. Udofia⁵⁰⁶ the plaintiff took out an

504 Personal Income Tax Act 1993, S. 88(2) (now Personal Income Tax (Amendment) Act 2011, S. 88(2).

505 See also Multi-purpose Ventures Ltd v. Ag. Rivers State (1997) 1 NRLR p. 122.

506 (2012) All FWLR (pt. 627) 794 @ 801 – 806 .

172 originating summons seeking determination relying on the provisions of sections 1(1) and 2(1) of the Taxes and Levies (Approved List for Collection) Act, Laws of the Federation of Nigeria, 2004. The Government of Akwa-Ibom State is entitled to engage the services of consultants to collect the revenue accruing to her. The defendant, Government of Akwa-Ibom in a preliminary objection challenged the locus standi of the plaintiff to maintain the action.

The preliminary objection was however dismissed. Aggrieved by the decision, the defendant appealed to the Court of Appeal. The Court of Appeal considered the following statutes:

Section 2(1) of the Taxes and Levies Act⁵⁰⁷ which provides;

Notwithstanding anything contained in the constitution of the Federal Republic of Nigeria, 1979, as amended or in any other enactment or law, no person, other than the appropriate tax authority, shall access or collect, on behalf of the government any tax or levy listed in the schedule to this Act and members of the Nigeria Police Force shall only be used in accordance with the provisions of the tax laws.

Again, item 9D of part II to the CFRN 1999 as amended provides⁵⁰⁸ thus:

A House of Assembly may, subject to such conditions as it may prescribe, make provisions for the collection of any tax, fee or rate or for the administration of the law providing for such collection by a local government council.

The court held further: thus;

…the deponent has missed the essence of the complaint in bringing the suit is not about the obligor paying commission to the

507 Taxes and Levies (Approved list for collection) Act, Cap. T2, Vol. 14 Laws of the Federation of Nigeria 2004, S. 2(1).

508 1999 Constitution op. cit. Second Schedule, part II, item 9D.

173 consultants but rather that there is no justification for deducting a

huge amount of revenue which accrues to the Sate as commission to the consultants for work not done. Since the Board of Internal Revenue has admitted the arrangement of paying the consultants for the work it has engaged the consultants; it is incumbent on the board to make a full disclosure of the amount involved and not to be dodgy about it since it is an item of public expenditure.

This case restated the law and also encouraged the citizens of this country to rise to the challenges of the time when the policy of a government is illegal. The joint tax board should rise up to the challenges and make the states to jettison the use of tax consultants.

Governments should rather invest in human capacity building, technology and other platforms that are necessary to modernize tax administration and enhance the overall capacity of the States‟ Boards of deliver on their mandates.