Agitation for better standards of living remains on the rise. But wrong remittances of the personal income tax of most employees that live in border communities are robbing some states of valuable revenue needed to provide projects and amenities for the governed. Festus Akanbi examines steps being taken to bring more earners into the tax net.

When finance commissioners in the 36 states of the federation, including that of the Federal Capital Territory, met in Abuja recently, one of the issues that was on the front burner was the inappropriate remittance of taxes, especially personal income taxes, by workers who reside outside the state where they work.

An observer at the meeting said the tone for the discussion was set by the representative of Nasarawa State who lamented the loss of revenue by the state to the Federal Capital Territory Administration, to which several residents in the border communities that fall within the jurisdiction of Nasarawa State, allegedly pay their taxes.


Apart from serving as the seat of government, the FCT also serves as the headquarters of many private sector organisations with the attendant space constraints to accommodate employees of these diverse institutions. The reality is that quite a number of civil servants and their counterparts in the private sector live outside the FCT, especially in areas that fall within the jurisdiction of the adjourning states of Nasarawa, Niger and Plateau.


Today, areas like Nyanyan, Mararaba, Masaka, New Karu, and Ado, Zimbabwe are sprawling slums in Nasarawa and the inhabitants are mostly people working in Abuja in the FCT.


But according to officials of Nasarawa State Government, the aggressive revenue mobilisation of the FCT authorities is taking its toll on the finances of Nasarawa given the fact that some of the residents of the state working in Abuja pay their personal income tax to the FCTA.


Tax experts said the Nasarawa State experience is shared by some other states especially those with heavy concentration of public and private sector organisations. The list includes Lagos and Ogun, Delta and Anambra, and Rivers and Imo and Abia States. In Lagos, people troop from the adjourning states of Ogun and Oyo daily to report to their various offices in Lagos while a handful of residents of Onitsha in Anambra State cross the River Niger Bridge to work in Asaba, the Delta State capital.


Lagos State, which is the undisputed commercial nerve centre of the country, boasts the highest concentration of businesses. Apart from the major seaports and airports, the Nigerian Stock Exchange, headquarters of most of the financial institutions, newspapers houses and embassies, among others, its population is second only to that of Kano State, according to official figures from the National Population Commission.

No Government Presence
However, a combination of shortage of accommodation and the high cost of living in metropolitan cities such as Lagos, Port Harcourt and Abuja are driving residents to neighbouring communities, most of which fall within the jurisdiction of other states.


Characteristically, most of these neighbouring communities appear to be far from civilisation as a result of the total breakdown of infrastructure, a development which the Ogun State Government has blamed on lack of adequate funds and loss of revenues through wrong payment of taxes by residents of the area to the Lagos Government.


Areas like Olambe-Akute, Agbado Oke-Aro, Mowe, and a host of others have been practically cut off from Lagos and Abeokuta. Apart from the total collapse of their roads, residents complained of lack of government presence in the area of provision of schools, health centres, and pipe borne water.

In many parts of the country, the allure of employment opportunities and access to a measure of convenience guaranteed by big cities have led to the concentration of large a pool of workers in certain states and localities than others.


Yet, some of these cities find it increasingly difficult to cater to the housing needs of their teeming workforce as well as for those working in private institutions located in the states.


Loss of revenue
One major reason advanced by the previous administrations in Ogun State for its inability to cater to the needs of residents of the border communities was the remittance of personal income taxes of residents of the area to Lagos State where most of them work.


A source disclosed that because of the lackadaisical attitude of the previous administrations to tax collection, the list of individual and corporate organisations that wrongly remit their taxes to Lagos has continued to rise. A particular case is that of some corporate organisations with representative offices in Ogun which are still remitting their taxes to Lagos where they are headquartered.

Correcting the Lapses
Analysts explained that it has been easy for the Lagos State Government to enlarge its scope of tax collection because of its aggressive approach to revenue generation. However, the current administration in Ogun State said last week, it has begun a chain programme of reversing the trend in order to live up to its responsibilities of making life easy for the state's residents.


A survey carried out by the state government, for instance, showed that a number of towns have witnessed population explosion in the last five years including Sango-Ota and Ibafo. Also a number of villages with just 50 families in the past have been virtually transformed into urban areas.


This development, the survey revealed, has led to a huge strain on Ogun State whose financial resources have not keep abreast with the pace of population growth.


According to the report, state tax revenues have not grown in line with the population growth, thus creating a mismatch of resources and funding. The study also showed that majority of border town residents work in Lagos State but their personal income taxes continue to be remitted to Lagos State as many employers are ignorant of the law, even though many major companies have staff bus routes that start and terminate daily in Ogun State.


The report maintained that the trend in migration is set to continue and indeed increase. It therefore raised concerns that unless urgent action is taken, modern day slums will be created in the border areas.

Ogun's Revenue Drive
The state governor, Senator Ibikunle Amosun, who expressed his concern over the development at a press conference in Abeokuta last week, disclosed that the Ogun State Government is losing about N1.5 billion every month as a result of wrongful remittance of taxes payable by people resident in the state but working for employers based in other states across the nation.


He said, “Our research is on-going, and this is a conservative estimate going by our findings.” He added that his government had begun to put in place measures to ensure that employees' personal income tax deductions due to the state are henceforth remitted to the state's coffers.


“More and more people working in Lagos and other states are bona fide residents of Ogun State, and most of them commute to work from the state. Unfortunately, many employers do not comply with the provisions of the Personal Income Tax Act,” Senator Amosun who himself is a taxation expert said.


A statement by the state's Commissioner for Information and Strategy, Mr. Yusuph Olaniyonu added, “This violation and wrongful administration of the statutory tax by companies and institutions is marginalising Ogun State. This tax leakage is an obvious case of revenue erosion and the economic strangulation of our state.”


Quoting the Personal Income Tax Act, Olaniyonu said an employee's residence should be the determinant factor in where an employer remits the employee's personal income tax to. “The Residency Rule implication of this tax law affects residents of border-line towns like Akute, Ibafo, Magboro, Mowe, Ojodu-Abiodun and Sango-Ota, just to name a few of the locations where people commute to Lagos regularly,” he said.


He said the Ogun State government believes that compliance with this extant tax law would go a long way in ensuring that the state delivers on its obligations to its numerous stakeholders.


Consequently, the state is said to be holding consultations with all stakeholders including private and public sectors employers, employees, the business community, industry associations, professional bodies, and employee unions. so that they can “understand and comply with the residency rule” aspect of the tax laws of the country.


Some of the measures being put in place to achieve this goal include sensitisation and awareness campaigns, which was flagged off by the governor last week. Others include road shows to engage Lagos-based employers.


The Ogun State Government has also begun a simple registration process for employers and detailed enumeration exercise in the border areas to accurately understand the demographics and indentify specific employers of residents. These employers will then be actively engaged to ensure compliance.




http://www.thisdaylive.com/articles/effort-to-bring-border-towns-into-tax-net-begins/100083/

Lagos stealing Oguns taxes?

How about Lagos stealing taxes from the people - period!

Slaves - See how your slave masters are bickering over your 'sweat' aka taxes.

Blaming your lack of payments for the dismal state of things on the ground -

Its all your fault -