The Taxpayer’s Rights

Does a taxpayer have rights attached to the taxes he pays? If he does, how important are these rights to the tax authority? Are taxpayer’s rights (if any) subordinate or superior to the rights of the citizens and denizens of a state? Does the taxpayer have powers to decide how his money should be spent? These are questions that should frame debates on the economic and political governance of any nation on the path to development.  

In Nigeria, these questions are rarely asked let alone debated.  The country is in the business of selling barrels of crude and the entire government budget is built around petrodollars.  It is no wonder everybody is a “consultant” of some sort. An increasing number of these consultants are now “experts” in improving the Internally Generated Revenue (IGR) of any of the Federating States.  I doubt if there is any state where the Governor or Deputy does not have one proposal or the other on how to improve IGR sitting on his desk.

Most of those peddling IGR improvement services have no clue on the subject of taxation, or at best they are skilled in computing tax payable or in negotiating or settling issues arising from tax dispute. No one considers that the most effective way of improving IGR (which ideally, should be the main source of revenue for any government) is to engender an atmosphere of wilful compliance.  You can only do this by earning the trust and confidence of the taxpayer.  

Earning Taxpayers’ Trust
Earning the trust and confidence of a taxpayer is a theme that we cannot exhaust on this page.  The signpost “taxpayer’s money at work” is a good start.  The taxpayer would hopefully see more of this signpost on Lagos–Ibadan Road, on several ultra-modern hospitals, and schools that the relevant government is building – soon!  This is the prayer of most of Nigerians who mean well for this country.  Yet, whether or not we see these signposts any where, the taxpayer is hounded daily by the taxman in one way or the other. The taxman will at first carry out a “monitoring visit”, then issue a set of queries, followed by an audit and then a back-duty assessment before he is eventually hauled before a “criminal investigation department”.  The question is, if the tax payer spends this much of his time responding to tax issues or administering taxes, how much resource would he need to generate taxable income?

It is for this reason that that we advocate restructuring the various revenue authorities and their administrative structures.  Clearly, a taxpayer in Nigeria does not have the same rights as his counterparts in developed nations. Does the vote of the Nigerian taxpayer count? Are his roads and utility provided by the tax collector? This point is beyond arguments.  Although the Nigerian taxpayer’s rights may not be respected by the average Nigerian politician, the revenue authorities should at least recognise a taxpayer’s rights and train its staff to respect them.  It means I do not have to beg for my withholding tax credit notes, and I do not have to lobby to be issued tax clearance certificates among others.  The revenue authorities here should adopt global best practices by setting up a Taxpayer Rights Corner in the manner of the United States Internal Revenue Service (IRS).  The IRS recognises that the taxpayer will benefit from knowing his rights as a taxpayer and being familiar with the IRS' obligations to protect them. Quick wins they call them. Let’s start with the basic rights. One day, perhaps Nigerian taxpayers would follow the example of the people of the State of Colorado in the United States by enacting a Taxpayer Bill of Rights (TABOR) that would restrict revenues and control spending for all levels of government.

Eben Akinyemi, an Associate of the Institute of Chartered Accountants of Nigeria and the Chartered Institute of Taxation of Nigeria,  is a partner at the transactions advisory firm, Stransact Partners.