By NWAODU LAWRENCE

Governor Hope Uzodimma of Imo State has said that his second tenure brilliant achievements has starred already with the 2024 Budget – the Budget is more than 83 percent Capital Expenditure, meaning infrastructure, infrastructure, infrastructure, Projects, Projects, Projects – but the 2024 Budget is also a 20 percent IGR powered project; meaning you need to make yourself count financially in actualizing this noble and laudable programmes, through fulfilling your civic responsibility of tax payments and ensuring that all State Government monies and revenues actually gets to the State Government – no leakages, no losses through inefficient collections via lack of adequate technology or the required infrastructure or requisite knowledge and discipline. Also ensuring that all government owned enterprises work and remains successful and profitable, and that all State Government ROIs gets to the State Government, etcetera.

The 2024 State Budget Is a 104.9 billion Naira IGR, out of the 592 billion Naira State Budget

So each time you think of the laudable projects and infrastructures of 2024 and the State Budget that enables them, ensure you play your part by paying your taxes and helping to see that all State Government monies and revenues actually gets to the State Government.

As already said, the 2024 Imo State Budget of 592.2 billion Naira, is 20 percent IGR, hence a wholesome revenue generation restructuring and resetting is needed to move the State independently sourced revenue to that height, and therefore my concern on the prevalence of tax evasion by the big men and the poor too.

For instance, PAYE or the Personal Income Tax is the largest component of the State Tax Income, and for most of the times, the biggest component of the entire IGR of a State.

But the Big Men don’t pay PAYE – the big men do businesses with Limited Liability Company or Companies, and structure those companies to evade taxes – only the structured remuneration workers pay taxes, but how much of this will be worth it in comparison to the Budgeted sum.

The Big Men use Limited Liability Companies to do businesses and do not therefore pay PAYE and someone may say, what of WHT – withholding tax can only be paid on their Audited Financial Statement’s supplied information on Directors Fees –; if Directors Fees isn’t on the Audited Financial Statements, there is nothing you can do, unless you are one of us – with enough tax consultancy knowledge to beat them at their game, otherwise you may get nothing – hence they don’t pay.

Directors Fees is a million times the wage bill (personnel cost), accurate and efficient tax audit investigations will fish it out, and a correct assessment and declaration of tax liabilities and payments, will translate the State tax income into a multiple fold increase and growth, hence helping to actualize the ethos and spirit of the 2024 State Budget.

As for the poor, they operate the informal market – with no data, and business and banking records, – and sometimes no fixed business address and structured workforce – Hence tracking and following up on them becomes an issue; also data and records to work with for tax purposes is a challenge Hence, adopting the Direct Assessment Tax method becomes the only way to get this market segment to pay PAYE , with all the inefficiencies of the Direct Assessment Tax method, like the accuracy of the assessments devoid of personal desecration and bias, etcetera.

Therefore hitting that all-important 20 percent mark of the 2024 State Budget for full implementation, the State IGR sector will have to refer to its drawing board again and retool to capture remedies for challenges such as the ones I have mentioned.

I shall be providing remedies to these challenges and more.

For the Imo State IGR to meet the 2024 State Budget projections of 20 percent of the Act, will ultimately require a wholesome revenue generation restructuring and resetting needed to move the State independently sourced revenue to that height, and therefore my concern on the prevalence of tax evasion by the big men and the poor too.

My concern more so is on the quality of infrastructure, technology, management skill-set and manpower needed to drive this all important vision of moving the State IGR from the realms of 1 to 2 billion Naira monthly to about 9 billion Naira monthly – a 450 percent increase on IGR.

It Is general knowledge that a 450 percent transformation would not be a walk in the park, or a tea party. It will definitely require holistic process change – everything about the way things are ordinarily done would have to change. Knowledge, experience, passion, will have to come in, The necessary technology and infrastructures needed for efficient collections will have to be adopted – no more App breakdown and taxpayers waiting for days to make payments they are in the first place reluctant to make – payment systems and applications will have to be multiplied – payment systems should have options – paying for taxes and levies should be easy, accessible and fast.

Back to the business activities of the rich and powerful, they don’t pay PAYE mainly because they evade taxes through operating their businesses with limited liability companies and craftily omitting or under-declaring Directors Fees in their Audited Financial Statement, but more than that is that their Corporate Taxes goes to the Federal Government and not the State, and so is their Withholding Taxes (this is statutory), hence unless painstakingly tax audited, nothing will come from this market segment to the State coffers.

Our people should be encouraged to use Enterprises rather than Limited Liability Companies to operate businesses, so that the State can benefit in receiving their taxes rather than the Federal Government, The State will receive the Withholding Taxes from an Enterprises but not a Limited Liability Company, and so is the PAYE through the Direct Assessment Tax method.

Our people also should be advised to use their Home Addresses or any Imo State address for their Stock Market dealings, irrespective of where they reside, so that their dividends’ Withholding Taxes would come to Imo State and not Lagos or Abuja for instance.

•Dr Nwaodu Lawrence, Development Economist (PhD Liverpool), writes from Owerri.

Update news