With the Lagos Internal Revenue Service’s notification on the execution of the tax law, Nigerians are confronted with yet another controversy regarding the nation’s tax regulations.
The Nigeria Tax Act Administration’s Section 60 gives the tax institution the authority to collect outstanding taxes by direct bank debit, according to a notice released by LIRS over the weekend.
The Presidential Fiscal Policy and Tax Reforms Committee and the Nigeria Revenue Service have not refuted the report.
The measure is the tax authority’s last option, according to Taiwo Oyedele, the committee chairman, who cited his X statement.
“The power of substitution is a tax collection tool that enables the tax authority to order a third party (a “substitute”) to provide money that belongs to a taxpayer who is in default in order to repay a final, established, and unpaid tax bill.
In response to a commonly asked issue about X, he stated, “This power is only exercised after all legal and administrative processes, including appeals to the courts have been exhausted.”
He emphasized that the use of the power of arbitrary substitution is strictly regulated by due process and clarified that it is neither arbitrary nor discretionary.
The most recent explanation, however, contradicts his previous assertion that no one—federal, state, or local government councils—was authorized to debit personal accounts under the new tax regulations.
Economists and financial specialists, meanwhile, expressed their opinions on the development.
Dr. Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise, stated that the opposing viewpoints must be reconciled.
In response to the development, Yusuf stated that although tax reforms were vital, Nigerians needed more precise explanations about the matter of tax authorities directly accessing bank accounts in order to prevent panic and misunderstanding.
He pointed out that concerns about the program have already caused panic in some areas, with tales of people taking money out of banks out of fear of arbitrary deductions.
Such responses, he said, highlighted the need for improved communication by the authorities supporting the reforms.
Yusuf cautioned that there are serious concerns regarding the ownership of monies in bank accounts when they are debited for tax obligations.
He clarified that money in an individual’s account might not always be theirs because it could come from suppliers, contractors, or other parties.
He emphasized that if these issues are not adequately resolved, financial inclusion may suffer and public trust in the tax reform effort may be weakened.
He claims that customers may keep cash on hand or move their savings into foreign currencies out of fear of account debits, which would erode confidence in the banking system.
According to Dr. Yusuf, judicial monitoring is crucial in handling such delicate issues, and such harsh enforcement actions should only take place with a clear court order ordering the conduct.
“I think it’s important that we reconcile those two positions,” he declared. Because I am aware that one of the concerns that individuals have is that the tax authorities may gain access to and start manipulating people’s accounts.
Many people voiced fear, as you are aware. The situation was so dire that some individuals were even withdrawing their funds from the bank.
However, I’m not sure he didn’t mention that the tax authorities can go ahead and debit people’s accounts if there is a liability. Naturally, much more explanation is needed for that, particularly from those who support tax reform.
“Because people are worried about tax reform because of things like these.” Because if you claim to wish to debit someone’s account, how can you be certain that the money in that person’s account belongs to them?
“Do you know? It might be someone else’s money. A contractor might be involved. Maybe it’s a supplier.
“After someone deposits money into your account, a tax authority claims that you have an asset since you owe money.
“You don’t own it. You might not benefit from it. I’m making that point.
These are a few of the difficulties, then. Because these are part of the problem when people start to embrace fiat and are worried about it.
The promotion of tax reform as a whole is not being aided by it. After all, this is not the type of thing that should be amplified. The federal government’s efforts to advance change are not beneficial.
You frighten people away otherwise. Individuals could start withdrawing their money right now.
“People could start converting their money into different currencies right now and keeping it at home.” And you know, it can result from all these problems with financial inclusion.
It might lead to issues with financial inclusion. For this reason, some of us believe that we need to handle this process quite carefully. due to the delicate nature of these matters.
And I believe I have heard that this kind of conduct requires a clear court order granting that kind of approval. They said that, as I heard. that the court must grant permission.
“We must appear in court, and the judge will rule that this is it. And that’s when some of these drastic measures can be implemented,” he stated in a Monday interview with DAILY POST.
Mazi Okechukwu, a former president of the Chartered Institute of Bankers of Nigeria, called the action risky and warned that it would lead to long-term instability in the financial system.
Additionally, Unegbu questioned the action’s legal foundation, arguing that government authorities lack the authority to randomly debit bank accounts without following the proper legal procedures.
He cautioned that such actions could harm the financial industry’s and the tax system’s credibility if they go unchecked.
Both experts advised authorities to use caution when managing the tax reform process, stressing that enforcement tactics must strike a balance between the need to preserve public trust and financial stability and the creation of income.
“A monster is being created here.
They are acting incorrectly, in my opinion. He stated, “I believe the law has to stop them because they are doing it.”
Recall that there have been difficulties around the new tax legislation, including allegations that its gazetted version was changed.
