The Lagos State Government disclosed on Wednesday that it had instituted 686 legal actions before different high courts in the state against corporate bodies and other private entities for allegedly defaulting in remitting their taxes to the state coffers.
The state government added that its internally generated revenue (IGR) had grown marginally from N20 billion in 2013 to N23 billion in 2014, noting that the IGR had kept the state working in spite of major drop in oil revenue in the past few years.
The Chairman of Lagos Internal Revenue Service (LIRS), Mr. Babatunde Fowler, stated this yesterday at the 2015 ministerial press briefing.
At the briefing, Fowler explained that the state government had filled 686 cases at the state high courts at the beginning of the year, which he said, were instituted to recover a total liability of about N11.6 billion from the tax defaulters.
Of these cases, Fowler said 376 cases “received restraining orders. This amounted to a liability of about N8.1 billion. Of this, the defaulters have paid N771 million. When a tax payer disagrees with the tax he is expected to pay or both the tax officials and the taxpayers could not reach a compromise, both parties go to court.
“The court will grant us some order of restraint to close that organisation. After that restraint, they make a payment and we will give a room for the tax payer to bring additional evidence on why he cannot pay such fee.”
On the IGR, Fowler explained that the high months of collection “are usually April, May and June. These are the months when companies declare dividends and staffs go on leave and they get their leave allowance.
“In terms of our actual collection, we did not increase in internally generated revenue. In 2013, we had approximately N236 billion, while in 2014 it was N276 billion. So, we went from an average of N20 billion in 2013 to an average of N23 billion.
“That was one of the things that have kept the state working. The informal sector is yet to pay taxes. Some of these people get paid for their services. They are about 3 million people in the state. The objective of taxation is to distribute wealth.”
Also speaking at the briefing, the special adviser said a minimum of about 40 per cent of the state’s population “should pay tax. This is the international standard. The number of tax payers in the state should be at least 8.4 million adults in the state.”
He acknowledged that the state would have suffered due “to the drop in the oil revenue, but for the effective tax system in the state, the state was able to pay workers salary. The level of unemployment has hampered the international postulation that 40 per cent of the country’s population should be in the working class.
“They have brought more unemployed. They argued that the unemployment rate in the country is about 24 per cent while in Lagos State, we believe that we have about nine per cent. Even at that, the unemployment in the country is impacting on the state.