Abia State Governor, Alex Otti, has announced a new digital tax system for transporters and traders, aimed at curbing fraud and leakages that have characterized revenue collection in the state.
The newly-elected governor had earlier disbanded the existing tax system in the state and announced a plan to introduce a far more effective system that will ensure that revenues collected go into the government’s purse.
In a statement titled: Abia Launches New Digital Tax System For Transporters, Traders, Otti said the digital tax regime comes with an insurance scheme for commercial vehicle operators and traders.
“I’m proud to introduce a revolutionary digital tax system that is designed to curb fraud and augment revenue,” he said.
“This system incorporates a free medical insurance scheme for all commercial vehicle operators, enabling us to fuel entrepreneurial growth and progress within the state.
“We envisage this digital platform to not only simplify tax compliance but also unlock substantial revenue for development projects, thereby strengthening our state’s economy. It offers easy payment options for both transporters and traders and promotes transparency, reflecting our steadfast commitment to facilitating business operations in Abia state,” the governor said.
The digital tax regime was announced on Tuesday, on the heels of the move by the federal government to introduce VAT on market traders and the informal sector.
The Federal Inland Revenue Service (FIRS) said in a statement on Monday that the federal government aims to launch a system dubbed VAT Direct Initiative to curb multiple taxations in the informal sector.
To achieve its aim, the tax agency said it will partner with the Market Traders Association of Nigeria (MATAN) to collect & remit VAT from their members, using a unified systems technology.
Concerns have been raised about what people see as a burden of taxation as both states and the federal government seek to widen their tax nets.
The move is understood to have been necessitated by oil revenue shortfalls, forcing the governments to see taxation as an alternate revenue stream.
However, experts believe that the tax initiatives would yield good results if rightly implemented. Talking about the federal government’s VDI, Taiwo Oyedele, PwC Africa tax chief, said the move should be commended but it needs some safeguards to prevent abuse.
“The social contract between the government and the people requires that every taxable person pays their taxes while government must apply the revenue collected for the benefit of the people,” he said.
He said the initiative will help the traders ward off the menace of multiple taxes and extortions often by non-state actors, but warned that there is a need for proper education to ensure that the traders know their rights and are not exploited by tax officers.
Otti had earlier indicated that Abia’s new tax scheme is to protect the people from multiple taxes imposed by non-state actors.
