The plight of pure water sellers in Nigeria sheds light on a larger issue crippling the nation’s informal sector: excessive taxation. These small business owners, struggling to make ends meet, are burdened by a staggering six to seven daily taxes, according to a recent revelation by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
These levies, nicknamed “stickers,” are collected by local governments and various unidentified agencies within their communities.
Oyedele, in a startling interview, highlighted the detrimental impact of such a tax structure on the informal sector. He emphasized that this burden is a key factor behind the high rate of business closures shortly after establishment.
Advocating for a Lighter Tax Load
The Presidential Committee on Fiscal Policy and Tax Reforms, recognizing the stifling effect of these taxes on economic growth, is advocating for their suspension before the National Assembly. Oyedele argues that chasing after every small business owner, including pure water sellers, is not a successful tax strategy employed by any prosperous nation.
“You cannot become wealthy by taxing poverty,” Oyedele stated, emphasizing the need for a more sustainable approach.
95% Relief Proposed
The committee’s proposal offers a glimmer of hope for the informal sector. They advocate for a tax exemption for a significant portion – a staggering 95% – of informal businesses. This move, they believe, will be instrumental in encouraging economic growth and development.
Oyedele’s analysis paints a stark picture: only an estimated 3-5% of the informal sector can actually afford the current tax burden. This segment, according to the committee, can be effectively identified and taxed, while the vast majority will be granted a reprieve.
The Informal Sector: A Cornerstone of the Economy
The committee’s proposal recognizes the crucial role played by the informal sector in Nigeria’s economic well-being. They are a significant contributor to the nation’s Gross Domestic Product (GDP), employment rate, and overall economic activity.
“They contribute a lot to our employment and our GDP, but they struggle,” Oyedele acknowledged. The proposed tax relief aims to nurture this vital sector, fostering its growth and sustainability.
With many informal businesses failing to survive beyond 3-4 years, the committee believes excessive taxation is a major culprit. Their proposed reforms seek to address this issue, creating a more supportive environment for these small businesses to thrive.
CEM On The Street
CEM on the street crew hit the street to confirm the report of Oyedele. Whole many refused to speak for various reasons, they confirmed that they pay several obnoxious levies on a daily to go about their trade.
They added that after these several payments they cannot still trade freely as they have to be on the lookout for task force who who either arrest them or claim your goods for either hawking or roadside selling.
In certain area where residents buy water, these truck water sellers also reveal that they pay levies at various levies to ply their trade. Other traders also reveal that they pay levies for space, security, sanitation amongst others on a daily.
They lamented that these taxes sometimes supersedes their profit and hence have to increase price to stay afloat. Returning the cost to the final consumers. Although it is arguably that the price of pure water and other prices cannot be abruptly increased, market women have found wys to vary tye price.
Read Also: Tax Reforms: Withholding Tax Relief for Manufacturers and Farmers
If You Ask Me
The committee’s proposal has sparked debate and discussion. While some hail it as a necessary step towards invigorating the informal sector, others raise concerns about potential revenue shortfalls.
Regardless of the immediate challenges, the conversation surrounding tax reform in Nigeria is a necessary one. Striking a balance between generating revenue and fostering economic growth will be crucial for the nation’s long-term prosperity.
The plight of the pure water sellers and other informal sector traders serves as a stark reminder of the need for a more equitable and sustainable tax system. By implementing reforms that empower the informal sector, Nigeria can pave the way for a more robust and inclusive economy.
