As more money has been deposited into the vaults of the nation’s commercial banks by Nigerians in obedience to the directive of the Central Bank of Nigeria (CBN), an expert has said that it would be difficult for traders and business owners to escape paying their taxes.
The expert, who is the Head of Global Markets at Parthian Partners, Ronke Akinyemi said the naira redesign policy, has prompted a rise in digital banking, adding that it would promote tax inclusion and efficiency in the country.
Investors King had reported that the CBN in a view to mopping up larger Nigerian currency which is said to have been hoarded by some individuals and bringing same to the banks’ vaults, had brought up redesigning of the N1000, N500 and 200 denominations.
Accordingly, the apex bank announced that Nigerians should return the old notes so as to give way for the redesigned ones to be in circulation.
Though, CBN has miserly released the new notes, a situation that has subjected Nigeria to a cash crunch and caused citizens woes, the expert noted that the internally generated revenue base of the country would grow once the tax collection strategy is strengthened.
For Akinyemi, while speaking at the bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) in Lagos, the paucity and control of naira in public would make more of the currency to be domiciled in banks’ vaults so as to the country to know how much each business owner has and thus determine the prompt payment of tax from affected individuals.
Aside from checkmating corruption and strengthening the economy, the expert said the naira redesign coupled with the cashless policy of the CBN is expected to see more naira move from private hands into the banking vaults ad thus promoting better monitoring from concerned authorities.
According to her, following the policy, it is expected that there will be increased remittances from government-owned enterprises.
She also noted that abundance of cash in banks would improve tax administration, adding that should the nation eventually transit to a full cashless economy, more money will be in the bank and that the banks would have an idea of who owns what and it will be easier for the tax collectors to go after those who have not been paying tax on who has been evading tax.
She said people have been evading tax because majority of their money has been in their hands but now that the better part of their money is in the bank, it would be easily for tax to be collected.
If tax is remitted as and when due, the expert noted that the nation’s economy would grow faster and that government would have more revenue for infrastructural development.
It could be recalled that the governor of the CBN, Mr. Godwin Emefiele had in a press conference in Lagos recently also alluded to the cashless policy enhancing tax collections and improving the nation’s revenue base.
Emefiele had noted that the short-term decline in cash holding and the increased formalization of business activities as the cashless policy forces more economic agents to open bank accounts, will also boost fiscal policy.
According to him, with more transactions going through e-channels and bank accounts, more agents come within view of the government’s tax net and that it would enlarge the base of taxable activities and increases the possibility of more tax receipts by various tiers of government.
Emefiele said the new policy would reduce tax evasion, saying that experiences from other jurisdictions have shown, effective currency redesign can support regulatory reform, increased legislative reach and coordinated fiscal and structural policies.
