LCCI Warns Of Economic Consequences Of Freezing Accounts Of Tax Defaulters By FIRS

Yemisi Izuora 

The council of the Lagos Chamber of Commerce and industry [LCCI], has raised concern over high handedness of the Federal Inland Revenue Service, FIRS, especially with regard to freezing of accounts of tax defaulters.

Rising from its first meeting this year which deliberated on a range of business and economic issues, the Council expressed concern over reports by many corporate bodies bordering on freezing of their accounts and subsequent debiting of such accounts by the FIRS, on account of tax defaults.  

This move was premised on the powers conferred on the FIRS by section 31 of the FIRS Act which gives FIRS the powers to appoint collection agents for the recovery of tax payable by the taxpayer.  

The Council though affirmed that LCCI is a strong proponent of regulatory compliance by private sector players, nevertheless it is important to underscore the fact that tax administration should be in consonance with the basic tenets of the rule of law and the fundamental principles of a good tax system.  

In a statement by the Director General of the LCCI, Muda Yusuf at the end of the meeting, said, “Tax administration should be consistent with the principles of equity, fairness, legality, accountability and due process. Taxpayers should be given ample opportunity to defend their positions on tax matters before a lien is placed on their bank accounts.  There are instances where company accounts were frozen in error because there was no proper engagement, documentation or communication with the tax payers”.

According to Yusuf, The disruptions to businesses resulting from a sudden freezing of bank accounts for reasons of alleged default in tax payment has caused irreparable reputational damage to many businesses. 

“In the light of the foregoing, LCCI urges the FIRS and the banks to exercise utmost restraint in the adoption of this tax revenue recovery strategy because of the grave implications for investors, financial inclusion and the economy as a whole. 

The damage to the economy may be much more than the contemplated revenue.

Revenue generation is not an end in itself, it is a means to an end.  

“The ultimate objective is to ensure equity, improve welfare of citizens, create jobs and promote the advancement of the economy.  The activities of agencies of government should be in tandem with the Ease of Doing Business Agenda of government and the promotion of the ideals of the Economic Recovery and Growth Plan [ERGP]”, he advised.

Also, the Council of the Chamber commended government for the payment of the first tranche of outstanding petroleum subsidy claims to the tune of N237 billion in promissory notes.  

In particular it commended the intervention of the Central Bank of Nigeria, CBN, in the granting partial interest waivers for the marketers on their indebtedness to the banks.  

The LCCI Council further urged the government to effect the payment of the balance of the subsidy claims without delay, and also proposed the expeditious passage and assent of the Petroleum Industry Bill and the deregulation of the sector to put an end to the recurring subsidy problem.

On the coming elections, the LCCI Council reiterated the imperative of a peaceful conduct of the forthcoming elections.  It stressed the need for the elections to be free, fair and credible.  

The council underscored the critical importance of the neutrality of INEC, the security agencies and the Judiciary in the electoral process, adding that a peaceful environment is crucial for political stability, economic progress, social stability and societal cohesion.  

It warned that, “No significant investment will take place in an environment that is politically and socially unstable”, and therefore urged the politicians and other actors in the political space to conduct themselves with decorum and in line with the rule of law.  “Politicians should refrain from intemperate utterances that could stoke divisive tendencies and conflicts in the country”, the LCCI warned.

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