Assessing the tax burden of Nigeria’s election cycle on taxpayers

As Nigeria gears up for its upcoming elections, concerns arise regarding the tax burden on taxpayers due to the electoral process. Taiwo Oyedele, Partner and West Africa Tax Leader, sheds light on the extent of the Federal Inland Revenue Service's (FRS) power to tax and the implications for businesses and individuals. In a recent interview on CNBC Africa, Oyedele discussed a case involving the FRS and a property leasing company, highlighting the complexities of tax assessment. The FRS attempted to determine the company's turnover based on property evaluation, leading to a legal dispute. Oyedele emphasized the importance of adhering to tax laws and the need for clarity in interpreting regulations. He pointed out key lessons from the case, emphasizing the value of learning from mistakes and advocating for legislative amendments to improve tax administration. Transitioning to the cost of Nigeria's election cycle, Oyedele outlined both quantifiable and non-quantifiable expenses. The direct costs, including the Independent National Electoral Commission's (INEC) budget allocation of 244 billion Naira, raise concerns about financial accountability. The postponement of elections further complicates economic activities, resulting in indirect costs such as reduced GDP and lost tax revenue. Oyedele estimated the tax-to-GDP ratio impact at approximately 10 billion Naira, underscoring the significance of election-related expenses on taxpayers. Beyond financial implications, Oyedele highlighted the damage to Nigeria's international reputation and the personal disruptions faced by citizens. However, the challenge of seeking compensation for individual losses poses legal and logistical hurdles. While some may consider legal action, proving a direct correlation between election delays and personal costs remains complex. Oyedele emphasized the need for electoral reform to streamline voting processes and reduce financial burdens on the government and taxpayers. Simplifying voting procedures, enabling remote voting, and enhancing security measures could enhance efficiency and mitigate excessive election expenses. Ultimately, addressing the underlying issues in Nigeria's electoral system is crucial for improving transparency, reducing costs, and enhancing civic participation. Oyedele's insights underscore the pressing need for reform and accountability in Nigeria's tax and electoral frameworks, signaling a call to action for effective governance and fiscal responsibility.