95% SMEs collapse within a year due to multiple taxation – Elumelu
The Chairman, Heirs Holdings, Mr. Tony Elumelu, on Thursday said that 95 percent of Small and Medium Enterprises fold up within a year in Nigeria due to multiple taxes and levies.
Elumelu said this at the Lagos Business School Alumni Association 2017 Alumni Day in Lagos with the theme: “The Effects of Multiple Government Regulations and Taxation on Business Growth in Nigeria.”
He said five per cent of the small businesses that survived after one year were a big disincentive to the nation in terms of employment creation.
Elumelu said multiple business regulation, multiple taxation and inconsistent government policies affect SMEs competitiveness.
According to him, multiple levies by the government and its agencies affect small businesses’ ability to attract capital in their investment climate.
Elumelu lamented that in spite of multiple taxes and levies in the country, Nigeria remained the lowest in the world with 10 per cent tax contribution to Gross Domestic Product.
“It seems we have a big problem, because, with high taxation and multiple levies, it is expected we should have very high tax revenue,’’ he said.
According to him, government should find out the reason for the discrepancy for desired growth and development.
He urged government to create a more conducive environment that would encourage survival of SMEs in order to reduce unemployment rate.
“Government doesn’t create jobs, it is the right enabling environment for SMEs that create jobs,’’ he argued.
He called on the government to streamline all taxation and levies across the three tiers of government to avoid collapse of SMEs.
The Head of Tax and Corporate Advisory Services, PwC Nigeria, Mr. Taiwo Oyedele, called for the amendment of the Constitution to ensure coordination among the three tiers of government and their agencies.
Oyedele said multiplicity of government agencies with the same work function was becoming worrisome.
“You don’t need tax incentives for people to do business, we just need to remove the disincentives,’’ he said.
Chairman/Chief Executive Officer, Soulmate Industries Ltd., Mr. Ndukwe Osogho-Ajala, said government needed to encourage SMEs to prosper for them to be able to pay taxes.
Osogho-Ajala said government should embrace measures adopted in other countries to grow tax revenues, instead of concentrating on closure of companies that fail to pay taxes.
“You need to grow revenue before you can collect tax. We are not growing revenue in Nigeria and that is why people fail to pay taxes.
“You don’t shut a place that is generating employment; you should allow them to make money to pay tax,’’ he stated. Punch
