Youth Inclusiveness and Tax Preference Prof Oyedokun.pptx

Youth Inclusiveness and Tax Preference:
Prospects and Challenges

Being a Presentation at the Virtual Inauguration of Taxation Students Association and Clubs at Tax Professionals’ House, Lagos on Wednesday, April 19th, 2023

1. Youth Inclusiveness and Tax Preference: Prospects and Challenges Being a Presentation at the Virtual Inauguration of Taxation Students Association and Clubs at Tax Professionals’ House, Lagos on Wednesday, April 19th, 2023 Prof. Godwin Emmanuel Oyedokun Professor of Accounting and Financial Development Department of Management & Accounting Faculty of Management and Social Sciences Lead City University, Ibadan, Nigeria Principal Partner; Oyedokun Godwin Emmanuel & Co (Chartered Accountants, Tax Practitioners & Forensic Auditors)

2. ND (Fin), HND (Acct.), BSc. (Acct. Ed), BSc (Fin.), BSc. (Bus. Admin), MBA (Acct. & Fin.), MSc. (Acct.), MSc. (Bus & Econs ), MSc (Tax), MTP (SA), PhD (Acct), PhD (Fin), PhD (FA), FCA, FCTI, FCIB, ACS, ACIS, MNIM, FCNA, FCFIP, FCE, FERP, CICA, CFA, CFE, CIPFA, CPFA, ACAMS, ABR, CertIFR , IPA, IFA, FFAR, FPD-CR, FSEAN, FNIOAM, ACIrb

3. Introduction What is Taxation? Taxation is described it as a compulsory contribution by the government and he concluded that even though taxpayers may receive nothing identifiable in return for their contribution, they nevertheless have the benefit of living in a relatively educated, healthy and safe society. However, the government ought to use this contribution to provide for a relatively safe and secure environment for the citizens Nightingale, (1997). In other words, he defined taxation as a levy imposed by the government on the income profit of the individual, partnership and corporate organization. Taxation is defined as an enforceable contribution of money enacted pursuant to legislative authority. If there is no valid status by which it is imposed. A CHARGE IS NOT TAX. Taxation is targeted towards alleviation and social welfare.

4. Introduction Tax Preference Tax preference simply means an abatement, credit, discount, exclusion, exemption, limitation on appraised value, refund, special valuation, special accounting treatment, special appraisal method or provision, special rate, or special method of reporting authorized by state law or the state constitution that relates to a state or local tax imposed in this state. A tax preference item is income or other items that is excluded when calculating one’s ordinary tax. There are different items or measures that are exempted from paying taxes-, exemptions, deductions, rebates, deferrals, special tax rates and credits. These measures are collectively called as ‘tax preferences’. They have an impact on Government revenues and also reflect a significant policy of the Government to realize some other objectives than revenue realization. The tax policy gives rise to tax preferences and such preferences can also be viewed as an indirect subsidy to preferred tax payers.

5. Taxation remains the most sustainable means of funding development and provides the bases to drive active citizenship where tax policies must serve the greater interest of the population especially young people who are at the receiving end of poverty and inequality. Over the years in Nigeria, the quality of youth responsive public service delivery has been on a downward spiral due to limited investment in these services. The misappropriation of tax revenue and funds meant for educational services, healthcare services, or social assistance that have direct impact on youth population) by the three tiers of government have also been a major challenge. The impact is abysmal to socio-economic indicators for your young people in the country including high rate of unemployment, falling standard of education, poor health service delivery, the lack of an enabling environment to drive the active involvement of young people in the economy among others.

6. Youths’ Participation in Taxation Effective youth participation in tax policy process is about creating opportunities for the youth to be actively engaged in designing, shaping, and influencing development policy and implementation processes. In Nigeria, the youth have not been engaged fully in influencing tax policies and processes at the three tiers of government. The Government of Nigeria has in place legal and institutional frameworks to ensure participation and involvement of the youth in decision making for national development, but in practical term, the youth are not given the opportunity to do so. However, it is important to also note that even when opportunities present themselves for young people to contribute to public policy making including tax reforms, there is a lack of knowledge on taxation that allows for informed engagement while the consciousness and understanding of taxation from the prism of a social contract is largely lacking.

7. Why Youths’ Participation in Taxation? Revenue Generation : the primary objective of tax is the generation of revenue to help the government to run the administration and provide basic facilities for the citizens of the country that is finance ever-increasing public-sector expenditure. Control the level of inflation : this function is performed in situation where people are taxed heavily, their disposable income will be reduced, and they will have less purchasing power, therefore reducing the level of inflation Redistribution of income : Tax system is a means of ensuring the redistribution of income and wealth in order to reduce poverty and promote social welfare. This can be achieved whereby people earning more will pay higher tax than those earning less.

8. Why Youths’ Participation in Taxation? To solve Balance of payments problems : Where the import is more than the export, the government can raise taxes to take care of the deficit that arises as such. To discourage businesses and consumption of “harmful Goods : Taxes can be used to discourage businesses that are harmful to the growth of the economy of the country and also consumption of harmful goods such as cigarette and alcohol, by imposing heavy taxes on them.

9. Challenges of Youth Inclusion in Taxation Low levels of tax literacy: Many young people lack the necessary knowledge and understanding of taxation systems, making it difficult for them to comprehend its benefits and contribute to tax revenue. Limited access to formal employment: Many young people are either underemployed or unemployed, which means they do not earn enough money to pay taxes. Lack of accountability: Young people may perceive taxes as unjust and may not see the tangible benefits of their contribution, thereby reducing their willingness to pay taxes. Technological exclusion: Young people may not have easy access to digital tools and resources needed to file tax returns and make payments online. Corruption: Young people are often exposed to corruption in various government institutions, such as tax collection agencies, which could discourage them from paying taxes.

10. Challenges Cont’d Political exclusion: Young people may feel excluded from the decision-making processes around taxes, which can affect their willingness to comply with tax requirements. Lack of trust: Young people often have doubts about how their tax revenues are being utilized by the government, which reduces their motivation to pay taxes. Difficulty in enforcing tax laws: Young people may be more difficult to enforce tax laws upon due to their lack of experience and knowledge in financial matters. Lack of consciousness of civic duty: Young people may not fully appreciate the importance of paying taxes as a civic responsibility. Economic constraints: Some families or communities may not prioritize tax compliance due to economic constraints, which can affect young people's perception of taxes.

11. Conclusion and Recommendations Tax must be made to work for young people: In the light of overwhelming gap in youth responsive social services, tax for services initiatives such as the Education Tax Fund should be deployed more effectively and in an accountable manner for accelerated youth development. The budget process presents an opportunity to aggregate the needs of young people and resource allocated accordingly. Inclusivity should be at the heart of the budgeting process and in the face of falling public revenue, inclusion would allow for better prioritisation and allocation to meet the most pressing needs of citizens especially for young people. The Nigerian government at all levels should open space for the youth to engage in tax processes at different levels on one hand while the tax authorities should initiate robust tax education programmes designed to educate Nigeria youths on taxation. Programmes that target young people in their spaces should be developed to suit their peculiarity. Example, students and undergraduates, youth entrepreneurs and businesses, informal traders, among others. This would provide the needed platform to actively engage tax reform conversation with the country's largest demography, help young people to appreciate taxation and its place in national development and become more receptive to paying taxes.

12. Conclusion and Recommendations Incentives and rebates should be directed at youth led businesses to drive business innovation and creativity, employment creation, the growth of the local economy and its competitiveness in a global economic landscape. Young people must continue to engage issues of transparency and accountability in the management of public resources. Through local groups working in solidarity with broad platforms young people have the capacity to hold leaders to account on their responsibility CSOs should build the consciousness of young people to understand taxation as a social contract between the government and the people, strengthen capacity for young people to advocate and participate in tax policy design, budgeting and demand investment in youth responsive public projects.

13. Prof. Godwin Emmanuel Oyedokun Professor of Accounting and Financial Development Lead City University, Ibadan, Nigeria Principal Partner; Oyedokun Godwin Emmanuel & Co (Chartered Accountants, Tax Practitioners & Forensic Auditors) [email protected] ; [email protected] [phone], & [phone]