MON, JULY 10 2023-theGBJournal |”The economics of collection does not support the move. The cost of collection would be much more than the amount that could be collected,” the Centre for the Promotion of Private Enterprise (CPPE) said in a statement to theGBJournal.
According to the think-tank, ”the FIRS should think of more creative ways of taxing the informal sector players in ways that will be more cost effective, less disruptive and with minimal political cost.
More importantly, the FIRS should adopt the pareto principle of focusing on the few players and individuals that could give the highest revenue yield. This is a model appropriate for an economy with high level of inequality like ours.”
It noted that over 98% of the informal sector traders are microenterprises who do not fall within the threshold of entities that are liable for VAT payment and they are also highly fragmented.
”It would be impractical to develop a partnership framework with the market associations for the collection as contemplated by the FIRS.” CPPE said.
Most informal sector operators have not recovered from the shocks of the fuel subsidy removal and the associated inflationary impact, and most of the operators have no records which could be used for purposes of assessment.
”There is therefore a high risk of arbitrary assessment.”
CPPE pointed to the literacy level of the operators which is very low which, saying that would create communication issues. bring very high political cost to the government.
It said sectors are already paying all manner of levies to local governments, and several non-state actors arguing that the government need not burden them with additional taxes.
Twitter-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com| govandbusinessj@gmail.com
