An effective tax administration system will help in the detection of economic crimes, Deputy Chief of Staff to the President, Mr Ade Ipaye, has said.
According to him, in modern systems, tax administration is increasingly being used to detect corruption and other economic crimes in addition to enforcing tax laws.
Ipaye taught tax law at the University of Lagos (UNILAG) before he joined the Lagos State Government as Special Adviser on Taxation and later served as Attorney-General and Commissioner for Justice.
He spoke in Lagos during a dinner/lecture in honour of former Nigerian Bar Association (NBA) Lagos Branch chairman Mr Chijioke Okoli, who was conferred with the rank of Senior Advocate of Nigeria (SAN).
The event was organised by “Friends of Chijioke Okoli” in collaboration with NBA Lagos Branch and an association of Igbo lawyers, the Otu Oka-Iwu (Law Society).
“Out of this, 4.6 million (or 46 per cent) are in Lagos State. If you juxtapose that against the 77 million workforce which the Nigerian Bureau of Statistics has declared to be in existence in Nigeria, you can clearly see how far down we are and how a sharp decline in the price and volume of our exported crude oil can be so devastating to the economy,” Ipaye said.
Ipaye backed the view that a multi-agency approach to fighting tax and financial crimes, including corruption, is the best recourse for a government seeking to make corruption more difficult to hide.
He said: “The rationale is quite simple. Tax examiners are often highly trained forensic accountants or auditors or financial investigators with an ability to follow money trails, whether legal or illegal.
“They are, therefore, well-placed to detect and report unexplained increases in wealth or suspicious transactions that could constitute a bribe.
“Furthermore, the proceeds of corruption are also, quite invariably, subject of tax evasion, and this correlation can help in law enforcement. In most cases, wealth acquired illegally would not have been subjected to tax, even though it is not tax exempt.
“Thus, even where illegality is difficult to prove, tax evasion and money laundering are usually easy (The famous Chicago drug baron, Al Capone (Alphonse Gabriel) was convicted of tax evasion and sentenced to 11 years imprisonment even when it was difficult to prove his drug dealing and other criminal activities). This demonstrates the potentials of taxation as a means of checking corruption.”
Ipaye believes corruption in the tax system acts as a major hindrance to sustainable economic growth as it deters well-meaning and capable long-term investors, thereby killing industries before they become viable.
“In this sense, corruption leads to the erosion of the future tax revenue base of a country, thereby impacting future tax revenue collection,” he said.