The need for financial education in Nigeria - An Analysis of Taxation in Contemporary Society.
This above topic is a very large discussion which I'm going to be focusing on taxation. First of all, taxes are just compulsory fees imposed on individuals and businesses in the country. So, these fees are legal and also collected and used by the country's government. This government could be local government, state government, or federal government, depending on the country.
There are various types of taxes which include: progressive, proportional, and regressive taxes.
The proportional tax is an income tax system that levies the same percentage tax to everyone regardless of income. A proportional tax is the same for low, middle, and high-income taxpayers.
They are commonly practiced in countries like Hungary, Bulgaria, and Estonia.
For progressive tax, the higher your income is the higher percentage of tax you pay while low-income earners pay a lower percentage of tax; a good example of countries that do this is Nigeria, the USA, Japan, and Canada. Then regressive tax system, lower-income earners pay a higher percentage of tax than high-income earners. Countries like Switzerland, Netherlands, Norway, and Denmark practice this taxation system.
Streamlining it to Nigeria, where a progressive tax system is in place, each income category, say, from #0 to #40,000, is responsible for paying a specific percentage. They then pay a set percentage when they decrease from #41,000 to #100,000. Nigeria primarily levies nine different types of taxes: capital gain tax, company income tax, national information technology development levy, personal income tax, which is very important, the petroleum profit tax, stamp duties tax, tertiary education tax, value added tax, and withholding tax.
I will talk extensively on 7 of the listed taxes, yeah, though the remaining two (2) are also necessary.
So, the first type of tax that’s gotten in Nigeria is the Capital gain tax. This tax is a 10% tax imposed on the profit of chargeable assets either in the form of sale or exchange. For example, you buy UBA for 43 billion naira; and manage it for a year plus, then UBA valuation increases and you sell it for 60 billion naira you're going to pay 10% tax profit on that 23 billion.
This tax will be paid to the Federal government through the Federal Inland Revenue Service (FIRS).
The second type of tax is the company income tax. It is normally paid by all corporate entities in the country to FIRS. It's usually a charge of 30% of the company’s annual profit from the Federal Inland Revenue Service. Like in Nigeria, all companies are supposed to pay this one except companies with petroleum activity. Petroleum business companies rather pay petroleum profit tax.
Then the next type of tax is the personal income tax. This one is imposed on individuals who are employed or self-employed through businesses. It's normally paid to the state in-land revenue service where the payer resides. So, let's say you're working in Lagos but you're living in Osun state. Since Osun state is like a stone through to Lagos state. Despite you working in Lagos, you're not going to pay this personal income tax to Lagos and LIRS, that's Lagos Inland Revenue Service. You're rather going to pay to Osun state inland revenue service. Also, if you're a government worker, there's something called PAYE - Pay As You Earn, it's going to be deducted from that source.
For the stamp duty tax, it is a tax on any written or electronic legal instruments/documents. Like all these cheques, receipts, agreements, bills of exchange, etc. This tax is charged for all electronic transfers above #10000 and it’s normally 50 naira per #10000 electronic transfer.
Value-added tax, this is the second most popular tax here. This is just an indirect tax imposed on goods and services. It was increased from 5% to 7.5%; as I speak, most people did not know about this value-added tax till when the federal government increased it from 5% to 7.5%; let's say you go to a shop, a boutique to buy something, you pay for the stuff. After paying, after summing up all those things, there will be a 7.5% if you check the receipts, next time you go just check the receipts, and you will see something called value-added tax.
Then you will see that if you now come and multiply it, if you now do 7% of your total bill, you are going to give you that value-added tax then it will now be added to your total price of goods and they will now give you the cost of the bill and that is when you will now pay. This value-added tax is paid to the business owner which is now paid by the company to the FIRS.
The next tax is the educational tax. I think this is the funniest one of all of them, and quite painful.
So, this tax is a 2% tax imposed on all registered tertiary universities in Nigeria, then I asked myself, if all tertiary institutions in Nigeria pay this tax, 2% tax, why is the government having a problem paying lecturers that money, that salary?
From the above-mentioned, I believe Nigerians are enlightened on the taxation rates; with this, can we say the government is doing well with our taxes in terms of meeting the basic amenities of the country?
Hi! Tsunsica here! One think I dislike about taxes is they not being used to what they are supposed to, it hurts knowing you are just inflating someones pockets. It would be good no see more sources of the information since the percentage and definitions are established information. Also, you should use tags according to your content, not only tribe tags. This one has nothing to do with Splinterlands for example.
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Thank you very much for the detailed correction. About the tags, I have taken note and it won't repeat itself.
For the sources, since it was something I had known about long before now, I didn't carefully check for their sources; however, I've taken note in my later posts I'll be sourcing details like the percentages and the rest.