Fear Grips Nigerians as Authorities Target Personal Bank Accounts for Unpaid Taxes”

The Lagos Internal Revenue Service’s notice on the execution of the tax law has sparked yet another dispute among Nigerians regarding the country’s tax regulations.

In a notice released over the weekend, LIRS revealed that the tax institution is empowered under Section 60 of the Nigeria Tax Act Administration to recover outstanding taxes via direct bank debit.

The report has not been refuted by the Presidential Fiscal Policy and Tax Reforms Committee or the Nigeria Revenue Service.

Taiwo Oyedele, the committee chairman, cited his X statement, which stated that the action is the tax authority’s last option.

“The power of substitution is a tax collection tool that enables the tax authorities to ask a third party (a “substitute”) to send money that belongs to a taxpayer who is in default in order to repay a final, established, and unpaid tax bill.

In response to a commonly asked question about X, he stated, “This power is only exercised after all legal and administrative processes, including appeals to the courts, have been exhausted.”

He went on to clarify that the power of arbitrary replacement is neither discretionary nor arbitrary, emphasizing that due process firmly governs its application.

His previous stance, according to which the new tax legislation did not give anyone—federal, state, or local government councils—the authority to debit personal accounts, is not supported by the most recent explanation.

In the meantime, financial professionals and economists expressed their opinions on the development.

Dr. Muda Yusuf, the CEO of the Center for the Promotion of Private Enterprise, stated that the opposing viewpoints must be reconciled.

In response, Yusuf stated that although tax reforms were essential, the problem of tax authorities having direct access to bank accounts needed more precise justifications in order to prevent frightening and confusing Nigerians.

He pointed out that fear of arbitrary debits has already caused panic in some areas, with instances of people taking money out of banks.

He claimed that these responses highlighted the necessity for authorities supporting the reforms to communicate more effectively.

Yusuf cautioned that debiting bank accounts for tax obligations poses important issues regarding who owns the money in those accounts.

He clarified that money in a person’s account might not always be theirs because it could come from suppliers, contractors, or other parties.

He emphasized that these issues could have a detrimental impact on financial inclusion and erode public trust in the tax reform plan if they are not appropriately handled.

He claims that consumers may store cash at home or convert their savings into foreign currencies out of fear of account debits, which would erode confidence in the banking system.

According to Dr. Yusuf, judicial monitoring is crucial in handling such delicate circumstances, and such harsh enforcement tactics should only take place with a clear court order sanctioning the conduct.

“I think it’s important that we reconcile those two positions,” he stated. Because I am aware that one of the concerns individuals have is that the tax authorities may gain access to their accounts and start tampering with them.

You are aware that many people voiced worry. Some people were even withdrawing their money from the bank because the situation was so dire.

However, I’m not sure if he addressed the issue that tax authorities have the authority to debit people’s accounts if there is a liability. Naturally, that calls for much more explanation, particularly from proponents of tax reform.

“Because people are concerned about tax reform because of these kinds of things.” Because there is no assurance that the money in someone’s account is theirs if you claim to wish to debit their accounts.

“Are you aware? It can be money belonging to someone else. It might be a contractor. It might be a supplier.

“After someone deposits money into your account, a tax authority claims that you have an asset because you owe money.”

It is not a benefit to you. It might not be a benefit to you. I’m trying to make that point.

Thus, these are a few of the difficulties. Because these are a part of the problem when people start to embrace fiat and worry about it.

It is detrimental to the promotion of tax reform as a whole. This is not something that should be amplified, after all. It is detrimental to the federal government’s efforts to advance reform.

If not, you frighten folks away. People might start withdrawing their money right now.

“People could start converting their money into different currencies right now and keep it at home.” And you know, that might result from all these problems with financial inclusion.

It might lead to a problem with financial inclusion. For this reason, some of us believe that this process needs to be handled quite cautiously. since these are extremely delicate matters.

And I believe I once heard that a clear court ruling granting that kind of consent is necessary for this kind of conduct to occur. I heard them say that. that the court must approve it.

“We must go to court, and the court will decide that this is the end of it. In an interview with DAILY POST on Monday, he said, “And that’s when some of these extreme actions can be taken.”

Mazi Okechukwu, the former head of the Chartered Institute of Bankers of Nigeria, called the action risky and cautioned that it would lead to long-term financial system instability.

Unegbu also questioned the action’s legal foundation, claiming that government entities lack the authority to arbitrarily debit bank accounts without following the proper legal procedures.

He cautioned that such actions might harm the financial industry’s and the tax system’s credibility if left unchecked.

Both experts emphasized that enforcement tactics must strike a balance between revenue generation and the need to safeguard public trust and financial stability, and they advised authorities to handle the tax reform process cautiously.

Here, we are building a monster.

“I believe they are acting incorrectly. He said, “I think the law has to stop them because they are doing it.”

Recall that there have been disputes around the new tax legislation, including allegations that their gazetted form was changed.