How Igbo Traders in Kwara State Are Bearing the Brunt of a Failed Government Tax Directive

[Shekinah Brama]

Despite previously agreed-upon arrangements with the Kwara State Internal Revenue Service (KWIRS) that outlined expected tax contributions based on the value of goods and evidence of payment, recent tax enforcement measures are disproportionately targeting Igbo traders, leading to significant controversy in the state. Numerous traders have been issued letters demanding tax arrears dating back to 2018, causing widespread anxiety and frustration among the affected communities, reports Mustapha Usman from The ICIR.

 

God First, an Igbo trader, watched in despair as officials from the Kwara State Inland Revenue Service (KWIRS) forcibly closed his boutique in Taiwo Isale, Ilorin. His arms were folded across his chest, his eyes reflecting a deep, unspoken burden as he helplessly observed the officials, accompanied by two police officers, lock up his shop. It was just 11:00 AM in July 2024, and he had hoped for a productive day. However, that hope was dashed when about six KWIRS officials stormed his boutique, chased out his staff, and roughly dragged the mannequins displaying menswear back into the shop.

“They are forcibly closing my shop. Do they even have the right to do this? What did I do to deserve this?” he laments. “Without any prior warning, they just said I owed some tax arrears and locked up my shop.”

God First explained to The ICIR that he had been paying his taxes promptly through his union and owed the state no money. He mentioned that he had recently received a letter demanding N20,000 for 2022, even though he had already paid N12,000 through his union with an official receipt issued. Despite his explanations, the officials dismissed him and proceeded to lock up his shop, demanding N188,000 in alleged arrears.

In Kwara State, individuals and corporate entities are subject to various tax obligations, including personal income tax, which is typically levied on traders based on their annual profits or gains. The tax is usually calculated through direct or self-assessment, with the state revenue office conducting on-field assessments to determine the amount due.

Court Orders and Enforcement Against ‘Offenders’

KWIRS officials were acting under a court order based on a motion filed in February 2024 under Section 38 (1) of the Kwara State Revenue Administration Law (2005) (as amended). The motion sought to enforce the closure of shops belonging to tax offenders. However, God First was unaware of any court hearing and had not been invited to respond to the allegations against him. The court ordered that the respondent’s goods and premises be seized to enforce payment of the alleged tax liability for the years 2014 to 2023, amounting to N188,140.00.

Uchechukwu Nnamani, a footwear vendor in Taiwo, Ilorin, Kwara state

Despite God First’s claim that he had paid all required taxes from 2018 to 2023, his shop was shut down, and he was slapped with additional demands. His tax payments, totaling about N84,000, were based on an agreement between the traders’ association and the government, first established in 2015 and renewed in 2018.

Pressure on Igbo Traders

The ICIR found that the Kwara State Association of Igbo Traders (KWAITA) initially resisted the state’s attempt to collect taxes through group arrangements. However, the state government continued to appeal, eventually securing the association’s cooperation.

“They appealed to us to help them collect taxes from our people, knowing very well that we know our people better than they do, and they couldn’t access even 15 percent of our traders,” said Aloysius Nwora, the coordinating chairman of KWAITA on tax matters.

Nwora added that the state revenue service initially offered a 10 percent bonus on the amount collected, with tax rates starting from N3,000 to N9,000 in 2015. Over time, these amounts increased, and the agreement was renewed periodically. However, in 2023, the KWIRS decided to bypass the association and engage directly with individual traders. Despite KWAITA’s initial rejection, the situation escalated when KWIRS began issuing new tax assessments, claiming that traders owed arrears dating back to 2015.

Ikechukwu Anieze, a building materials trader in Ita Amodu, Ilorin, Kwara

The tension reached a boiling point on March 1, 2024, when KWIRS sealed the shops of two KWAITA members, Chuppet and Top Biz, during enforcement operations. The government’s shift from its original agreement left traders like Chupet, Top Biz, and God First to bear the brunt of the new directives.

God First’s boutique, a medium-scale business, is now expected to pay N188,140, despite having evidence of payment and adhering to the previously agreed-upon terms. Meanwhile, indigenous traders with similar-sized shops continue to pay as little as N3,000 annually, without facing increased taxes or enforcement actions. This disparity has led many Igbo traders to believe that they are being unfairly targeted by the state government.

Accusations of Discrimination

The enforcement team has been accused of disproportionately targeting Igbo traders. A survey by The ICIR revealed that most indigenous traders had not been required to pay new taxes or arrears, despite using similar payment methods through their unions. A visit to 20 shops—10 owned by Yoruba (indigenous) traders and 10 by Igbo traders—showed that while most Igbo traders were hit with exorbitant tax demands, all the indigenous traders interviewed had settled their taxes with relative ease.

The chairman of the building materials unit zones in Kwara State

Historical Context: 2015-2023

Given the significant potential in the informal sector, KWIRS established the “Informal Sector Tax Directorate” to collect Personal Income Taxes (PITs) from traders and artisans. The directorate was divided into three units—Markets, Micro Business, and Artisans—each supported by an administrative unit. The assessment of tax liabilities, particularly for micro businesses, was carried out by the tax assessment directorate using a “best of judgment” approach, rather than the more formal “Pay-As-You-Earn” (PAYE) system.

For years, the collection of PITs from traders and artisans was facilitated by union or association executives, a system that reduced collection costs and stress but had its risks. This arrangement was mutually agreed upon and functioned smoothly until 2023 when the KWIRS began to reassess the amounts owed by traders, ignoring the previously agreed-upon terms.

In 2023, the KWIRS issued new tax assessments, leading to a wave of enforcement actions. Igbo traders, particularly those in the Taiwo area, were hit hardest, with many being asked to pay arrears dating back to 2015, despite having paid through their associations.

Protests and Discriminatory Sanctions

The enforcement actions triggered protests among Igbo traders in Ilorin, leading to the closure of shops and business centers owned by Igbo businessmen. In response to the government’s actions, KWAITA organized protests, which resulted in the temporary reopening of some shops after negotiations with the state government.

However, the harassment continued, with traders like Uchechukwu Nnamani, a footwear vendor in Taiwo, Ilorin, now owing over N1 million in alleged arrears. Uchechukwu, like many others, has evidence of tax payments dating back to 2014 but is now being asked to pay arrears amounting to N1.3 million, despite running a small shop funded by loans from banks and cooperatives.

Behind a Flawed System

The KWIRS Director of Legal Shehu Mogaji

Documents and memos obtained by The ICIR, along with interviews with KWIRS and KWAITA officials, reveal that the responsibility for collecting taxes was shifted to the union in 2015 by the state government. This arrangement, while initially beneficial, has now become a source of contention as the KWIRS seeks to impose new tax demands on traders.

The flawed system has led to widespread confusion and distress among Igbo traders, many of whom feel they are being unfairly targeted. The KWIRS’ failure to conduct proper on-field assessments before issuing tax demands has only exacerbated the situation, leading to arbitrary and inflated tax assessments.

Conclusion

The situation in Kwara State highlights the challenges and complexities of tax administration, particularly in the informal sector. While the KWIRS seeks to improve tax compliance and collection rates, its heavy-handed approach has led to significant hardship for Igbo traders. As the controversy continues to unfold, it remains to be seen how the state government will address the growing concerns and restore trust among the affected communities.

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