January 22, 2021

SB-Accounting

Accounting + Finance Blog

Top six reasons why you should pay your taxes

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Taxes are compulsory rates that every citizen of a country should pay. The government of the country set out procedures, rates, and penalties for paying taxes. Though compulsory, original and artificial citizens of that country should pay taxes voluntarily. But why should you pay taxes?

Reasons why you should pay taxes

Below are the top six reasons you should consider. These reasons may encourage you to pay your taxes.

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Reason One: It shows obedience

Paying taxes to the government without being coerced, revealed that such citizen is obedient to the rule of law in the country. But that’s not all! It also shows that the citizen is obedience to the almighty God in heaven. He is the one who says that we should be obedient to authorities.

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Reason Two: To avoid penalty

Failure to pay taxes attracts certain penalties. This may include a lump sum of money that is higher than the amount you want to pay as tax and interest rate base on fair value. In some cases, businesses had been closed for failure to pay taxes. Others have seen their bank account frozen. To avoid such penalties, paying taxes is good for you.

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Reason Three: Gives the good public image

Paying taxes may give the taxpayer a good public image. If you run a business, for example, and all taxes are paid, it may attract investors to the business. The belief will be that, as you can obediently pay off taxes on time, then, the investor’s returns may also be paid on time.

Reason Four: Enjoy some tax benefits

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When taxes are paid, you enjoy some tax benefits. The Nigerian Finance Act of 2019 shows that if citizens pay tax before the date slated for payment of tax, the taxpayer will enjoy a 1 percent refund of the tax returns. This implies that it is better to pay-off taxes than to invade it and ends up facing the penalty.

Reason Five: Win Award of Government Contract

According to the Nigerian procurement act, individuals and businesses that pay taxes promptly are awarded a government contract. The taxpayer will show evidence of payment of tax by presenting his or her Tax Identification Number (TIN). This worth it, because you never can tell when a contract from the government may be knocking at your door.

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Reason six: Security of life and property

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No business can thrive in a society where peace is threatened. Businesses can only work in a tranquil community. The government uses tax payers’ money to ensure peace and security in the country. Therefore, the payment of tax will enable the government to pull resources to take care of the security of life and properties.

In the next lesson, the objectives of taxation will be discussed.

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