FG’s proposed higher taxes

IN what must have sounded like extremely bad music to the ears of Nigerians, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, disclosed last week that there might be “modest increases” in taxes and tariffs on certain businesses and individuals over the medium term. Speaking at a public hearing on the 2021 finance bill organised by the House of Representatives Committee on Finance in Abuja, Ahmed said the government was also considering new taxes as the “economy is now on a recovery path”, adding that a couple of reforms and amendments had been recommended in the draft 2021 finance amendment bill, and more would be introduced by the middle of 2022. The fiscal reforms, she noted, were still in view, as the ministry could not adopt all the proposals collected from stakeholders. If precedent is any indication, the Muhammadu Buhari-led Federal Government must be taken very seriously regarding its plan to increase taxes next year.

Meanwhile, going by the projections in the National Development Plan 2021-2025, the government is set to continue its borrowing spree, pushing the country’s public debt stock to N50.22trn by 2023, with domestic debt at N28.75trn and external debt at N21.47trn. According to the Debt Management Office (DMO), Nigeria’s public debt stood at N38trn by the end of the third quarter of 2021, with the total debt stock rising by N2.540trn in three months (July to September 2021). In short, the Buhari government plans to accumulate about N12trn debt in two years ( 2021-2023). The long and short of it is that in order to fund its budget, the Buhari government plans to borrow the country into a coma and tax Nigerians to death. It is an alien from Mars that is not aware that as things stand currently, Nigeria and Nigerians are back in debt peonage, thoroughly rubbishing any memory of the Paris Club debt forgiveness achieved at the onset of the current Republic under the Olusegun Obasanjo administration. We do not make this submission lightly.

For instance, in analysing the 2020 budget, we observed that if a budget was a codification of a vision signaling in what direction those who drafted it would like to take the country, that budget showed that the Buhari administration had no grand developmental plans, and would rather wallow in the same old economic and political mediocrity. We premised our conclusion on two grounds: the Federal Government would continue to commit close to 90 per cent of its net spend on recurrent expenditure, meaning that for every naira that it spent, only 10 kobo would go towards any kind of capital expenditure. Second, more money would have to be committed to running costs and salaries because, with very little warning, the Federal Government went ahead and created five new federal ministries, increasing the total number to 44.

To say the least, Nigerians suffered severe economic agonies in the outgoing year 2021 as a series of bad government policies and inflation combined with pervasive insecurity to create a climate of misery. It is therefore uncharitable that instead of outlining measures to ameliorate the distressing conditions in which Nigerians are being forced to live, the Federal Government is planning yet another regime of taxes.  There is only so much that any population can take, and no more, and the Buhari government had better take cognizance of that fact of history. If it sounds odd to hinge the planned introduction of new tariffs and levies in 2022 on the fact that the economy is now on a recovery path, it sounds much more bizarre that the government is not thinking of cutting costs in the face of economic realities, but has in fact increased recurrent expenditure.

In case it needs any reminding, the Buhari government imposed tariff increases on Nigerians this year, and millions of Nigerians are walking corpses. It increased electricity tariff and increased Valued Added Tax (VAT) from 5 per cent to 7.5 per cent. Only recently, it slammed electricity meter tariff increase on Nigerians. And what is more, for many months now, Nigerians have contended with the soaring cost of cooking gas simply because their government imposed a prohibitive 7.5 per cent VAT on gas imports early in the year, and further caused the policy to have retroactive effect, putting importers in an impossible situation. Of course, it is currently talking about removing subsidy on fuel. Just how can the government be thinking of imposing higher taxes when cooking gas and even kerosene are beyond the reach of most Nigerians? What benefit have the tariff increases brought to Nigerians?

It is interesting that in all her rhetoric, the Finance, Budget and National Planning minister did not indicate that the government has any plans to cut the cost of governance, which keeps rising to the detriment of the populace. Yet there is no way a country like Nigeria can make a headway without a drastic cut in governance cost. If it earns any revenue, it is basically to service its humongous debts, not even to offset those debts, and so it is confounding that the government keeps spending money that the country does not have. It has talked about widening the tax net without taking concrete steps to actualise that objective. It has also allowed certain individuals, including some unscrupulous private jet owners, to commit economic sabotage at will.

We reject the proposed tax increases. It is uncharitable for the government to be telling Nigerians to expect greater suffering in 2022. As we have said time and again, a society cannot be built solely on the basis of exploitation of the people.

YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE

We Have Not Had Water Supply In Months ― Abeokuta Residents

In spite of the huge investment in the water sector by the government and international organisations, water scarcity has grown to become a perennial nightmare for residents of Abeokuta, the Ogun State capital. This report x-rays the lives and experiences of residents in getting clean, potable and affordable water amidst the surge of COVID-19 cases in the state.