FG’s tax cheer

THIS is apparently a jolly time to be in government. Things are shaping up quite well revenue-wise, and officialdom is quite exultant and rather unpretentious about its excitement. And quite naturally, it wants and is asking for, more. Last week, the Federal Government charged tax practitioners to work harder in getting more revenue from taxes, stressing that tax revenue is currently the highest income source for the federation. It spoke through the Accountant-General of the Federation, Oluwatoyin Madein, at the 26th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja, with the theme ‘Sustainable Tax Culture and Economic Roadmap for Nation Building.’ As it pointed out, based on the current high revenue from taxes, members of the Federation Accounts Allocation Committee (FAAC) were always looking forward to the figures from the Federal Inland Revenue Service (FIRS) every month in order to have funds to share to the three tiers of government. Madein said: “Like the CITN, the Office of the Accountant-General of the Federation is committed to a sustainable tax culture that will ensure the continuous flow of revenues even at an improved level.

“Tax revenue, as of today, is the highest source of revenue accruing to the federation. Therefore, at the FAAC meetings, we eagerly await the numbers coming from the FIRS because the performance keeps increasing and brings succour to all tiers of government. Let us remain steadfast in our commitment to building a better future for all. Together, we can harness the transformative power of taxation to create a more prosperous, equitable and sustainable world. Like I said earlier, at FAAC, we eagerly look forward to tax numbers because at the moment revenue from non-oil has been a great revenue source to the federation. Therefore, to tax practitioners, you are doing so well, but we need more of this to be able to deliver on all the areas that the citizens are looking forward to, because for even infrastructure development, it is only through funds that we can get it done.” Madein’s optimism is rooted in reality: FIRS indeed exceeded its 2023 revenue target by N816bn, as its total revenue collection for last year stood at N12.37tn, outperforming the N11.56tn target. This was contained in a presentation by Amina Ado, its Coordinating Director of Special Tax Operations Group.

On his part, though, the President/Chairman of Council, CITN, Samuel Agbeluyi, while delivering his remarks pointed out that the withdrawal of subsidies on fuel and electricity had reduced the purchasing power of the masses. He noted that raising electricity tariff for a selected band after fuel subsidy was withdrawn “is going to reduce the purchasing power of the masses. So we urge government to consider these actions on the masses.” He, however, stated that the institute was happy to know that President Bola Tinubu had asked the Central Bank of Nigeria to slow down on the recent cybersecurity levy that was approved by the apex bank.

There are of course many who have a negative view of taxation, but no government around the world has been able to abrogate it. Taxes have been paid for as long as anyone can remember. Taxes provide the oxygen for government, and some would say societal, survival. Infrastructure building, the vehicle of modernity and civilisation, is hardly possible without taxation. That being the case, it ordinarily ought to be a thing of joy that taxation is now the biggest revenue spinner for the government. But that, precisely, is where the problem lies. Precisely what do the people get for the government’s taxation binge? For some time now, the government, especially the central government, has “looked inwards” to expand the tax net through the invention of multiple taxes and not through, as reason would naturally dictate, the incorporation of previous non-tax payers or under-payers into the tax net. From increased VAT to extra tax per litre of beverages and sugary drinks, new taxes on single use plastics and certain motor vehicles, to stamp duty and, recently, the cybsesecurity levy, the government has made no secret of its intention to profit maximally from taxation, shying away from the apparently more profitable step of opening up uncharted territories in the economy and then reaping maximally from manufacturing and productive activities.

To reiterate, we are categorically not against taxation. During the First Republic, arguably the best so far in terms of the delivery of democratic dividends in the country, taxation was a core component of the government’s revenue. In the Western Region, tax collection was enforced under the Obafemi Awolowo government that is still widely considered as the best that Nigeria has ever produced at the subnational level. At that time, taxation was so ingrained in the people’s consciousness that local songs consistently portrayed the activities of the tax collectors. Because the fact was clear that the taxes were being expended on the welfare of the people, defaulters were universally derided and considered to be social outcasts. A local Ibadan song proclaimed at the time: “Owo ori to d’ode o, baba ti wa lo ko san.” Gloss: Our father is among the first persons to pay the new tax in town. The song added that “the elders that refused to pay are in detention in Mapo.” This shows that there was a time in this country when paying tax was a thing of pride: the people knew that the taxes collected would be expanded on life-changing projects and therefore went out of their way to demonstrate fidelity to tax payment regardless of the pains it naturally imposed on them.

The situation, we dare say, is markedly different today, where government taxes people heavily but provides  little or no infrastructure to justify the taxation. Indeed, given the dismal performances of governments at all levels over the years, it is fair to say that nothing has been done to defeat the scepticism of those who have scoffed at the government’s tax collection bid. That is not fortuitous. In 2019, The Economist magazine reported that Nigerian leaders had stolen an estimated $582bn since Independence in 1960. It quoted the UK’s International Corruption Unit as saying that it had confiscated £76 million from Nigeria since 2006, while another £791 million had been frozen worldwide following its work.  At least N1.1 trillion was said to have been diverted in the power sector alone since the return to civil rule in 1999, while N1.3 trillion was reportedly laundered between 2015 and 2019. If the March 2015 submission by the  antigraft agency, the Economic and Financial Crimes Commission (EFCC), is to be believed, Nigerian leaders stole $20 trillion from the treasury between 1960 and 2015! In the face of such rapacious robbery, of what use is a sustained taxation drive?

Over the years, the government has looked like a superstructure erected on the people’s pains. It has failed to deliver the oft-touted dividends of democracy, and it is not for nothing that the country was, in 2018, rated the global capital of poverty by the Brookings Institution. It is also the country with the worst electricity access, and the capital of open defecation, all of which is traceable to pestilential leadership. Given these damning statistics, we urge governments at all levels to rise above the parochialism of corruptive tendencies. They must justify their existence by making real changes in the lives of the people. In particular, we advise the Bola Tinubu-led Federal Government to note that it is not going to be judged by how much taxes it is able to extract from the long-suffering populace but by the level and depth of the positive changes it is able to make in the lives of the people. If the government puts the taxes and other revenues it is now exulting in to good use and delivers record-breaking infrastructure outlay, taking the people from the morass of despondency into a worthwhile existence characterised by dignified living, it would have justified the present obsession with taxes.

Of course, to really guarantee value for the people’s money, the anti-graft agencies need to redouble their efforts in apprehending and prosecuting corrupt leaders  while the judiciary, the mythical last hope of the common person, must wean itself of its accustomed corruption and throw corrupt leaders into jail. We do not begrudge the government of its tax fortune, but we are constrained by historical evidence to say that there is, as yet, no cause for cheer. The government must restore the people’s trust in it and give them value for their money. It must utilise taxation as a developmental tool in real terms. The happiness of FAAC members alluded to by the Accountant-General must translate into the happiness of Nigerians. As long as Nigeria remains abundantly blessed but criminally managed, no amount of tax revenue is going to rescue Nigerians from the horrendous existential conditions in which they have been trapped.

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