Full text of a lecture delivered by Chief Obafemi Awolowo, Vice Chairman of the Federal Executive Council and Federal Commissioner for Finance under the joint auspices of the Geographical Society and the Federalist Society of Nigeria at the University of Ibadan, on 16th May 1970.
BUT by limiting the extra burden on companies whose taxable profits exceed whichever is the greater of:
- £5,000 for a year of assessment, or
- 15 per cent of the company’s issued and paid-up capital,
we succeeded in extracting from this source only what the traffic could bear. In 1968 the super tax was a flat rate of 2/- in the £. But in 1969, we made the rate progressive from 2/- to 5/-in the £. In 1968/69 and 1969/70 respectively, we collected £1.6 million and £2.4 million from this source, and we expect to realise about £3 million in the current financial year.
It is not correct, as two recent commentators had made it appear, that I undertook, at any time, to limit the operation of the super tax to the duration of the war. At no time did I make any such promise. On the contrary, from its introduction, the super tax was intended to be a permanent feature of our fiscal policy. The only alternative to this policy will be to introduce a general increase in company income tax. This, however, must be ruled out, at least for the time being, for the reason which I previously gave.
NOUN graduates 18,000, insists on 1 million target enrollment
Indirect taxation is by nature a prolific, convenient, and less painful source of revenue. The measures introduced in this realm, during the war, are too numerous to mention. Suffice it, therefore, for me to say that we exploited this source to the fullest extent compatible with economy and the monetary policy adopted by the Government.
Divorce your wife, lose your house to her, Oyo court rules
Since our recurrent revenue could not meet our recurrent expenditure, we had to resort to three different forms of short-term borrowing. They are: the Treasury Bills, the Treasury Certificates, and the Ways and Means Advances which, by law, had to be retired at the end of the fiscal year. The Treasury Certificates were a war-time device, and are of 24-month maturity, as against Treasury Bills which are of 3-month duration only. Treasury Certificates were introduced in order, as we had first thought to obviate the necessity of raising the level of Treasury Bills beyond 8.5 per cent of the estimated Federal revenue. We had hoped, at the same time, that we would not have to depend very much on this new fiscal weapon. But subsequent events did not only necessitate our having to raise the level of Treasury Bills to 1.50 per cent of the aggregate revenues of Federal and State Governments, but also compelled us to lean more heavily on Treasury Certificates than we had previously contemplated.
I would like to remark, at this juncture, that by resorting frequently to Treasury Bills, Treasury Certificates, and Ways and Means Advances as we did during the war, we knew that we were, pure and simple, pursuing the slippery path of inflation. But having reached the end of our revenue-raising tether, there was no other path open to us. In other words, we felt ourselves irresistibly compelled to tread this path, determined, however, to dig our toes into the ground after every completed step, and to do everything possible to ensure that the journey, though difficult was safe. We had good luck on our side. The bulk of the Treasury Bills and Certificates issued up to the end of the war that is £240.3 million out of a total of £253 million-was taken up by the Commercial Banks and the rest of the private sector. Though our Compulsory Savings Scheme was not as successful as we had envisaged, yet it must have gone some way to help to ease the pressure of inflation. So also were the effects of our various tax measures, and of voluntary savings on the part of many Nigerians, including the men and women of the Armed Forces. Above all, we deliberately encouraged the output of more goods. Of its own volition, the Federal Ministry of Finance initiated the grant of £.5 million annually to the States for agricultural development. We could have given more if asked, and if a suitable formula for its allocation among them had been agreed to by the States. The net result of all these measures is that the Consumer Price Index, with an increase of approximately 6 per cent over the 1966 level, has not happily, reflected the full increase in the volume of money put into circulation since 1967.