The disclosure by the Nigeria Extractive Industries Transparency Initiative (NEITI) that oil producing companies operating in the country owe the Federal Government a hefty N1.3 trillion in taxes is scandalous.
This is high-level economic sabotage. Chairman of NEITI and human rights activist, Mr. Ledum Mitee, revealed the startling tax default at a recent stakeholders forum on the Petroleum Industry Bill (PIB) in Abuja. The disclosure is the outcome of an audit report on the operations of the oil companies and what they ought to have paid to the coffers of government as tax. According to the audit report, the huge revenue loss consists of underpayment and outright non-payment of taxes.
Beyond that, NEITI said the oil companies got away with such infractions because of lack of effective supervision by government institutions entrusted with monitoring their operations and ensuring that they pay the required taxes on their operations. Among these government institutions are the Central Bank of Nigeria (CBN), Federal Inland Revenue Services (FIRS), Office of the Accountant-General of the Federation and the Department of Petroleum Resources (DPR).
We commend NEITI for being diligent in its work. The Act which established the agency empowers it to check all forms of corrupt practices. It is also mandated to ensure that all revenue accruing to the Federal Government in form of taxes, royalties, dividends, bonuses, penalties and levies are duly paid.
This is not the first time that NEITI has uncovered large-scale under-payment of taxes. Last year, the agency revealed that between 1999 and 2008, Nigeria lost over N38 trillion to non-payment and underpayment of taxes by the oil companies.
This clearly underscores the appalling lack of accountability and transparency in the oil sector as well as lapses in our public accounts and enforcement system. Such sharp practices hamper economic development of the country. Undoubtedly, the amount of debt involved is enough to balance the deficit in the current Federal budget and even write off our huge domestic debt, which is almost spiraling out of control.
In these times of financial squeeze amid huge infrastructural needs, government can deploy the money to address pressing national problems such as power supply, road infrastructure and insecurity. It is regrettable that these oil companies fleece the country of such huge revenue and get away with it.
Government’s response towards recovery of these debts must be swift and effective. The loopholes that make it possible for such abuses to thrive should be plugged immediately. We suggest alignment of the Acts creating NEITI and the proposed PIB so that they will not run in conflict with one other, especially in the areas of computing, assessing and ensuring payment of royalties, fees and other charges for petroleum upstream operations as stipulated in the petroleum bill.
Government should, therefore, see the report by NEITI as an opportunity to demonstrate its commitment to checking all sources of revenue leakage and ensuring that due payments are made by oil producing companies in the country.
As a mere whistle-blower that can only bark and not bite, NEITI has done its bit. It is left for appropriate government agencies to recover the debts. All in all, the revelation by NEITI does not paint a good image of Nigeria and the way the oil companies are conducting their operations in the country.
It will not just be enough to recover the debts, the delinquent oil firms should be appropriately sanctioned. What they have done amounts to economic impunity that should attract more than a slap on the wrist. It serves no useful purpose to saddle NEITI with such oversight functions and do nothing with its findings that are in the overall national interest.
This huge tax liability may further soil Nigeria’s poor corruption profile if immediate drastic measures are not taken to recover the debts. The public and all stakeholders in the oil sector will be very keen to see how firmly and thoroughly the Federal Government goes about the recovery of the huge unpaid taxes.