By Onyedika Agbedo
with October inflationary rate put at 18.3 per cent in a country with N18, 000 minimum wage of over five years, massive job loss and salary cuts, especially in the private sector, Nigerians, no doubt, are already wallowing in the pains of the current economic recession. But as the Federal Government continues to experiment with policies aimed at revamping the economy, opinions are divided over ongoing revenue drives of many government agencies and parastatals. With oil prices still low and mounting opposition against Federal Government’s plan to externally borrow $29.9 billion over the next three years amid the unwavering demand of Nigerians on the President Muhammadu Buhari-led administration to go beyond promises and fix the economy, many revenue-generating agencies of government have remained under pressure for most parts of the year to improve their remittances to the federal coffers. As such, they have been coming up with initiatives aimed at blocking leakages and opening up new revenue sources. But as it appears, Nigerians would ultimately bear the brunt that would come with such initiatives.
For instance, Nigerians woke up on Monday, December 5, to herald the news that the Federal Government has banned the importation of vehicles into Nigeria through the land borders with effect from January 1, 2017. The Public Relations Officer of the Nigeria Customs Service (NCS), Mr Wale Adeniyi, who made the disclosure in a statement in Lagos had said: “The ban is sequel to a presidential directive restricting all vehicle imports to Nigerian seaports only. The order takes effect from Jan. 1, 2017. The restriction on importation of vehicles follows that of rice, whose imports have been banned through the land borders since April 2016. Importers of vehicles through the land borders are requested to utilise the grace period up till December 31, 2016, to clear their vehicle imports landed in neighbouring ports.”
Before then, the Executive Chairman of the Federal Inland Revenue Service (FIRS), Tunde Fowler, had also revealed that Nigerians would soon be made to show evidence of tax payment before they could obtain their international passports.
Fowler, who stated this recently at the 136th meeting of the Joint Tax Board, which had the theme, “Increased Inter-Agency Co-operation to Enhance Tax Compliance and Optimise Revenue Collection,” in Abuja, had revealed that the FIRS set a target to increase the individual taxpayer database by 10 million by December 31, 2016.
“We did take a position and I believe it would be implemented in the very near future that before you get any services from the immigration department, renewal of passports etc, you would have to show that you are a tax payer. These things are normal all over the world and it would help us to serve Nigerians and Nigeria better.
“People believe that payment of tax is a burden and I’ll repeat that you only pay tax on income and profits. So, if you reside in Nigeria and you are benefiting from being a Nigerian resident, it is only fair that you contribute to the system that makes you enjoy that standard of living,” he said.
Meanwhile, the Senate had on Tuesday, October 24, 2016 passed a motion calling for the reintroduction of tollgates on federal roads across the country. The Minister of Works, Babatunde Raji Fashola, had also on Tuesday, December 6, reinforced that position at the public hearing on a legislation seeking to scrap the Federal Roads Maintenance Agency (FERMA) and replace it with the Federal Roads Authority. Fashola had stressed the need for the Federal Government to revisit tolls as a means of raising funds for the maintenance of Nigerian roads. He had noted that “there has been a toll policy already in Nigeria since the Federal Highways Act in 1971 with deployed tools but for some reasons, we stopped it.”
More so, but for the intervention of the Senate and wildspread public outcry, Nigerians would have been paying more on telecoms data services by now on the approval of the National Communications Commission (NCC). The increment, which would have taken effect from December 1, this year, would have reportedly allowed the telecommunication companies in the country to hike their data services tariff by 200 per cent.
Although many analysts believe that some of the policies would add to the economic pains Nigerians were already passing through, the founder and Rector of Olawoyin Awosika School of Innovative Studies (OASIS), Lagos, Prof. Abiola Awosika-Fapetu, said there was nothing wrong with government’s efforts towards improving its revenue through efficient collection of taxes.
In an interview with Sunday Sun, Awosika-Fapetu, who is a Professor of Business (Finance and Economics) and former Vice President and Dean of Academics at Montreal College, North Carolina, United States of America, lauded government’s initiatives, noting that Nigeria perhaps has the worst index globally in the area of tax compliance.
“I had warned in an earlier interview that if government fails to acquire the $29.9 billion external loan which they want to use to reflate the economy, the people would be the ones to bear the brunt; and that is what is happening now. This is because if you cannot borrow money to shore up the economy, you have to get the money somewhere. All the things that they are trying to do now are not illegal; they are actually things that should have been happening in this country. Nigeria is perhaps the worst nation in terms of tax compliance and government functions on taxes. In the United States for example, almost 35 to 40 per cent of your income goes back into the system in one way or another through medicare, federal, state and local taxes. That is how they keep some of these developed countries looking the way they do. So, the system where cars come into the country from neighbouring countries is inimical to the economy because Nigeria doesn’t get the allowances and taxes that come with such imports. It is unfortunate that it’s happening to us at this time but it’s a pill that has to be swallowed if we are going to get anything better in this country,” she said.
Awosika-Fapetu also faulted the argument that some of the policies would compound the economic woes of ordinary Nigerians. She noted: “The common man is not applying for passport to go out of the country. So, if you have enough money to travel out of Nigeria, you should pay your taxes. That is the section of the economy that has to either curtail their consumption or find alternatives that will not be so demanding on their income. If you talk about importation of cars from land borders, first of all, we all know that many of these cars are smuggled into the country. The common man on the street just wants may be two and a half meals per day; he is not importing cars. So, the Federal Government is targeting a section of the economy that is affluent enough such that it will get some money out of them to help the common man. That is the way I see it. They are not telling people on the streets to go and bring tax clearance before they buy or before they do anything. It is the section of the economy that still has Nigeria’s money in their pockets or outside the country that are being required to put some of that money back into the economy.”
The Chairman United Progressives Party (UPP) and former presidential candidate, Chief Chekwas Okorie, also lauded the current tax drives of the government but warned against multiple taxation. He said: “From my own standpoint, taxes are based on income. So, somebody who is jobless or earning below certain level will not be subjected to pay tax. Meanwhile, tax is meant to be a major avenue for national revenue all over the world. Some countries rely only on tax to run their economies. Basically, what I will advise against is multiple taxation where people are subjected to paying multiple taxes.
“On the importation of vehicles through the borders other than the sea, it is a clear indication that government wants to fight smuggling by narrowing down its surveillance to the seaports. Any measure to checkmate leakages in our system is a welcome measure. Anybody who can import by road can also import through the ports if the importation is genuine.”
Okorie, however, urged the government to ensure that the policy of obtaining tax clearance before issuance of international passport is well defined before its implementation.
“I wouldn’t know how anybody who is not earning any income would obtain his tax clearance showing that he is not earning any income. For instance if somebody wants to obtain a passport to travel as a student, what type of tax clearance are you requiring from such a person. So, they have to come clean on the categorisation of those who are expected to pay taxes before they can obtain their international passports. Children are also entitled to international passports. So, how do you tax under age people who may have to travel abroad for one reason or the other? So, government should be very cautious on that one and I advice that they should come out clean on how they intend to categorise it,” he noted.
On the issue of the planned return of tollgates on federal roads, Okorie warned against it, saying it would provoke Nigerians.
“It is very insensitive for government to be talking about bringing back the tollgates now. For instance, there is nobody who would travel to anywhere in the eastern part of the country that would not see the planned return of tollgates as a provocation. I do not know how good the roads are in the north because in recent times I have not gone there by road. I expect the government to concentrate on putting all our roads in very sound conditions before they can begin to talk about tollgates to generate revenue for the maintenance of the roads. The essence of tollgates is not to build roads but to maintain them. So, government should build the roads first. I therefore see talks about the return of tollgates as a ploy to provoke the Nigerian people the more.”
Partner/Head of Tax and Regulatory Service, Pricewaterhousecoopers (PwC) Nigeria, Mr. Taiwo Oyedele, had also recently faulted the plan to make the presentation of tax clearance certificate a prerequisite to obtain international passport. In an interview, he had said: “All forms of identification should be encouraged in Nigeria. I do not think it is right to make tax compliance a requirement for obtaining international passport especially because all Nigerians are entitled to it, including minors and elderly who may have no tax compliance obligations. Also some people require international passports for emergency situations such as medical treatment abroad.
“What should be done instead is to allow anyone who is eligible to get an international passport and then use the information about their travels as intelligence to crosscheck with their tax compliance information in order to query any apparent inconsistencies or non- disclosure.”
Also, the Lead Director, Centre for Social Justice (CSJ), Eze Onyekpere, who had also spoken on the issue faulted the plan. “As far as I’m concerned, anybody who has a means of livelihood should pay tax. Anyone who doesn’t shouldn’t pay. Procuring or renewing passport is part of the freedom to free movement because that is facilitated by an international passport. So, for someone who doesn’t have means of livelihood, you can’t impose tax on him because that is tantamount to denying him that freedom of movement. That’s my take on it,” noted.
On how Nigerians should react to the policies, Awosika-Fapetu called for patience. “I think Nigerians should be patient. If anyone had asked me at the beginning when this government came into power and discovered all the things that they discovered, I would have told them that it’s going to get worse before it starts getting better; and that is what we are seeing now. I know that this government is not there collecting money to be squandered; they are collecting money that would be put back in this economy and make it better. And we are seeing the evidence. So, we should bear it.”
Okorie, on his part, urged Nigerians to be law abiding in the face of current economic challenges. He, however, warned government to tread with caution in its bid to rev up its revenue. “Government should know that it would not be long before they will need Nigerians again at the polls. So, they should not be behaving as if they are going to be there for eternity. Having said that, I want to advise Nigerians to remain law abiding because if they do otherwise, it would be to nobody’s benefit. Nigerians are now getting the short end of the stick in spite of the glowing promises of the All Progressives Congress (APC) during the 2015 electioneering campaigns. Every well-meaning Nigerian agrees that the situation is dire and government policies have not helped matters.”