Adejuwon Ogunsusi
My default response to any government pronouncement, policy or programme is to shuttle between indifference and skepticism. Only in very few instances (and I can count them on the fingers of one hand) have I felt a government programme has a chance of success. I guess it is part of being Nigerian.
Last July, when the Federal Ministry of Finance unveiled the Voluntary Assets and Income Declaration Scheme (VAIDS), I was not indifferent-because there had been conversations around taxation-but I was skeptical about its chances of success. My doubts, of course, became stronger when I discussed with friends who are also relentlessly skeptical and dismissive about government policies. Countless examples of policies that bombed were given to support their position. While they agreed that there is a need to do something about poor tax culture in the country, the blame for it was laid squarely at the feet of government at all levels, especially poor service delivery and near-total dependence on oil revenue, which has been shrinking since 2014 because of dip in oil prices on the international market. Of course, that was before the recent mini-bounce in oil prices.
One friend, who had lived abroad, argued that service delivery is poor in Nigeria because people do not pay taxes at all or when they do, they grossly underpay. If you do not pay or grossly underpay, he argued, you are less inclined and, of course, ineligible to demand adequate service delivery from the government. This friend had also taken time to study the provisions of VAIDS, which he did his best to break down to digestible bits. The scheme, he explained, has, as its major goal, the rectification of our tax anomalies by offering tax defaulters a time-limited opportunity to regularize their tax status. If it works, he added, it will bring many more taxpayers into the tax loop, reduce dependence on oil revenue, provide a reliable and more sustainable revenue source for government and nudge Nigerians to demand that service delivery be better.
I did not disagree with him, but wondered how the government was going to discover hidden assets and income. Patiently, he explained that the government was inviting people to voluntarily and truthfully declare such and pay tax liabilities over three years, as agreed with the relevant tax authority.
This, he said, is the fairest possible in the current circumstances, given that the government is also offering incentives such as immunity from prosecution for default, freedom from tax audit and a waiver of the interest and penalties that have accrued. I told myself that I was going to suspend belief in the scheme for some time. I remained wedded to my belief that a pig would fly before the government would discover hidden assets.
I have since been relieved of that belief (delusion, it now seems). What cured me of it was the realization I reached through reading a new item that showed I had been ignorant of many things. Specifically, the news item announced that the VAIDS office had collected data of over five corporate organizations and individuals in the country. The collected data, said the news report, have been undergoing analysis to ensure that all unpaid taxes are tracked and collected. Efforts in that direction have also yielded data government revenue-generating agencies such as the Federal Inland Revenue Service, Nigerian National Petroleum Corporation, Central Bank of Nigeria, Federal Airports Authority of Nigeria, Federal Housing Authority, Petroleum Technology Development Fund and Nigerian Communications Commission. State governments, I later understood, have volunteered transaction data required to identify tax defaulters at the expiration of the first phase of the VAIDS on 31 March. In addition, the VAIDS office has obtained data on all contracts and transactions above N50 million from the Nigerian Customs Service, Assets Management Corporation of Nigeria and Nigeria Export-Import Bank among other sources.
Data collected are being matched with those that will be provided by the FIRS, Corporate Affairs Commission and Government Integrated Financial and Management Information System to identify tax-defaulting companies.
Alongside data collected locally are those to be collected on Nigerians with offshore assets. In case you are in doubt, a variety of trans-border information-sharing agreements to which Nigeria is a signatory are there to blow the lid off. These rely on cooperation among tax authorities to exchange data even without request.
One of such is the Automatic Exchange of Information (AEoI), which kicked off in Nigeria on 1 January. Home or abroad, it is obvious, the tax defaulter has no hiding place. Defaulters, obviously, want to stay away from the teeth of the law. In the first four months of implementation, VAIDS delivered N17billion into government coffers. Two months later, an additional N6billion was realised through the scheme. I am left with no doubt that VAIDS is viable and the country needs it to remain viable.
Ogunsusi, a town planner, writes from Ado-Ekiti