Recently, the Minister of Finance, Zainab Ahmed, hinted that there might be an introduction of new tariffs and levies in 2022 as part of measures to shore up government revenue. She said that a couple of” reforms and amendments” had been recommended in the draft 2021 Finance amendment bill just as more will be introduced in middle 2022.
In the considered opinion of this Newspaper, increasing tax rates at this period of increasing poverty may lead to a worsening of living conditions of the average Nigerian already stretched tight by the state of insecurity in the country.
According to World Bank data, Nigeria is the poverty capital of the world, with 93.9 million people living below the poverty line. Increases in taxes would also add to the number living in extreme poverty.
This newspaper recalls that the government is considering removing fuel subsidy next year which invariably will lead to an astronomical increase in the price of goods and services. There are also plans to increase the electricity tariffs next year.
We agree with the position of the Organised Private Sector of Nigeria, comprising the Manufacturers’ Association of Nigeria and the Nigeria Employers’ Consultative Association, among others which stated that the introduction of new taxes or levies by the federal, state, and local governments would lead to an upsurge in the country’s unemployment rate with its attendant socio-economic consequences as it could trigger job losses and companies’ closure.
Granted, we understand the plight of the government to increase its revenue. Indeed, Nigeria has one of the lowest Value Added Tax (VAT) rates in the world. In Ghana, the VAT rate is 12.5 per cent, while it stands at 15 per cent and 16 per cent in South Africa and Kenya respectively.
It is also instructive to note that the impasse on who should collect VAT between the federal and state governments is yet to be resolved. We have said it severally on this page that increasing taxes is a dilatory approach to increasing revenue and given the current economic realities, it is not feasible.
In our opinion, the government should be thinking of widening the tax net in the country and blocking revenue loopholes. It is pertinent to note that Vice President Yemi Osinbajo said recently that only 142 individuals pay a self-assessed tax of more than N10 Million.
“I am not talking about companies, I am talking about individuals, 90 per cent of them are from Lagos State so in this whole country, people with rolls Royce big cars and all sorts only that tiny fraction pay that N10 million in self-assessed tax everybody else claims to earn never enough to be able to pay that kind of money,” he said.
The government should be aggressive in widening its tax net instead of increasing taxes and levies. We aver that taxes on luxury goods should be increased substantially. Pointedly, there should be a serious emphasis on blocking revenue loopholes.
Regrettably, the senate had stated that Ministries, Departments, and Agencies (MDAs) did not remit over N3 trillion to the Consolidated Revenue Fund (CRF) of the Federal Government between 2014 and 2020. This is unacceptable.
According to a report by the Nigerian National Petroleum Company Limited, between January and September 2021, Nigeria lost N898.93 billion to crude oil losses and repairs of vandalised pipelines, among others.
Similarly, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, disclosed that a few Nigerian elites may be stealing yearly about 42.25 million barrels of the nation’s crude oil worth $3.6 billion at the prevailing price of $85 per barrel.
From the foregoing, it can be deduced that blocking revenue loopholes and crude oil theft would significantly improve the revenue of the country.
The government also needs to cut the cost of governance. Reducing salaries and emoluments of political office holders should be the first step. Indeed, the jumbo pay of our political holders does not represent the present economic realities in the country.
Inexplicably, the government has been pussyfooting on the implementation of the Oransaye report which recommended the restructuring and rationalisation of federal government parastatals, agencies, and commissions.
It is from this perspective that we call on the government to jettison the idea of increasing taxes as it will do more harm than good to the economy of the country. Ameliorating the suffering of the masses and businesses should be the target and not policies and actions that will worsen the already bad economic situation.
Consequently, we insist the government should think of creative ways of widening the tax net, use of technology to block revenue loopholes, and enforcement of regulatory and oversight functions.