In an unprecedented policy recommendation, governors of the 36 states of the federation, reportedly, advised the federal government to offer federal civil servants who are above 50 years a one-off service exit package. In their opinion, this will form part of a coordinated effort to instill fiscal discipline and prevent the nation from imminent economic collapse. The governors, it was also reported, made the proposal at a meeting with President Muhammadu Buhari recently.
In it, they urged the government to begin the implementation of the updated Stephen Oronsaye Report, which recommended the merger and shutdown of agencies and parastatals with duplicated or contested functions as a way to address bureaucratic inefficiency and reduce the cost of governance.
Available record indicates that the federal civil service has in its books about 89,000 personnel. Also, it is estimated that the sum of about N4.1 trillion will be spent on personnel costs this year alone, from the N17 trillion 2022 budget. In a country notorious for its inability to keep accurate data on basic things, it is difficult to know how many workers are above 50 years of age, or, for that matter, how much of the personnel costs gets to them at all.
The governors advised the federal government to reduce expenditure immediately by eliminating petrol subsidy and NNPC-funded projects, cap the Social Investment Programme (SIP) and National Poverty Reduction with Growth Strategy (NPRGS) budgets to N200 billion, eliminate extra-constitutional deductions from Federal Allocation and Accounts Committee (FAAC), and reduce Service Wide Votes (SWV items) for Sustainable Development Goals (SDGs) and National Assembly (NASS) Constituency projects.
They also asked the government to reduce duplications in empowerment programmes and waste, reduce one per cent granted to NASENI to 0.2 per cent, amend the Act in 2022 Finance Bill, reduce personnel costs of federal government Ministries, Departments and Agencies (MDAs), and expedite action on the privatisation of non-performing assets like the Niger Delta Power Holding Company (NDPHC) power plants.
Similarly, the governors suggested the movement from State Income Taxation to Consumption Taxation, adding that with the introduction of three per cent Federal Income Tax, state-level Personal Income Tax (PIT) should be abolished. They suggested that state Sales Taxes (flat rate of 10 per cent) should be enacted for the 36 States and FCT, Value Added Tax (VAT) levels increased to 10 per cent with a timeline to raise it to between 15 per cent and 20 per cent. The proposal contained the re-introduction and passage of VAT into the Exclusive List. It was not clear whether all governors agreed with the position on VAT being moved to the exclusive list.
To improve tax revenues, they suggested that the federal government should introduce a flat three per cent Federal Personal Income Tax on all Nigerians earning more than N30,000 per month, adding that persons earning less than N30,000 per month whether employed or not, including farmers and traders, should pay a monthly FPIT of N100. Similarly, telecoms firms and NIMC should collaborate to ensure deduction of this from phone credit of individuals linked to NIN and BVN.
We consider some of these recommendations outrageous and unacceptable just as we recall that the country had experienced such mindless economic reforms in the past during the Murtala Mohammed regime were many young civil servants were sacked in the prime of their careers. The country is yet to fully recover from that ill-advised decision. Sacking the workers is throwing away experiences needed for development and nation building. That purge, as it was described within the civil service, introduced some disfunctions in the service, created room for indiscipline and corruption that are still haunting the service till date.
As a newspaper, we welcome positive reforms that will re-engineer the country towards fiscal discipline and economic development, but definitely not an arbitrary retirement of civil servants who are still in their prime. Worse is the imposition of tax on the unemployed while other countries have social benefits for that class of citizens
The planned sack of civil servants above 50 years will create more economic problems. We already have enough economic challenges. That’s not the best way to save an economy that is already bleeding. In fact, it is the fastest way to bury an ailing economy.
We also call on the federal government to discard the idea of introducing any draconic tax regime that will place undue financial burden on generality of Nigerians. A flat three per cent Federal Personal Income Tax on all Nigerians as suggested by the governors should be ignored. The reforms, in our view, should start with the governors.
In our considered opinion, the cash crunch the economy is experiencing is as a result of the high cost of governance. Politicians, at all levels, see the national treasury as their piggy bank to be dispensed with at will. That is the real issue. If the governors and, indeed, the political ruling class are sincere about re-inventing the economy, they should start from themselves by reducing the armed robber salaries, allowances and exit packages they allocate to themselves. Only then can the ordinary Nigerians begin to give them and their proposition any attention.
