joshuaNational Tax Reform Bills’ll Advance Nigeria – Prof Awodun
Prof Muritala Awodun is a member of the Presidential Committee on Fiscal Policy and Tax Reforms as well as Consultant, Fiftyfifty Institute Limited and a former Chairman, Kwara State Internal Revenue Service. In this interview with journalists, he discusses the National Tax Reform Bills, their benefits and controversy. Ayo Ola was there.
The Tax Reform bills have become controversial. As a member of the Presidential Tax Committee, could you give us insight into what the National Tax Reform Bills are all about?
The Tax Reform Bills are products of the Presidential Committee on Fiscal Policy and Tax Reforms set up by President Bola Ahmed Tinubu last year with specific mandates for a general overhaul of the tax, revenue and fiscal landscape of the nation. The Bills are made up of 4 different bills namely; the Nigeria Tax Administration Bill, the Nigeria Revenue Service (Establishment) Bill, the Joint Revenue Board of Nigeria (Establishment) Bill and the Nigeria Tax Bill. These four Bills are what is being referred to by all as Nigeria Tax Reform Bills before the National Assembly.
The genesis of this significant tax reform is predicated upon the fact that most of the existing tax laws are old and not aligning with the changes of our time. Moreover, the present structural arrangements of the administration of taxes and revenue in the country are producing suboptimal results as against the potential of the nation. The issue of revenue administration and its inherent inefficiencies cannot also be left unattended to if the nation must survive.
We cannot continue to do things the same way and expect to get a different result, so the administration of President Bola Ahmed Tinubu considers it inevitable to address these issues, particularly to provide sustainable revenue generation institutions across the nation.
For a very long time in this country, nobody has been bold enough to effect the required changes to our structural imbalances as a nation, and this administration has shown enough courage to do the difficult job of making essential structural reforms. The Nigeria Tax Reform Bills could be seen as a part of the structural reforms of the President Bola Ahmed Tinubu’s administration.
What exactly are the things the committee wants to achieve by the bill?
It is not about the Committee wanting to achieve anything, but the administration of President Bola Ahmed Tinubu trying to steer the ship of the nation back on track since the previous administrations, including that of President Muhammad Buhari, drove the ship of the nation backward, rather than forward with their various economic policies, particularly the immediate past administration’s, which unfortunately is from the same political party.
From one administration to another in Nigeria, it has been problem upon problem, with this coming to its crescendo during the immediate past government. The cumulative harm that these various administrations have done, is what this present administration is trying to fix, through various policy reforms, and the fiscal and tax reforms constitute a major step in this direction.
Ours is a nation where the political drives the economic, and we have been very unfortunate to have very incompetent set of political leaders steering the ship of the nation, the result of these incompetent leadership is what we are all seeing, as this administration attempts to correct or fix some of the obvious problems resulting from the mistakes of past administrations.
When the leadership of a nation makes policies that are not well thought out in terms of measuring the resultant impacts on the larger majority of the people, the people end up suffering based on the impact of such bad policies. The interests that matter most to our leaders are their own interests and that of their cronies as against the interests of the large majority.
The only time you see the politicians concerned about the interests of the larger majority is when canvassing for their support (votes) and during that period that are ready to attend to some direct (short term) interests of the people by sharing monies and pretending to be listening to them. Once the elections are over, the people’s interests become secondary to our political leaders.
How will it impact Medium, Small and Micro Enterprises and Nigerians with low income bases?
The greatest beneficiaries of the content of the tax reform are the people at the bottom of the pyramid. The poor and small businesses have been greatly exploited in this country while the rich and large businesses have dominantly influenced policies in their own favour. This tax reform has therefore intentionally changed the paradigm in favour of the majority of Nigerians, and the rich will definitely not like that. The poor are mostly voiceless and largely unable to influence policies of government to favour them but this reform is largely in their favour. If you take it one by one, you will see that the clamor for the status quo to remain is coming from the rich political class who, with the present arrangement, has mastered the exploitation of the poor and the downtrodden to their own advantage over the years.
They are not willing to allow this change because they fear it will distort their already mastered system of national wealth sharing. The fight against it as presently put out there is nothing fundamentally in the interest of the people, rather it is a fight to retain the status quo which is a political interest protection strategy. Rather than look at the ultimate impact and benefits assessment, what the opponents of the bills are talking about are political interests and not the economic interests and benefits. Where you see any economic reasons being put forward, it is largely for the benefit of the political class and not in the interests of the mass majority of the people.
In other words, the fight against these bills is purely political and nothing economic as the bill favours the poorer majority of Nigerians and the small and medium scale businesses.
Many politicians and traditional rulers from the northern part of the country are opposed to some sections of the bill. Why do you think such is happening?
The major reason is the proposed change in the allocation formula from 15:50:35 and 50:30:20 to 10:55:35 and 20:20:60. The present arrangement favours equality and population against derivation, and that is now proposed in the new arrangement to favour derivation against the population and equality. This is the major crux of the matter.
While the present arrangement has encouraged indolence just like the federal character that encourages mediocrity, against hard work and excellence, the proposed arrangement is more in favour of derivation which will promote hard work and diligence.
After over 64 years of existence we still want to continue as a nation in deprivation that must be spoon fed. We do not want to wake up to the reality that you have to work to eat, that you have to produce to consume, that you have to earn to spend, that you have to export to import, that you have to learn to lead, and that you have to sow to reap. We want to continue in our rent seeking economic arrangements because it provides us with easy access to cheap money and wealth. This is not sustainable.
Is the bill really anti-north?
If nobody sees the present arrangement as anti south, it is then playing politics to see the proposed reforms as anti north. In Nigeria we play politics with everything particularly once it is affecting our personal interests, we make it look as if we are fighting for the people, when in the real sense we are fighting for our pockets and interests. We exploit the poor masses always to our own advantage.
These bills I will term as anti laziness, anti inefficiencies, anti incompetences, anti indolence, and anti poverty rather than anti north or south.
Why should some revenue generating agencies of the Federal Government such as the Customs, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) be relieved of such responsibilities and to be handled by a central revenue agency of the federal government? Is this not an indirect way of crippling their operations?
This is nothing for any form of contention other than the fact that agencies given responsibilities to render certain government services to the people have turned themselves to revenue generating agencies at the detriment of their original responsibilities, and this cannot continue. Using the present arrangement encourages huge leakages and loss of government revenues in unimaginable amounts, so if reforms of taxes and revenue must happen; it must be total.
We are quick to want to compare ourselves to foreign countries in areas that suit us like asking for democratic governance, but the same people are not willing to have an efficient governance system as we have in these countries where government services are top notch and efficiency and excellence are of topmost priority. How then do we get accelerated development?
This thing called development doesn’t just happen, you have to be intentional about it and purposeful in driving the nation towards it.
We have been driven backwards rather than forward, particularly in the last 10 to 12 years as a nation. People who have been given the opportunity of rulership not leadership of this country called Nigeria in the last 10 to 12 years in particular have ruined this country. I have had some interviews in the past raising issues about the incessant borrowings of the last administration in particular that those borrowings for consumption will jeopardize our future and where they claim they were for infrastructure those infrastructure were largely inflated in terms of costs and not even completed or in most cases with insignificant impact.
Going back to your question, every agency of government that are originally service providers have turned themselves into revenue providers paying more attention to collecting money from people than providing services to people. Their primary responsibilities are jeopardized by their revenue chasing efforts just because they want to have direct contact and control of funds to support their exploitation of the system.
Nobody is saying that their activities should be taken over by any other agency but their revenue collection system should be integrated to that of the revenue agency for proper and seamless accountability and reporting. We did this successfully at the sub national level in some states in this country, as I spearheaded it in Kwara State Internal Revenue Service between 2015 and 2019 when there was a paradigm shift in revenue administration in the state. Several other states in Nigeria have also been bold enough to do the same while majority of the sub nationals are lagging behind preferring the unintegrated arrangement that is obviously sub optimal.
President Bola Tinubu gave a directive that the gray and contentious sections of the bill should be reviewed and the concerns addressed. How does the committee intend to do that? If there will be no contentions; does it mean that the bill will continuously be reviewed to suit the agitations?
The President knows that the political system has dominance over the economic considerations in our polity, and that is why he is ready to allow for the so-called grey areas to be further discussed. He also understands the heterogeneous nature of our polity and politics. Moreover, no policy can be satisfactory to all, hence the decision to give consideration to areas considered that needed to be revised. This is for the National Assembly and the nominated parties of the executive, particularly the Ministry of Justice, to look into. The Committee will obviously be guided by whatever the ‘compromised position’ they come up with without jeopardizing the largely significant areas that are of direct benefit to the poor and larger populations of the nation at the bottom of the pyramid.
As a Professor of Business and Entrepreneurship, entrepreneurs are finding it extremely difficult to survive in Nigeria? From your vintage position and wide intellectual and practical knowledge, what are the challenges and remedies?
The business environment is not very friendly despite the numerous opportunities in the country so until we address the policy, process and infrastructure contestations that frustrate business operations, entrepreneurs will continue to complain. These are part of what the tax reform bills are meant to address.
The people against these bills are the people that are exploiting the poorest of the poor of this country to their own advantage and will want that arrangement to continue. Anything that will bring some sort of succor to the people they will fight because they want the majority of Nigerians to remain poor and uneducated for them to continue to exploit their ignorance and poverty.
What we have in terms of present arrangements has made the majority of the people poor without access to education, good health conditions, housing and employment. The funds given to all the tiers of government are largely misapplied and the people suffer. Whatever will make life better for the large majority at the bottom of the pyramid should be supported and not killed. For someone earning N1m annually and below where you will find more than 70 to 75 percent of Nigerians to be exempted from paying taxes as proposed by these bills is favorable to the majority of Nigerians and that should not be killed by anybody. For businesses paying all sorts of taxes and levies that amount to exploitation and raises the costs of goods to be given the relief of not paying these several multiple levies and taxes again as proposed by these bills favours majority of small and medium businesses and even the logistics of the larger businesses is bringing substantial relief to businesses and this cannot wait till tomorrow.
When the National Assembly was being given large sums of money and official vehicles that the nation could obviously not afford nobody says why the hurry. When the prices of fuel were being raised and exchange rates floated nobody said why the hurry but now that bills that will bring about some sort of succor to the majority of the people have been put forward to the National Assembly the slogan “why the hurry” suddenly came up.
Our leaders are not in a hurry to make our lives better but they are much more in a hurry to make their lives better and continue to exploit us.
