Atiku, Buhari and 2019 Fantasy Island ~ By Olusegun Adeniyi
Every election season in countries well-governed, citizens expect that the policy documents of the leading candidates will contain not only promises but also what would come from their pockets to fund such plans. That is basically what the phrase, “no taxation without representation” connotes since it also presupposes that there can be no effective (and accountable) representation without taxation. But in Nigeria, our people have been conditioned to believe that government is a Father Christmas that dispenses the goodies of life free of charge without demanding anything of citizens.
It is within that context that I will situate the campaign documents of the ruling All Progressives Congress (APC) candidate, President Muhammadu Buhari and his opponent in the main opposition Peoples Democratic Party (PDP), Alhaji Atiku Abubakar. I have read both documents and they lack rigour because there is no coherent funding plan that ordinarily should be tax-based unless of course the essence is to deceive. Given a low revenue problem compounded by dependence on oil, it is not enough to promise infrastructure, which we sorely need, the question is how? By borrowing more from China?
Meanwhile, I understand the predicament of the candidates. Atiku, a very wealthy man who owns a Private Jet, claimed in his Independent National Electoral Commission (INEC) form that he earned only N60.2 million in three years and paid the sum of N10.8 million as tax for those three years (between 2015 and 2017), an average of N3.6 million per annum. Another presidential candidate on the platform of the Social Democratic Party (SDP) and former governor of Cross Rivers State, Mr Donald Duke reportedly earned a combined sum of N5,618,419 between 2015 and 2017 and from that he paid a tax of N400,000, which means he paid an annual tax of N133,000. We don’t even know whether President Buhari has ever paid any tax on his legendary 150 cows that neither increases nor decreases with every election cycle for almost two decades now!
More than at any period in our history, the manifesto and other public documents of those who seek power must have realistic funding plans at the heart of which must be taxation. Sadly, the current tax regime in the country makes little sense which explains why less than a thousand Nigerians are paying tax of N10 million per annum, according to Mr Babatunde Fowler, the Federal Inland Revenue Service (FIRS) Chairman. I must commend Fowler for the expertise and tenacity he has brought to the whole tax matter, even when I believe he is relying on a model that cannot work. In a revealing interview in March this year, Fowler gave an example that summarises the problem with taxation in Nigeria, although he couldn’t see it: “If your turnover is N100 million, we assume that you make N20 million profit and we charge that N20 million at 30 per cent, then you pay about N6.6 million in tax.”
How does such an assumption make sense within our environment when people supply their own electricity, erect their own boreholes for water, pay for their own security and sundry social services that government should ordinarily be providing? On top of that, we have built a social security system around the most financially secure person in a household who bears the responsibility of members of the extended family. Should we not factor all these into the plan if we want to bring everybody under the tax net? Can’t we design what suits our own environment rather than copy wholesale what obtains in America? Are we not better off with flat rates as they do in Russia or Hong Kong?
Given the foregoing, the number one issue on the agenda of the candidates should be tax. Not only because we need all the money we can get to fix our infrastructure and pay for essential services but also because we will never be able to successfully tackle corruption and crime or instill any modicum of transparency in the governing process until we bring more income earners into the tax net. Besides, with a tax to GDP of 5.9 percent as against more than 20 percent by South Africa, it means more than 90 percent of Nigerians are outside the tax net. To bring in this people, mostly in the informal sector, we have to review and simplify the tax codes and create incentives for compliance.
One day, I am going to write about my experience with taxation in Nigeria but the lesson I have drawn is that the current regime does not encourage honest citizenship that is committed to meeting civic obligations. To compound the problem, tax has now become a weapon to kill small businesses. I know many people who are on the verge of closing down their businesses because they are better off without them due to these charges and taxes that are disincentives to small scale entrepreneurship in Nigeria. It is almost as if the regulatory environment is designed to stifle business in the country.
For two days last week, Mr. Lanre Gbajabiamila, new Director General of the National Lottery Regulatory Commission (NLRC) shut down the offices and business premises of Nigeria Brewery Plc across the nation despite a restraining court order. At issue is the definition of promos as distinct from lottery but the new NLRC took the laws into his own hands. The action of Gbajabiamila forced the NECA Director General, Mr Olusegun Oshinowo, to express shock “that a public servant will rashly shut down business premises of a multi-billion dollar investment without considering the dire implications on the economy.” These are some of issues you expect in a campaign year but what we hear are empty promises.
It is instructive that when Atiku ran for the PDP presidential ticket against then incumbent President Goodluck Jonathan in 2011, he had pledged that if elected, his medium-term (a four-year period) strategy would be to finance recurrent expenditure with non-oil revenue while every kobo earned from oil revenue is devoted to investment in infrastructure, security, education and health. “We would also encourage all state governments to set an agenda and timeline within which they would no longer depend on oil revenue for recurrent expenditure” Atiku said in a statement that elicited two columns from me when I returned to the country after the election. Right now, where he stands on issue of fuel subsidy in the downstream operations and the full deregulation of the entire sector is a matter of conjecture.
When the news broke early this year that the federal government illegally diverted $1.05 billion (N378 billion at N360 to a dollar) sourced from the Nigerian Liquefied Natural Gas (NLNG) dividend funds to secretly fund subsidy payment, there was a statement from the Atiku Presidential Campaign Organisation that “the subsidy regime as it is currently being administered is inefficient and shrouded in secrecy”. But there is nothing in his current plan about what he would do differently. In fact, the PDP said early this month that Atiku has worked out a pricing template that will immediately crash the pump price of fuel in the country to less than a hundred Naira per litre because “the appropriate pump price of fuel in the Nigerian market, under the current subsidy regimes of the Buhari Presidency, should be within the borders of N87 to N90 per litre as against the N145 currently being charged.”
If that statement is true of Atiku’s intention, then it is safe to conclude he does not even understand the problems in the sector. Buhari of course does not disappoint. We know the position of his government on subsidy on which hundreds of billions of Naira have been wasted and are still being wasted with the Nigerian National Petroleum Corporation (NNPC) acting as though above the law. Last year, the three moribund refineries in Port Harcourt, Warri and Kaduna recorded a loss of N10.79 billion. Meanwhile, in September 2015, the current Minister of State, Petroleum, Mr Ibe Kachikwu, then in his capacity as Group Managing Director (GMD) had said most memorably: “Personally, I will have chosen to sell the refineries, but President Buhari has instructed that they should be fixed.”
What Kachikwu said is what most reasonable people have said for years. Why should we continue to pump billions of Naira into what has become a waste? But Buhari likes subsidy which is why his government is borrowing to finance infrastructure without thinking of how to repay while taking more loans to meet recurrent expenditures. The Kaduna train project on which a loan was taken from China, is being run on subsidy. “We spend N56million per month and we get N16 million; so we are augmenting for both rich and poor—N40 million per month under the directive of the president because he fears that the poor might not be able to afford it’’, said the Transportation Minister, Rotimi Amaechi who does not see the problem in such an arrangement.
There are other questions begging for answers: At a period the Sahara Desert is inching gradually towards the South, what is the position of both Buhari and Atiku on the issues of environment? How would Buhari tackle education beyond refurbishing some primary school classrooms and where will the money come from? How will the new minimum wage be funded by Atiku who has endorsed it?
In all, the campaign documents being celebrated by the supporters of Buhari and Atiku are loudly silent on these and other questions. I know there are many candidates in the presidential race and I intend to look at some of them and what they bring to the table in the coming weeks. But it is safe to predict that the next president will be Buhari or Atiku. That is why it is very important that we scrutinise their policy prescriptions and pay more attention to what they say. Our future may depend on it.
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