Petition on 2019 budget – Need to increase to N15trn (III)

This article is a continuation of an open petition to the President of the Federal Republic of Nigeria, to cause a review of our budgeting processes going forward. I hereby continue to elucidate on ways by which we can generate more revenues to fund the budget. 2.Transparency in tax/revenue drive – Transparency will breed trust […]

This article is a continuation of an open petition to the President of the Federal Republic of Nigeria, to cause a review of our budgeting processes going forward. I hereby continue to elucidate on ways by which we can generate more revenues to fund the budget.

2.Transparency in tax/revenue drive – Transparency will breed trust in driving revenue. People don’t like paying taxes because they are unhappy with the way our governments use these revenues. If our leaders would show total transparency around budget management then there will be better compliance. A report says VAT compliance in Nigeria is about 29%. See http://blogs.lse.ac.uk/africaatlse/2017/03/20/enhancing-tax-collection-efficiency-and-compliance-in-nigeria-the-role-of-behavioural-economics/. Also the FIRS has claimed that many businesses not registered for VAT collect and don’t remit, among other infractions. It needs to be noted that we shouldn’t view government revenue from the prism of taxation only. Government revenue entails every collectible for the purpose of organising society. There has been little attention, compliance and accountability in the areas of fees, levies, duties, fines, rates, rents and sundry sources. Whereas the TSA enforcement has helped but there still exists a huge gap in this area. Another N2trillion should be added to the budget from better management at this level. This is N4trillion added to the proposed N6.4trillion projected (reduced) revenue so far.

3. Optimise taxation – Apart from the issue of transparency and leadership-by-example in the revenue drive, there is also a need to optimise some tax and revenue lines that are lying a bit sedate in our books. Nigeria is where people don’t bother paying Capital Gains Taxes and we have also given waivers on CGT on capital market transactions just to encourage the market. This is largely needless as the market swings up and down irrespective of these waivers. This is unnecessary loss of revenue. Also despite there being a provision for inheritance taxes, our revenue chiefs have largely avoided that area as it touches on powerful families, despite this being an equitable tax that works for societies wishing to reduce corruption and reduce inequality. We can rake in at least N500billion if we were serious about sundry taxes like this. The UK makes over 5 billion Pounds on Capital Gains Taxes alone each year. This is an equivalent of N2trillion. Furthermore, the rapid standardization of other sectors of the economy, like solid minerals, will result in the mainstreaming of new categories of taxes. The Chairman of the Federal Inland Revenue Service (FIRS) mentioned recently that there were as many as 6,800 cash billionaires in Nigeria whose accounts have been frozen for total tax evasion. We commend the deployment of information technology and hereby urge the FIRS to immediately mainstream the taxes payable by these evaders. At a mere N10million per defaulter, we are talking of potentially N60 trillion. This figure sounds bizarre but indeed it mirrors the decades of merciless raping of Nigeria and its people by a tight confederacy of vultures.

4. Organise society, money will come. Related to 2 above, the real issue with Nigeria is our inability or refusal to organize ourselves. For example, we have a situation where ‘big men’ go around with policemen trained and equipped with taxpayers money in Nigeria. Some of these big men pay for this service but the funds go straight into the pockets of God-knows-who. These payments should be standardized and organised, and paid directly into the TSA. They should also be punitive. Anyone needing a single policeman to follow them around should be able to pay N200,000 – enough to pay the police escort N100,000 salary with extra going to the coffers of government. Senator Misau alleged that the Inspector General of Police pockets N10 billion monthly (N120billion annually) in this area – right or wrong. What is evident is that this could be a money-spinner for government, enable Nigeria to employ more people into the police, and ultimately help in tackling insecurity. Another area where we could organise ourselves and also generate money is in obsessing with our environment. Our youths could be employed from secondary school to be Environmental guardians, tidying up, beautifying, securing and protecting the environment with salutary effect in terms of an improved image for Nigeria, more tourism, higher home remittances, better security as these youths will not be idle, and general increase in productivity for all. Environmental enforcement could also yield revenue for government. The biggest problem we have with organising our society for good is the do-you-know-who-i-am factor. When leaders and their friends in high places are not ready to keep the law or pay a fine, no one else will comply. I will not put a figure on this.

5. Reorganise budget management- Perhaps the first thing that should be done is to reorganise and rejig our budgeting culture. The federal government has basically continued with the envelop system which emphasizes discretion on the part of Ministries, Departments and Agencies. What makes it into our budgets bears every resemblance with what the operatives at those institutions dream about, and little to do with the desires of the people. There is an urgent need to fuse zero-based with performance and evidence-based budgeting with the people being the full beneficiaries of our budgets at every level. As it happened last year and the years before it, and as it is this year, the 2019 budget will be full of the appurtenances of office that our leaders in the MDAs wish to acquire for themselves. It will be full of projects that tie with the protection of territory, and not the delivery of service to the people. For example, there is an item in the 2018 budget for NPA to construct a new office in Abuja, 19 years after it was forced to relinquish Ship House to the Ministry of Defense. Why does NPA need an office in Abuja? And why do government agencies prefer buying or building their own mansions rather than taking over some of the thousands of recovered properties all over town – beyond the need to strike deals for themselves in these real estate acquisitions?  Very importantly, there is a need to make budgets at all levels of government – and ultimately what makes it into the revenue and expenditure side of the final federal budget – to be driven by revenue targets.   If the budget is premised on a sense of responsibility on the part of CEOs of MDAs, and they first commit to a revenue target of which they must ensure an excess percentage goes to government coffers, this will release a lot of revenue for government and the people. So, for all revenue-generating agency reorganized and refocused with reasonable revenue targets remittable to TSA, I say Nigeria should target another N2trillion in revenue. This takes our additional revenue to N6.5 trillion.

 

To be continued next week