Tax Reform bills require cooperation not bickering

The much-anticipated federal tax and fiscal reform programme has run into unnecessary storm waters. This was unnecessary because it would have been quite avoidable if the right approaches had been followed by those involved in the process. The expected fiscal stabilisation component of the ongoing economic reforms may be delayed for some time. Nobody knows […]

The much-anticipated federal tax and fiscal reform programme has run into unnecessary storm waters. This was unnecessary because it would have been quite avoidable if the right approaches had been followed by those involved in the process. The expected fiscal stabilisation component of the ongoing economic reforms may be delayed for some time. Nobody knows how long that will be.

The imbroglio stemmed purely from the lack of proper consultation of state governments by the federal authorities and other stakeholders. It is needless to say that state governments need to have an input in such important bills, which may alter their revenue perceptions.

There is a broad agreement among Nigerians that the country urgently needs reform in its tax system because the current arrangement has too many loopholes that allow people to get away with both tax evasion and avoidance. We need a comprehensive tax overhaul that takes everyone’s interest into account. Indeed, Nigeria is such a case that the super rich pay the least tax because such people and companies generally under-report their incomes.

Unfortunately, the Presidential Fiscal Policy and Tax Reforms Committee carried out its activities, drew its conclusions, and even drafted the fiscal stabilisation bills without deeming it fit to consult the other constituent parts of the federal system. Facts have emerged that the committee did not consult with the states in all of its deliberations. Consequently, the state governors have rejected the work of the committee, including the stabilisation bills submitted by the executive to the National Assembly.

The governors’ position was part of the decision of the National Economic Council, which is chaired by the vice president. The NEC, at its latest meeting rejected the committee’s report and demanded a withdrawal of the bills already submitted by the executive arm of the federal government to the National Assembly.

It is noteworthy that NEC’s rejection of the stabilisation bills followed a similar rejection of the committee’s work by the governors of the 19 northern states. The states faulted the processes followed by the Tax Reform body, and therefore its conclusions as represented by the stabilisation bills.

 In our view, these actions are justified. Nigeria is a federation, so it is unacceptable for the federal government and its agencies to continue to act unilaterally. It is unacceptable for the committee (or the government) to draft such bills without consulting the federating units or sub-nationals. We, therefore, agree with the NEC that the federal government must sit down with the states and harmonise their positions on how to effect needed reviews in the country’s fiscal framework.

It is quite clear that these objections to the bills and the processes that led to their preparation have arisen purely due to the opaque nature of the committee’s actions. This has in turn given rise, understandably, to the sentiment that part of the bills were designed to benefit Lagos most. This in turn has also given rise to the feeling among some northerners that the policy is an agenda designed against the region.

While the above facts are ugly in themselves, the president’s response, that the National Assembly should first be allowed to handle the bills, is quite unfortunate. By this utterance, the president has already shown that he has decided to have his way on this matter, no matter what other parties say, or whichever way it goes.

This stance by the president becomes more worrisome given the allegation or impression out there that the National Assembly has been doing the president’s bidding.

The president and his advisers must discard this posturing if he hopes to make any progress on this programme. We want to point out quite clearly that Nigeria does not have an imperial president, and anyone trying to create such a position within the political structure of the country is sure to fail. So, we call on the president to play as the democrat that he has always professed to be.

We urge the president to listen to the voices of reason that are opposed to his latest approach on the tax reform matters. He should withdraw the bills. Then the federal government must seek the consent of the generality of Nigerians, whose affairs would be directly and indirectly affected in this regard. 

Daily Trust equally urges the governors to embark on fiscal reforms to enable them to generate revenue to run their states instead of waiting for hand-outs from the federation account. Many state governors are sitting on gold mines in their states but have failed to exploit the potential that abound in their respective states.

We believe this is the surest way of realising their developmental goals and being seen as partners in the federation rather than seen as hangers on. The time to build such capacities is now.