Tinubu tax reform: Cry wolf and a lofty opportunity to act

The tax reform bill is one policy of President Bola Ahmed Tinubu that has heated the political arena to the point of divisive politics. Proponents, predominantly from the South and oppositions, predominantly from the North, see the bill through the usual mutually suspicious lenses. The South sees the bill as a subtle way to galvanise […]

The tax reform bill is one policy of President Bola Ahmed Tinubu that has heated the political arena to the point of divisive politics. Proponents, predominantly from the South and oppositions, predominantly from the North, see the bill through the usual mutually suspicious lenses. The South sees the bill as a subtle way to galvanise the North into wealth creation.

In contrast, the North sees it as a deliberate attempt to cash in on the early colonial and oil advantages conferred on the South which makes it the industrial hub of the country to punish the producers (the North) of the raw materials that feed many of those industries.

Unfortunately, the two opposing sides are wrong, as both used the wrong lenses for their analytical myopia. Interestingly, though, the North ought to have seen the bigger picture of the bill. Nonetheless, the northern outcry reinforces a key component of democracy that the squeaky wheel gets the grease.

Except for the planned increase in the value-added tax (VAT) at this time of lowest purchasing power of Nigerians, and capital transfer tax (inheritance tax), the bill is a lofty, well-articulated document that aims to unify tax collection for government efficiency and correct some anomalies.

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One of these anomalies is the remittances of VAT from the states that hitherto are being done to the states that house the headquarters of the companies to the states where goods and services provided by those companies/firms are consumed or utilised. This is a clear, well-intended departure of wealth redistribution.

But why didn’t North see this benefit among others and why did it reject the bill? Yes, the North saw and appreciated this but two things explain the cry wolf that greeted the bill. The first is reactionary politics. Some politicians, rather than constructively criticising the bill, politicise it that it is anti-North and intended to reduce the accrued VAT shared to the northern states. Sadly, some of these politicians who have contested for the presidency have some of the proposed changes in this bill in their manifesto as changes they will bring on board if elected.

The second factor is misinformation. The celebrities with large followers on social media descended on the bill that it is anti-North and that the North that brought the president into power against its people who voted for the Labour Party candidate cannot stand watching to be humiliated and persecuted. And this set in motion the flip side of the 21st-century misinformation spread with the speed of light on social media. Unfortunately, these influencers were criticizing the bill for saying VAT should be paid to the states that house the headquarters of companies to the detriment of the North which consumes the goods and services provided by those companies, alas, the position of the bill is the reverse of this misinformation.

The tipping point and the final stroke that broke the camel’s back was the declaration by one of the most respected northern governors who said that his state could not pay salaries if the bill was passed. To add salt to the injury, the Northern Governors Forum called on the national assembly to reject the bill.

The northern political class should not have described the bill as anti-north and should not have called for its outright rejection. Rather, it ought to have reached out to its best brains to study the bill and identify the grey areas that should be amended based on empirical evidence or compelling logic. No policy is error-free or sacrosanct.

Another area that may be worthy of examination on the proposed bill is tax-free food/agricultural items which the government said is to avoid hurting the poor. In my opinion, this is a good policy. However, if the North feels this is meant to commercially and economically hit the region below the belt (as alleged in some quarters). Those with this assertion opined that the northern strength lies in agricultural produce.

Be that as it may, it can say any vehicle/truck carrying so and so number of sacks or tons of so and so item will pay a tax of so amount to the state/market from where the goods are being loaded. This suggestion assumes that such a quantity of goods is meant for industrial purposes and should be taxed. These are some of the cases the North should make.

Bombastic regional politics has been the unfortunate politics of Nigeria, and a gaffe of one public officer is often given unnecessary publicity by the media. This fans the ember of hatred and distrust resulting in a political banana skin as exemplified by the reactions and counter-reactions that greeted this bill.

The banality of northern economic potential is manifested in its vast arable land, solid minerals and large population (predominantly youth), among other things that are yet to create wealth for its people in the 21st century. This is now being compared with China and India which ascended and are ascending, respectively, to prosperity by leveraging their huge population size.

Interestingly, Northern Nigeria had leveraged these comparative advantages during the colonial era to create wealth for its people and the country. This was the time the federal government borrowed money from the Northern Protectorate to finance the country. This was the time “jangali” played a significant role in the region’s revenue generation. It was reported that the northern region generated more revenue than the two other regions combined.

Indeed, many blame poor leadership for the loss of northern Nigeria. Nonetheless, the North can still turn those potentials into assets.

The tax committee and the president should find ways through compromises to ensure this bill sees the light of the day. Judging by my skimpy knowledge of political economy, it is the best policy the President Tinubu-led administration has rolled out for Nigerians. They should listen to constructive and legitimate grievances, address them, or reach workable compromises and get it done and dusted.

 

Tauheed, PhD, Department of Veterinary Pharmacology and Toxicology, ABU, Zaria