NIGERIA AND THE TROUBLING THREATS TO THE TRICKS ON TAX

NIGERIA AND THE TROUBLING THREATS TO THE TRICKS ON TAX

By Bala Ibrahim

Once again, Nigeria my country, is dancing on the boundary of trouble, this time around, the trouble of the tricks of taxing the masses. As things stand, nothing may happen, until the tension passes the threshold of endurance. God forbid! Feelers from the north are not only obnoxious but disdainfully disagreeable with the planned tax reform agenda of President Bola Ahmed Tinubu, who had since, transmitted four tax reform bills to the national assembly. The reform bills are, the Nigeria Tax Bill 2024, the Nigeria Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill. The ambition of the four bills is to overhaul tax administration and revenue generation in Nigeria, in a manner that would centralize tax collection and fine tune the laws, to the benefit of the country.

On Wednesday, the Nigerian Senate descended into a heated exchange over this particular tax reform bill, which is extremely contentious.The bill, which was not listed on the day’s Order Paper, sparked anger and a shouting match among senators, after it was unexpectedly introduced for debate by the Deputy Senate President Jibrin Barau, who happened to be the Presiding officer of the day. There was a fierce argument between the Deputy Senate President Jibrin Barau and Senator Mohammed Ali Ndume, who accused the Senate leadership of violating legislative rules. The unexpected appearance of that bill for debate that day, the surprise substitution of the Senate President, who is from the south, with the Deputy Senate President, who comes from the north, and the speed with which the issue was pushed, combined to raise a question with regards some motives. And virtually all the questions were raised by the northerners, who are now bent on visiting their own legislators with their own anger. Nearly all the major mosques in the north, last Friday, took Senator Barau Jibrin and his cohorts to the cleaners. The north is not happy nor supportive of the bills, which they say, would only worsen their misery.

It may be recalled that, shortly after he assumed office, the President set up the Presidential Committee on Fiscal Policy and Tax Reforms, because, he said, he saw tax reforms as one of the primary things his administration needed to achieve to lay a strong fiscal and revenue foundation for sustainable growth for the rest of his tenure and beyond. To this effect, overhauling Nigeria’s tax laws and administration are to him, part and parcel of the Renowned Hope Agenda. The Nigeria Tax Bill, otherwise called the NTB, is a comprehensive piece of legislation that seeks to outline all taxes in the country, hitherto administered by different laws and compress them into a single simplified law. The NTB vests upon the Nigeria Revenue Service, which would replace the FIRS, powers to collect all national taxes, including royalties hitherto collected by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and excise duties, import VAT etc, hitherto collected by the Nigeria Customs Service. On face value, and in the absence of pretence, deceit, or hypocrisy, a reasonable mind would gladly accept the mission of the reform. But then, the theatre of the drama is Nigeria, where there is always the suspicion of omission in the commission of every mission.

The north is particularly angry with the perceived segregation in the reform. It is widely believed by many, including the entire 19 northern states governors, that it is a model that would perpetuate the segregation of other sections of the country, to the bias benefit of one state- Lagos state, which is the commercial capital of Nigeria and the general headquarter of most businesses. Also, because VAT, or value added tax, is a major component of the reform, and because it is a consumption tax on goods and services, that is levied at each stage of the supply chain where value is added, the manner of application, as argued by experts, seems discriminatory. Examples have been given by those that are knowledgeable on tax collection, about retribution or take back in tax. Some have argued that, if you want to tax the man who lives in Kano, VAT on Golden Penny Spaghetti, Golden Penny Jollof Noodles, Golden Penny Goat Meat Pepper Soup Noodles, or Golden Penny Semovita, then you must also factor into the chain, a tax to be paid at the point of grain purchase in the Dawanau Kano grains market, before shipment to the corporate headquarters of Golden Penny Flour, at Golden Penny Place, Wharf Road, Apapa, Lagos State. You can’t tax the consumer of a product, purchased from him at zero tax, just because you have added value to the product elsewhere.

The north’s anger is born out of the original discrimination in the agricultural tax policy of the country. The agriculture sector in Nigeria enjoys pioneer status with attendant tax exemption to all companies operating within the sector. It simply means that companies that operate within the agricultural sector in Nigeria don’t pay taxes. But their counterparts in other sectors are mandated to remit their taxes to the government. The position of the Government is aimed at encouraging investment in agriculture by offering tax breaks and incentives to stimulate growth and development within the sector. These incentives are meant to attract local and foreign investors to invest into the agricultural sector, which in turn leads to the production of food and raw materials in Nigeria. But now, the north, which is the real food basket of the country, is on the receiving end of another tax, the VAT levy.

Unless something is done to compensate the farmers at the point of purchase, making them to pay a tax at the point of consumption is clearly discriminatory. And it could be troubling.

NIGERIA AND THE TROUBLING THREATS TO THE TRICKS ON TAX