There is this metaphorical joke which tries to paint the agony of living in Nigeria that goes something like this…in a question and answer form: “What do you do for a living”? “I live in Nigeria for a living”. In a manner of speaking, the joke is that it is so tough to live in Nigeria, and just living in the country should be equated to practicing a profession. So, Nigerians are invariably asking that living in Nigeria should be recognized as a profession, a career that should attract monthly wage. The Bola Tinubu regime is inexorably encouraging this kind of “profession”. Two weeks to its first year in office, majority of Nigerians have never had it this bad.
Back to back hardship seems to be the unintended intendment of the regime. There is a clear dissonance between the fiscal and the monetary policies; forget the idea that there is the office of the coordinating minister for the economy. Even the traditionally-say-little Central Bank of Nigeria (CBN) governor, Yemi Cardoso cried aloud the other day that the fiscal measures of the government are not helping his efforts to cage the genie of inflation. While inflationary pressures are at boiling levels, the central bank is increasing interest rates to drive down inflation, the fiscal side is arming people and businesses with more cash thus worsening inflation. Just today, the Statistician General of the Federation released the April inflation figure of 33.59 percent (this should take more sleeping hours off Cardoso’s sleepy eyes), an increase over the Mary numbers. Since this government came into power nearly a year ago, inflation has been on the increase month on month. To be sure, it was one of the bad batons his predecessor handed over to the incumbent President.
Aside from the steep devaluation of the Naira, our beloved yet battered currency, which commenced in June 2023, and has successfully sent many corporate behemoths crashing to the canvas (ask the MTNs and the Nestles of this world); and the removal of the corruption-ridden fuel subsidy on regime Inauguration Day, the layers of taxation piled up on Nigerian households has made life and living unbearable for many.
In 2020, Value Added Tax (VAT) was increased from 5 per cent to 7.5 per cent. That represents a 50 percent increase overnight; and Nigerians are yet to feel, let alone see the impact of this increase, and the Tinubu administration is already discussing about increasing the VAT rate to 10 per cent.
There is also this lopsided analogy the Bretton Woods Institutions (the World Bank and the International Monetary Fund) and their apologists like to give that Nigeria’s tax to GDP ratio is one of the lowest in the world. They always conveniently forget to look at other variables particularly the per capita income of Nigerians, which is one of the lowest even by African measure.
Much of the taxations are imposed on the citizens and companies to fund budget deficits. On the surface, there is nothing wrong with that. But the fact is that the same people and companies end up shouldering the responsibilities governments are suppose to provide. Where, apart from in places like Nigeria, do you hear that citizens and companies contribute money to fix roads, provide water, replace electric transformers (that upon commissioning automatically become the property of Distribution Companies), pay to secure themselves and their property, and other basic services that government should provide. When you read the story of what has happened to the Edo State-based Okomu Oil Plc these past two weeks, you will come to terms with the reality that living in Nigeria is a big deal!
Though the Joint Tax Board has the three tiers of government in agreement on the taxes to be imposed, each of the tiers of government has its own visible and invisible taxes not known to law. This is more rampant at the state and local governments. It is when you are getting involved in establishing businesses that you get to hear of certain taxes you never knew existed. But surprisingly, you will hear every government official singing about their policy of attracting investments. It just doesn’t make any economic sense.
Some companies are merely surviving under the weight of heavy taxation, some duplicated. Many companies have just not been able to survive and have, therefore, fallen off the cliff; burying with them many jobs, and ballooning the unemployment market. The ones that are surviving have shrunk in size.
In Nigeria, we have the more obvious and general taxes such as the capital gains tax, the company income tax, the national information technology development levy, the personal income tax, the petroleum profits tax and the stamp duties. Others include the tertiary education tax, the value added tax, and the withholding tax. And there are several others that are beneath the ones above.
Last year (or was it in 2022?), the government introduced a yearly car ownership tax. Every year, I have to pay N1,000 to show proof that the car I bought with my money is mine. Why? Because government exists to tax me to the fullest. One might argue that N1,000 is not much to worry about. Wrong because nothing stops the same government from increasing that levy from N1,000 to whatever amount it deems fit. The same goes for the VAT rate which was increased by 50 per cent from 5 per cent to 7.5 per cent.
Things were going to torpedo last week when the CBN ordered banks to commence implementation of the 0.5 per cent cybersecurity levy on electronic banking transactions. Nigerians were almost up in arms over the directive when the politically savvy President quickly pulled the rug from off the feet of angry citizens by suspending the implementation of the law.
Note that the key word in the government position as announced by the Information and National Orientation Minister is ‘suspension’. From the look of things, I can almost certainly bet that more taxes are going to come as we commence the second year of this regime.
There are four major reasons why we pay taxes: civic responsibility, wealth redistribution, source of funding for the government, and economic stimulation and stabilisation. In fact, this week at the opening of the Chartered Institute of Taxation of Nigeria conference in Abuja, the Accountant General of the Federation, Mrs. Oluwatoyin Madein said that tax revenue is currently the highest source of income for the government. You can see that oil, the oxygen Nigeria breathed for unending is being replaced. So, why are tax payers not getting the benefits of the taxes they pay? That is the question those in power must answer us.
Short takes
1. No to pension funds for infrastructure investment
Nobody told me, I heard it directly from our cerebral Minister of Finance and Coordinating Minister for the Economy, Mr. Wale Edun that government is going to use Nigerians’ pension funds to finance long term infrastructure projects. This government should be advised, lobbied, cajoled, pleaded, begged and threatened not to go near peoples funds. That would be a terrible mistake. Let’s say government borrows a trillion naira from the fund to finance the Lagos-Calabar coastal road project and it’s completed in seven years (the East – West road project has already told us that it will take this new dream!) and the road is tolled. It will take forever to get the N1 trillion back. Until the current pension scheme kicked in, Nigeria pensioners had experienced the most horrendous life in retirement on earth. Any attempt to touch retirement savings by any government must be stopped.
2. Where did President Tinubu disappear to?
I know that in Nigeria we’re not suppose to ask questions like this because one of the unwritten rules in our brand of democracy is that we the citizens are not expected to hold those in authority to account. But, please, can the presidency just tell us where our beloved president was between when he was done with his official duties in Saudi Arabia and Europe and when he returned to Nigeria. We have just about six or so days to account for. It’s clear he was not temporarily raptured and then released to continue governing us.
Esiere is a former journalist!
