By UCHE CHRIS
If the huge deficit of N6 trillion were the only problem with the budget, it would be easier to rationalise and even accept, but there are bigger and more challenging, and even contradictory, issues that defeat its very premises and parameters. The 2022 budget does not make much sense; and most experts agree on this fact.
One of such areas of major concern and contradiction is the prospect of more taxation. According to government, the budget is based on bringing more Nigerians into the tax bracket to ensure more revenue outside of oil. Ordinarily, this is a good proposition.
This idea was the brain child of former minister of finance, Mrs. Kemi Adeosun, and chairman of the Federal Inland Revenue Service, FIRS, Mr. Tunde Fowler, when they introduced the VAIDS scheme, which promised to double the tax net by adding more companies and high net-worth people after offering them amnesty from prosecution if they paid up.
However, two things have changed since then: Both are no longer in government, and this is important because they created the templates; but more importantly, the economy has also changed for the worse.
The economy has entered stagflation, a situation where both economic stagnation and inflation are simultaneously rampaging. More taxes will only drive up inflation, which will produce more stagnation, as demand for products will fall and production drops, followed by lay-offs.
Government believes that only four million out of the 40 million eligible Nigerians pay tax and increasing the figure to about 20 million will solve the revenue crisis of government. In comparison, 14 million South Africans pay tax, which is triple the number in Nigeria with four times South Africa’s population. Government must recognize the reason for the high rate of tax evasion in Nigeria.
Nigerians are reluctant to pay tax for two major reasons: They distrust government and the leaders to use the money judiciously and for public benefit; and the high level of corruption in government. It is a hard sell to convince a private person to part with his hard earned money to some faceless public bureaucrats, who would likely divert much of it into private pockets.
Nobody, who is aware of the level of graft in the system will be encouraged and motivated to pay tax. The issue is not just the fact of corruption, which you can still find in other tax paying societies; the corruption dilemma is that the system is largely incapable of holding the culprits to account.
There is also another reason, which may be derived; namely, no Nigerian could get anything from government without paying some unofficial rent or fees. None. Whether it is contract or service, the government has been wired that monetary demands are imposed on you before you can get what should legitimately be your civic right.
So, it is double jeopardy for Nigerians to pay for things that should be ordinarily free, and then for government to demand tax from them. The truth is that Nigerians are paying taxes more than any country in the world, but unfortunately, their taxes are informal and go into private pockets at the expense of government.
Government should clean up its act; it is double taxation to expect Nigerians to pay official tax after public servants had extorted money from them to perform their official functions to the people; it is double jeopardy, and social revolutions had in the past arisen out of such oppressive policies. Until government ends corruption in public service, tax evasion and under-declaration will be difficult to eradicate.
Also there is a political angle to the issue of taxation in the country. Who are those paying tax in Nigeria, and which part of the country bears the heavier burden of tax payment? Tax evasion has a colonial origin and it has continued because such colonial vestige in our tax system remains very visible. Most of the tax burden of the country is borne by southern Nigerians.
This is very evident from utility bills, such as electricity, VAT, company tax etc. Even though the north claims to be more in population, which they use in revenue allocation and voter distribution, 70 percent of tax contributions is from the south. So, when government talks about increasing tax net, it means forcing more southerners and their companies to fund the government.
It is this colonial tax system that is behind the current VAT controversy between the south and the north. As Governor Nyeson Wike of Rivers state, stated, the north cannot be claiming superior population in election and revenue allocation, which does not translate into tax generation.
Tax payment has become a political issue and without resolving the politics of it, few people, especially southerners will be compelled out of patriotic duty to pay tax, which others with unfettered access to power carelessness expropriate for their own good.
Another political issue in the budget is the Social Investment programme, SIP, which has cost government over N2 trillion in four years. With the school feeding, which is intended to give a meal to school children, the SIP includes direct cash transfer of N5000 monthly to the most vulnerable groups in society – however that is defined. Again both are political initiatives directed at President Buhari’s political base.
Both schemes are steeped in controversy. From reports released by the ministry of Humanitarian and Disaster Relief, over 70 percent of the beneficiaries of the SIP are in the north. The number allotted to Katsina state alone is more than the total number of beneficiaries in the entire Southwest.Yet, poverty is not exclusive and unique to a part of the country.
The same thing applies to the school feeding programme, when it emerged from the ministry’s records that they distributed food to pupils in parts of the south west when the country was on Covid 19 lockdown. It was such a scandal that prompted senate probe and the subsequent burning of the Accountant General of the Federation’s office where documents demanded by the senate committee were allegedly kept.
And Dr. Akinwumi Adesina, President of ADBF, was unequivocal in condemning the continued implementation of the wasteful programme, when the country is borrowing money to execute physical projects. It makes no sense at all unless there is a vested political interest.
In the final analysis, budget 2022 is Buhari’s political gift to his constituency, which has stood by him during his ruinous administration of the country. President Buhari has nothing to be proud of after his reign, so he is buying the good will of his people, because this budget can never improve Nigeria. This budget is simply a continuation of the policy of robbing Peter to pay Paul.
