What does Nigeria need? Investment or tax

Anyone with interest in the affairs of Nigeria – the most populous black nation in the world – would wonder why politics have dominated the polity in the past few months at the detriment of the nation’s economy. It is the scramble for political power ahead of the 2019 general elections that has generated the rat race among all politicians. What is trending in the society today is the contest for supremacy between political party interest and national interest. A country crying for investment, with millions unemployed and weighed down by both internal and external debts is not in a good position to allow political party interests to be on a collision course with the country’s national interest.

For crying out loud, those in the government must always remember that they are managing the affairs of a country with a population of about 200 million. Given the excruciating debt crisis, inflation, skyrocketing unemployment and other manifestations of a battered economy, it is only right for governments at all levels- local, state and federal- to accord national economic interests top priority in the conduct of their affairs. So, what does Nigeria need at this point when her economy is still fragile? Is it investments or taxes? Without investments in the economy, unemployment will skyrocket, poverty will rise, and only few people will pay tax. But bearing in mind current economic challenges the country is going through, Nigeria needs both investments and taxes.

Talking about investment, Nigeria needs investors to invest in the economy. But this is quite challenging. Why so? One obvious answer is the poor business conditions and harsh treatment of both local and foreign investors too numerous to mention in this piece. Is it due to political interests that economic diplomacy mainly to woo foreign investors into the country is being jettisoned by the current administration? If economic diplomacy was not jettisoned, it is not skillfully and tactfully executed to project Nigeria as a country with good investment climate to the world. However, those in the government have the onerous task to convince would-be investors about numerous incentives and infrastructure which Nigeria has put in place to encourage and induce inflow of capital to the country for profitable investments. So, when words are being exchanged on the pages of newspapers about who paid tax and who did not, foreign investors are discouraged. This calls for urgent actions on the part of the government to implement faithfully its economic diplomacy by amplifying same at home and abroad that an improved investment climate exists in Nigeria despite having the ease of doing business at a subnormal level.

With respect to tax, there are two sides to it. On one side are tax payers and on the other side is the government. Both have statutory responsibilities. Tax payers must benefit from the mandatory financial charge imposed upon them by the government. The government must ensure that taxes collected are transparently and prudently used to finance services and programs that would benefit the people. To drive home this point, tax should be fair, proportional to the ability to pay, or the benefit received, while it must equally be predictable, convenient to pay, and efficient to collect. Taxes, levied on the income, property of individuals and firms must be reasonable, and they are to be used to finance government programs and projects.

Now to the main issue. There is, in the Nigerian press, a barrage of controversies regarding the Attorney General’s (AG’s) office demanding tax payments from corporate organizations in Nigeria. What is wrong with that, you may ask? This move is politically motivated and untimely. The politics in it is to score political advantage and it is untimely because the tenure of the government would soon expire unless Nigerians say otherwise. The CBN is also accusing a few banks and MTN for illegal capital repatriation for almost eight years (2008-2015). It is surprising that CBN is just knowing this. It equally, beats one’s imagination that the FIRS is just knowing that 6772 billionaires have been evading tax. So, is Nigeria going through a season of witch hunting or the failure of corporate governance on the part of these government-owned institutions and firms involved in this saga? These are tough questions. Notwithstanding the ineptitude and bureaucratic challenges in our public institutions, this writer supports the prompt payment of taxes by individuals and corporate organizations.

Why should firms in Nigeria not pay tax? Why should a billionaire not pay tax in a country where cleaners on a minimum wage of N18000/month pay tax monthly? Or, why should a multinational corporation flout the rules and regulations of host countries on tax and capital repatriation? Let us get it straight, there should be no excuse why any individual or firm will not be favorably disposed to complying with laid down rules and regulations on tax matters. Also, government institutions responsible for regulating financial activities of local and foreign investors should be alive to their responsibilities.

According to reports, the AG has served a payment demand of US$2 billion to MTN which the latter claimed was incorrect. MTN claims that the sum of over N2 trillion has been paid in taxes and fees to the authorities in Nigeria since 2001 that it started operations. The tax confusion has gingered analysts to ask whether the tax administration process in Nigeria has been delegated to the AG’s office to handle at state and federal levels respectively. Well, the matter is for the courts to determine. This is one of the reasons why wise men say that it has to be the rule of law that prevails in a sane society, not the rule of rulers. But regulatory agencies need to be very cautious with the method applied to supervise and regulate local and foreign firms domiciled within the country. If it was true that MTN has followed due diligence in the payment of taxes and other levies, the image of the government and the country would have been dented globally. This writer hopes that the economic diplomacy of the government is not a potential agent of corruption.

 M.A Johnson