August 14, (THEWILL) – On the sidelines of the yearly gathering of academics, captains of industry, public officials and the media at the annual social event tagged PLATFORM and hosted by the Senior Pastor of Covenant Nation, Polu Oyemade, at Iganmu, Lagos, recently, with the theme: Is Devolution of Power The Solution To Nigeria’s Problem? a government official was overheard lamenting the parlous state of the Nigerian economy.
The economy is in such bad shape, the official wondered, that it may require a miracle for the country to make a meaningful headway soon.
While the official may be pardoned for invoking a superhuman intervention, given the ambience of the gathering, it occurred to nobody that a more direct approach was in the making as the 36 state governors did recently when they presented President Muhammadu Buhari with save-the-country-now suggestions.
At the moment, the economy is in a free fall, with the balance in Excess Crude Account falling gravely from $35.37 million to $376,655 and spelling doom for the country with a high debt servicing cost of N1.94 trillion against a total revenue of N1.63 trillion.
A mixed bag of economic measures and demand-side reform, the governor’s suggestions seek economic growth through increase in taxation, suspension of welfare measures and restriction of the Central Bank of Nigeria to its “core and statutory mandate of exchange rate management, interest rate management and inflation targeting. It should also be directed to cease competing with development and commercial banks.”
Some of the recommendations appear vexatious and oppressive such that even implementing federal ministries are at loggerheads for and against the impact of some of the policies on Nigerians.
Things came to a head last Thursday, a day the Minister of Finance, Budget and National Planning, Zainab Ahmed, publicly disagreed with the position of her counterpart in the Ministry of Communications and Digital Economy, Isa Pantami, who had a few days earlier expressed his disapproval of the five per cent duty on data calls and vowed to fight it legally.
According to Ahmed, the Federal Government would implement the tax, based on the Finance Act of 2020, stakeholders’ approval and the approval of President Buhari.
She said, “In view of the position of Dr Pantami, there could be the question whether he was absent in the whole processes that resulted in the Finance Act, which is a product of both the National Assembly and Federal Executive Council (FEC).
“Suffice this to say that before the Act, the Finance Bill would have been through the FEC of which Dr Pantami is a member and the National Assembly.”
Still, other recommendations attracting public concern are that 22 per cent increase in salaries in 2023 to be reconsidered and a cap on Social Investment Programme (SIP) and National Poverty Reduction, as well as the need to introduce a flat 3 percent Federal Personal Income Tax on all Nigerians earning more than N30,000 per month and persons earning less than N30,000 per month whether employed or not, including farmers and traders to pay a monthly FPIT of N100. Then, offer federal civil servants above 50 years a one-off retirement package to exit the service.
In his reaction to the value of the recommendations, particularly the one dealing with a one-off retirement of federal civil servants above 50 years, the Chairman of Association of Senior Civil Servants of Nigeria (ASCSN), Comrade Babatunde Balogun, described the recommendation as laughable and unconstitutional.
Balogun told THEWILL on Friday: “What is the percentage of Nigerian workers who work in government? Is it the over five million Nigerians seeking jobs that they are recommending to be taxed? How many private sector businesses are still operating in the country since 2000 to show that the economy is growing? They did not recommend the slashing or removal of their security votes. They made no suggestion to eliminate or reduce their huge retirement benefits and disengagement allowances for them and their retinue of aides? That is why I say that many of the recommendations are laughable.”
The Governors’ 33 Recommendations To Buhari To Halt Economic Downturn
According to the state governors, the Federal Government should embark on an aggressive revenue drive by creating multiple taxes, which would spare no one, irrespective of age, gender and status.
Part of their recommendation is for the Federal Government to impose a 5 percent tax on every living Nigerian, both the employed and the unemployed. They also proposed 5 percent communication tax on phone calls and data and N100 monthly deduction from the air time credit of everyone that uses the telephone. This is irrespective of the existing 7.5 percent Value Added Tax (VAT).
The governors also urged the Federal Government to increase the VAT rate from the current 7.5 percent to 10 percent, before stepping it up to 15 percent, then raising it to 20 percent. This is coming two years after the government raised the VAT from 5 percent in 2020.
Another way to halt the hemorrhaging economy, according to the governors, is to eliminate state-level profit income tax (PIT) and introduce three percent federal income tax.
Also, they urged Buhari to introduce state sales taxes of 10 percent across the 36 states and FCT. In addition, the governors urged the Federal Government to revisit the decision to drop the subsidy on petrol after postponing its removal for 18 months. The government had planned to remove it in January.
President Buhari was also advised by the state governors to approve the retirement of public workers above 50 years of age. To raise the funds to make a one-off retirement package to public workers above 50, eliminate NNPC-funded projects. It was gathered that the suggestion was made to enable the government to have enough funds to make a one-off retirement package to public workers above 50 years.
The governors suggested a reduction of empowerment programmes, as well as the recalcitrant personnel costs of Ministers, Departments, and Agencies (MDAs).
In addition to the MDAs, the following agencies should be stripped of foreign trips: Federal Inland Revenue Service (FIRS), Nigeria Port Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Communications Commission (NCC). They also wanted government officials and their families to have limited access to visa approval, unless granted by the presidency.
With Nigeria’s Excess Crude Account depleted to $376,655 from $35.37 billion in 2014, the governors believe that the measures they had tabled before President Buhari would boost the availability of foreign exchange, which will grow Nigeria’s reserves.
The governors also urged the government to convert the N19 trillion Ways and Means outstanding loans obtained from the CBN into a 100-year bond with a proposed interest of one per cent.
They added that CBN’s ‘fixed exchange’ stance discouraged foreign investment (peak of $90bn investment commitments in 2018, to $20bn in 2021) and Diaspora inflows ($20 billion), just as petrol subsidy has wiped out all accruals to reserves.
Interestingly, the fortunes of Nigerian workers and the economy have so dipped that suspending welfare measures as recommended by the governors comes across as insensitive.
BudgIT, a civil group, in a statement signed by Iyanu Fatoba, Head Media, Communications and Creatives last week, stated that 12 states in the country owed their workers at least one month’s salaries as of July 28, 2022.
In an empirical survey it conducted to spotlight and identify state governments that have consistently failed to meet the essential requirement of governance and employee compensation, the group stated that states were subjecting their workers to unpaid labour and harsh living conditions.
Meanwhile, the domestic debt stock of the 36 states in Nigeria, including the Federal Capital Territory rose to N4.84 trillion in the first quarter of 2022, representing an 8.6 per cent increase, compared to N4.46 trillion recorded as of the previous quarter.
The 36 states of the federation parted with the sum of N21.62 billion as external debt deductions in the first quarter of 2022, an increase of 31.5 percent from N16.44 billion deducted in the corresponding period of 2021.
In his assessment of the package, the Chairman of the Bar, Police Monitoring Committee of the Nigerian Bar Association (NBA), Benin City Branch, Douglas Ogbankwa, Esq, who think the governors were right to collectively make recommendations to redirect the economy for growth and development, however called for wisdom in implementing some of the suggestions.
He told THEWILL that unless the law on retirement of civil servants, which makes 35 years of service or 60 years by age as grounds for retirement is amended, attempts by the President to invoke the aspect of the law that empowers him to remove workers discretionally may cause labour unrest and affect the implementation of the other recommendations.
He said: “Organised labour will cause problems because they will think, rightly so, that their fate would be left to the whims and caprices of the President.”
Solutions
While the inter-ministerial fight between the Ministry of Finance and Communications and Digital Economy continues because the Federal Government, as stated by Finance Minister, Ahmed, has started implementing the data and calls tax and the Digital Economy Minister, Pantami has vowed to explore every legitimate means to stop the planned five per cent excise duty tax on telecom consumers, faulting the timing and process of imposing the tax on the telecom industry, insisting that part of the responsibility of a responsive government was not to compound the challenges facing the citizens, experts think things can be done in a better way.
A finance expert and Managing Director/CEO, Taurus Capital and Advisory Services, Dr Nnaemeka Obiaraeri, said the 5 percent tax on every working Nigeria is not a bad policy, but a national identity data bank must first be created to ensure that only those above 18 years of age and who are gainfully employed are taxed.
“Five percent flat tax on every working Nigerian is not a bad policy. But first we need to create a national identity bank that truly captures every adult Nigerian above 18. We need to merge the INEC data with what is at the FIRS and NIN. This will also help us to drive financial inclusion in the land.
“It is not right to tax the unemployed. Five percent communication tax on all calls and data is good as long as the funds will be applied in developing Nigeria and not looted by political bandits. Those who provided ways and means to the Federal Government over and above the 5 percent of previous year’s budget violated the law. What did they do with the over N20 trillion notes printed?” Obiaraeri told THEWILL in a note.
For ASCSN’s Comrade Balogun, the government should streamline its appointments, cut down on overhead costs, create the infrastructural basis for foreign and local investment and embark on massive employment of youths, cut down or remove the severance benefits and huge gratuity for governors.”
Chief Willy Ezugwu, Secretary-General of the Conference of Nigeria Political Parties (CNPP), thinks more accountability and transparency in government would make it unnecessary to further tax already underemployed, unpaid workers and poverty-stricken Nigerians.
He said: “When the Minister of State, Timpre Sylva, said recently that 400,000 barrels of oil is stolen every day and the Ministry and Development Agencies fail to submit accounts to the National Assembly during budgeting process as an NGO recently submitted, does that not tell you that corruption and cost of governance is the major challenge bleeding the economy? The governors should start operating the recommendations first. They should cut down on expenses and overhead costs, convoys and run a lean government.”
About the Author
Amos Esele is the Deputy Editor of THEWILL Newspaper. He has over two decades of experience on the job.
