Making Taxes Work For The People

In a number of ways, President Bola Tinubu is keeping some of his campaign promises which, however, are taking harsh tolls on the people. All major presidential candidates pledged to end petrol subsidy payments, a policy that Tinubu implemented from Day One of his administration.

He had also campaigned on the need to “widen the tax net”. His sponsoring of four tax reform bills in the National Assembly – Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigerian Revenue Service Establishment Bill and the Joint Revenue Establishment Bill – is a confirmation of his determination to upgrade Nigeria’s tax laws.

Tinubu’s quest to foster justice and equity in the crediting of the proceeds of the Value-Added Tax based on the derivation principle encountered storms among Northern Governors who felt it would take away many undeserved privileges they had always enjoyed. Tinubu’s refusal to withdraw it as demanded has given the National Assembly members the opportunity to eschew political distraction and treat the tax reform bid on its merit.

We reaffirm our support for the tax reform project because it is in the overall interest of our economic development. The Federal Government is reducing its take from the VAT from 15 per cent to ten per cent, which is a commendable sacrifice. The reform is also meant to tax the rich up to a maximum of 25 per cent of their incomes, while exempting those earning N70,000 per month or lower. The VAT component also aims to reward derivation, or where the vatable transaction takes place, ending the old practice of remitting VAT proceeds to states that discourage the consumption of certain commodities due to religious and cultural hang-ups.

Those who choose not to consume must not benefit. That’s equity and justice! We call on our federal lawmakers to give these bills expeditious passage.

Beyond these laudable intentions behind the tax reforms, however, the question that remains unanswered is what governments at all levels do with, not just the tax revenues but also the monthly federal allocations they receive. These are the people’s moneys. Unfortunately, our politicians do not seem to realise this fundamental truth.

In a democracy such as ours, power (including power over the public purse) is held by the elected leaders in trust for the people. After all the dogfights over these tax bills, we want to see that the proceeds are properly invested in the people’s welfare, such as education, health, public infrastructure, agriculture, security and social safety nets for the poor and vulnerable. These are the proverbial “dividends of democracy”.

We should no longer abandon wholesale the discretion of public spending to politicians alone. We must demand accountability, especially since the Legislative Arm seem to have been bought over by the Executive.