Dont Overregulate Businesses -By Tunde Odesola


Not a few business men and corporate organisations are scared stiff that the Bola Tinubu administration may replicate the stringent regulatory regime of Lagos State at the federal level. A friend expressed that fear in no uncertain terms.

According to the report of The Policy Advisory Council set up by Tinubu after he was elected President early 2023, his government will “deepen tax collection by restructuring and automating key revenue generating agencies.”

Steps he plans to execute to strengthen the tax collection regime are: “Identify, map, consolidate and automate the revenue collection function across key revenue generating agencies; implement end-to-end automation of all taxes and levies and deploy big data analytics to improve (tax) collection.

“Implement tax harmonisation to eliminate multiple taxation, improve collection and compliance; mobilise political will to drive zero tolerance for tax evasion; (and) broaden the tax net by creating incentives for transitioning the informal sector players (into the tax net.”

Many are worried that the Tinubu administration may encourage the taxation regime that scares the daylight out of most Lagosians at the national level. Though it may not be as blatant as it obtains in Lagos State Nigerians are apprehensive nonetheless.

If you think that the overregulation that the scared businessmen fear is too much government revenue drive, you will be correct. Overregulation is indeed a euphemism for too much taxation, which is driving businesses and residents away from Lagos State.

This apprehension is fed by the usual boast b y Tinubu’s men that he raised the Internally Generated Revenue of Lagos State from N600m a month to more than N7bn before he handed over to his successors whose efforts promised to up it to N1.01tn in 2023.

Mercifully, President Tinubu disclosed in his maiden speech at his inauguration at Eagle Square that his government would address the menace of multiple taxation and disincentives against investments.

He should not overtax poverty-stricken Nigerians and underwhelmingly performing corporate organisations that are already groaning under the weight of dwindling revenue, high cost of living and infrastructure deficit.

But this is not to say that the tax net should not be widened, or that the government should not insist that tax liabilities should be settled. No. The argument is that tax liability, which is a statutory responsibility, should not become a burden.

No one can argue that the government should not raise revenue through taxation. That is the major way by which governments raise money to fund their obligations to the citizens who have surrendered their sovereignty to the state. But greater emphasis must be on indirect taxation, like customs, excise and stamp duties, inheritance tax and petroleum production tax, that may be relatively high.

Direct taxation, like personal income tax, company tax and land use charge, should be relatively low and not become a heavy financial load on Nigerians who are already impoverished by the wrong-headed macroeconomic, fiscal and monetary policies of previous governments.

The World Bank has painted the gloomy picture of Nigeria as the poverty capital of the world, where more than 133 million Nigerians have been described as multi-dimensionally poor. That means households that suffer deprivations from monetary poverty, low education and poor access to basic infrastructure.

Right now, the government must deliberately come up with tax policies that leave more money in the hands of individual citizens and corporate entities who are the engines and, at the same time, the beneficiaries of economic activities.

If you take a cue from the concept of supply-side economics, popularised by the government of American President Ronald Reagan, more money in the hands of individual citizens can be used to buy more consumer goods (that will hopefully be manufactured locally).

Also, more money in the hands of corporate organisations can be transformed into business expansions or new investments. This, of course, leads to increased Gross Domestic Product, higher employment and expanded tax revenue base for the government.

Government can also reduce capital gains tax on dividends, treasury bills, bonds and new investment start-ups, to provide incentives that will encourage further investments throughout the economy.

The idea of tax holiday is crucial to the survival of new investments at this initial stage of reinventing the Nigerian economy for better and more profitable performance that appears to be evident in the way President Tinubu is already conducting government business.

The manufacturing sector that currently has a terribly weak base can take advantage of any support it can get. By the way, the tax holidays may also apply to old companies that are being revived or recapitalised.

While the moratorium of the tax holiday should be reasonably long, to enable the new or weak companies to survive, the rate of the tax payable should be low when the companies resume tax payments.

Those concerned about how the government will receive adequate revenue for its operations need not worry too much. Government can shore up its revenue by eliminating oil bunkering and pipeline vandalism, (which it is already doing), raise the production level of the oil wells, and increase investment in the gas sub-sector, which experts insist has more revenue potential than crude oil.

Government should pay closer attention to government-owned enterprises and parastatals that yield revenue. Such entities include Nigeria National Petroleum Company Limited, Nigeria Ports Authority and Nigeria Maritime Administrative and Safety Agency.

Others are the Central Bank of Nigeria, Federal Inland Revenue Service, Nigeria Customs Service, Nigeria Immigration Services, Nigerian Television Authority, Federal Radio Corporation, National Broadcasting Commission and Nigeria Communication Commission.

Government must take deliberate steps to check and punish corruption. It must also strive to eliminate waste by streamlining its ministries, departments and agencies to reduce or totally eliminate duplication of responsibilities and duties. These should significantly help to reduce the size and cost of governance.

Now may be the time to revive the Voluntary Assets and Income Declaration Scheme that was actively promoted by former Vice President Yemi Osinbajo during the administration of ex-President Muhammadu Buhari.

VAIDS provided opportunities for defaulting tax payers to voluntarily regularise and remediate their tax status and pay up their outstanding taxes without penalties or repercussions, if paid within a stipulated time frame. This should yield a lot of revenue to the coffers of Nigeria’s exchequer.

Nigerians too must realise that they have constitutional obligations to pay their taxes as and when due. Section 24(f) of Nigeria’s Constitution provides that, “It shall be the duty of every citizen (of Nigeria) to: declare his revenue honestly to appropriate and lawful agencies and pay his tax promptly.”

If the government demonstrates the political will to considerably reduce or eliminate waste, graft and corruption, Nigerians should be willing to buy into its programmes, cooperate and voluntarily pitch in their contributions.

Without any iota of doubt, the obligation of governments is to provide security and look after the welfare of the citizens who have voluntarily entrusted their lives and wellbeing into the hands of the government.

Governance is supposed to be a symbiotic arrangement, whereby all parties play their part to engender trust on all sides so that the benefits belong to those who run the government and those who consume the services of the government. Government must make every effort to encourage Nigerian businesses to thrive, not tax them to death!



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