Nigeria’s Thorny Taxation, by Kene Obiezu

The Nigerian government is out to increase its tax revenues amidst soaring cost of living, pathological government borrowing, stratospheric costs of governance, and a general lack of public prudence. The outcry is entirely understandable.

The administration of President Bola Ahmed Tinubu is a little more than a year in office, but there has been nothing auspicious about an administration that promised to renew hope among Nigerians. Rather, there has been a lot to make Nigerians suspicious that in the name of cleaning the Augean stables that Nigeria is, there is a carefully disguised attempt to lead them down the garden path.

Since the advent of the current administration in May 2023, one policy has followed another in striking fashion. The most jarring for Nigerians has been the removal of the fuel subsidy, a decision which trembled out of the lips of the president on the day of his inauguration, before sending a tremor through Nigeria. More than twenty months later, the decision to remove fuel subsidy without clear plans of how to steer the post-subsidy era has generated protests and outrage. These protests have further complicated and compounded the issues for the FG as it struggles to build confidence in what is still early days.

Nigeria has largely and roundly failed to learn from other countries that have scaled the Olympian heights of development, that the feats which have proved startlingly elusive to many other countries who continue to languish in poverty could not have been possible without effective and efficient taxation. While yawning gaps remain in Nigeria’s taxation framework, the country remains on the backfoot in its bid to catch up with development.

While this is ongoing, tax evaders continue to rip the country off, denying it of much-needed funds for development, stymying development, and patronizing tax havens.

Notorious tax havens like the Caymans Islands, Bermuda, Luxembourg, Switzerland, British Virgin Islands have a long list of patrons that should be remitting taxes to the Federal Republic of Nigeria. While tax evasion remains high and compliance low, tax havens remain in thriving business, feeding fat off the loot of those who successfully evade the slippery watch of Nigeria’s tax authorities.

The government of President Bola Ahmed Tinubu clearly recognizes the importance of increasing Nigeria’s tax revenues. Simply, the government recognises that more taxes mean more resources in government coffers for development, even allowing for the rampant corruption the country has to contend with.

However, in a gripping demonstration of the challenges taxation faces in a country of riotously diverging interests and distracting diversity, a proposed tax reform bill drawn up by the government has stoked tension, especially in the North where Nigeria’s more notorious ethnic jingoists have clearly stated that it is an attempt to confer undue advantage on the two states of Rivers and Lagos.

As with its democracy, security, and many other major issues, it is no surprise that there is a sharp disagreement on tax reforms. What is disquieting is that as usual, the disagreement has descended into a disturbing debate between competing interests of the North and South in a country that should be united around questions of economic development that can break the stranglehold of poverty over millions of Nigerians.

Nigeria is not living up to its taxation potentials. This failure largely lends an explanation to Nigeria’s failure to kick on more than sixty years post-independence. As long as every opportunity to discuss economic growth and policies that can support same reflect Nigeria’s deep-seated divisions, Nigerians can expect stagnation to remain their lot.

Kene Obiezu,
keneobiezu@gmail.com